Zara: A Case Study

What can we learn from one of the world’s largest fashion retailers?

Key Takeaways

  1. Zara’s company ethos has democratized clothing for everyone and innovated the supply chain in the process.
  2. Zara’s success is directly related to its ability to predict the next sartorial fad based on consumer demand and bring it to market quickly.
  3. Despite the issues with “fast fashion” Zara remains an exemplar brand to be analyzed by young labels seeking relevancy and long term success.

Established in 1975, Zara, a clothing retailer from Galicia, Spain has arguably changed the fashion world forever. A few years into its expansion, its founder Armancio Ortega overhauled the entire design-manufacturing process to create the first “instant fashion” or what we now know as a “fast fashion” retail chain. The brand was catapulted into mainstream success after producing inexpensive au courant wares. This would eventually lead Inditex (Zara’s parent company) to become the largest fashion group, with Zara operating 7200 stores in 93 markets worldwide today. Unlike many of its competitors, Zara has been able to broach the divide between both its price-conscious consumers and trendsetters alike through its many designs. In recent years, Zara continues to stay ahead by forging eco-initiatives, promoting internal professional development, and showing customer focus. The brand’s disruption of the traditional fashion business model makes it a paragon for independent designers.

 

         Zara sets itself apart from competitors, due to Ortega’s insistence that the supply chain is tightly controlled. From there, Zara refined its business model by creating incredibly short lead times that can bring a product from inception to market in under a month. This is unlike other brands, where most retailers order products from factories at least six months in advance. Unlike other companies, Zara’s quick turn around time allows it to produce the majority of its products within the current fashion season. Changing tastes and attitudes are accommodated because goods are designed after receiving feedback from floor managers. Longer lead times can be disadvantageous for a brand, especially during the current pandemic, as they are not as readily able to adapt to the demands of the market (I.e. The shift to WFH attire has made it difficult to vend dress wear or business wear). This has left many retailers scrambling to sell off an influx of products.    

 

The infrastructure at Zara has been the subject of many case studies in recent years but many competitors would need to do a complete top-down revamp to successfully emulate Inditex. Zara’s ability to produce clothing quickly and efficiently can be attributed to its local production (most products are produced in Spain or neighboring countries), and through its work with many designers, instead of one lead designer. Zara’s proficiency in trend forecasting is based on feedback from its employees that are committed to seeing their company prosper. Clothing is manufactured in limited quantities creating a scarce supply, which in turn increases demand from shoppers that must frequent the stores more often. Also, Zara’s dynamic culture is at the core of all of its operations and design practices. Inditex’s founder views clothing as a “perishable commodity” akin to food that should be thrown away at the end of each season, according to Martin Roll brand consultancy. Treating clothing as disposable instead of precious is in direct opposition to the belief that fashion is a visual art. Zara’s attitude allows it to transform its vision without limit, never getting bogged down by a specific point of view. Thus, Zara appeals to a broad spectrum of consumers across all ages, sexes, and socioeconomic classes.

 

         The brand’s disposable clothing would seem to stand in the way of today’s emerging trends of environmental justice and sustainability. However, Zara has spear-headed many green initiatives in the fast fashion industry. The company established a sustainability committee and has reduced energy consumption by 20 percent, and water consumption by twice as much according to BOF. Inditex is among the first large retailers to commit to reducing its packaging materials waste. By 2023, the company plans to eliminate all single-use plastic and to derive all of its natural fibers from renewable sources by 2025. The brand’s ability to create trendy clothing at affordable prices coupled with its commitment to ecological causes has undoubtedly given Zara an edge with both Millenial and Gen Z shoppers. Buyers that once steered clear of fast-fashion companies have increasingly been won over.

 

         For all of the brand’s inventive changes to the traditional workflow and new sustainability drives within the fashion industry, there remain issues with fast fashion as an acceptable mode of consumption. Zara reportedly releases 500 new designs a week and 20,000 per year according to Slate, with many articles of clothing inevitably ending up in landfills. Moreover, analyzing Zara’s shortcomings include recent obstacles to profitability since the pandemic began. Many brick and mortar retailers have suffered as customers have turned to online shopping during quarantine. Zara has been slow to adapt to internet sales, working with an ill-equipped website. The brand has historically relied on in-store customer feedback, which has proven to be unfeasible during this era. Internet shopping has exposed issues with Zara’s fit and quality, with many customers leaving negative remarks on consumer review websites.

 

         Despite setbacks due to issues with vetting and a problematic core value, Zara is indisputably a fashion powerhouse. By developing an ethos that promotes employees from within, the organization fosters an attitude of goodwill amongst staff. This improves employee retention and incentivizes workers to increase productivity. For creators seeking to emulate the brand’s victories, investing in employees and implementing sustainable practices are a must. Other effective strategies that brands can take away from Inditex are manufacturing products in scarce supply to stimulate interest in designs, as well as working with local factories to cut down on lead time. Adopting these protocols into your business while paying attention to quality control and user experience online can set your brand up for success in the long haul.