Description
In such a data regarding the strategists choice unique business strategies.
The Strategist’s Choice
Unique Business Strategies
Making Good Businesses Better
T: + 44 (0) 1280 844966
Page 1
The Story of Zara –
the Speeding Bullet
How a Business can
Achieve Sustainable
Competitive Differentiation
and Positioning
ZARA HAS become Spain's best-known fashion
brand and the flagship brand of £2.5billion
holding group Inditex. Amancio Ortea Gaona, the
company’s founder, began retailing clothes in
1963. By 2005 Inditex emerged as one of the
world’s fastest growing manufacturers of
affordable fashion clothing. Now with over 2000
stores and promising to double that number by
2011, Inditex is one of the biggest business
success stories in Spanish history.
Zara’s success offers us all some instructive
lessons in how to create and sustain a break
through strategy. The striking thing is that Zara
has found differences that matter to customers
and differentiated itself from its competitors by
performing key activities [in its supply chain]
differently. It is this that sets challenges for
competitors because they will not find it easy to
imitate or equal Zara’s positioning and it is this
achievement that has given Zara sustainable
competitive differentiation and positioning.
This article shows how Zara has achieved this
level of uniqueness.
Let’s start with the market! Today’s consumers
are spending less on clothing—choosing to spend
their disposable income on healthcare, electronics,
education, and travel and leisure. Moreover they
can now choose from a wide assortment of
inexpensive products. Thus to capture today’s
elusive consumer, it is more important than ever
to find a breakthrough in the clothing market.
Through a clear focus and vision, Zara has tapped
into the power of fashion. It has shortened
conventional supply chain response from 5-7
month down to 2-2½ months and their customers
are eagerly awaiting next week’s—take note, not
next season’s new fashion!
Small and frequent shipments keep product
inventories fresh and scarce—compelling
customers to frequent the store in search of what’s
new and to buy now…because it will be gone
tomorrow. Thanks to the twice weekly deliveries
of replenishment stock as well as new items,
customers constantly return to stores to browse
new items. Zara's global average of 17 visits per
customer per year is considerably higher than the
three visits to its competitors
As the eyes and ears of the company, empowered
retail managers provide word-of-mouth
information on customer wants and preferences.
This is quite at odds with relying solely on
electronically collected data, an approach used by
competitors. Thus lines that are not selling well are
quickly removed and popular items quickly
replenished. A quick turn around on merchandise
helps generate cash, reduces inventories and
eliminates the need for significant debt.
Poor communication is often the culprit of
bottlenecks. Zara invested in information
technology (IT) early on. Their in-house IT is
simple and effective. Vendors and suppliers report
that people are accessible and answers can be
obtained quickly. Internal communication is
maximized by housing on one floor, the designers,
pattern makers and merchandisers, as well as
everyone else involved in getting the product
completed.
Ninety per cent of Zara stores are company-
owned; the rest are franchises or joint ventures.
Customers entering a Zara store in London, Paris,
New York or in Rio de Janeiro find themselves in
the same environment: a predominantly white,
modern and spacious store, well-lit and walled
with mirror. The latest fashions hung from the
The Strategist’s Choice
Unique Business Strategies
Making Good Businesses Better
T: + 44 (0) 1280 844966
Page 2
store racks around them. A long line of people
typically waited at the cash registers to pay for
their purchases: a few select items.
In comparison with other clothing retailers, who
spent 3-4 percent of sales on advertising, Zara
spent just 0.3 percent. The little it spends goes to
reinforce its identity as a clothing retailer; low-cost
but high fashion.
Controlling notorious bottlenecks along the
supply chain is key to speed. For example dyeing
and fit are critical processes within the supply
chain. Zara is a large investor in a dye and
finishing plant—a notorious bottleneck. Its
control allows them to oversee the dyeing process.
A further trouble spot is sewing. Even though
Zara uses sub-contractors some subcontractors, it
carries out the bulk of all cutting itself—a crucial
process that determines fit.
60% of the manufacturing processes are
outsourced in countries close to the Zara
headquarters in Spain to help achieve a quick
turnaround. Zara maintains a strong relationship
with their contractors and suppliers—viewing
them as part of the company.
To successfully react to consumers demands,
design decisions are delayed as long as
possible. Typically, Zara pre-commits to 50%-
60% of its production in advance of the season,
whereas other clothing retailers commit to 80%-
90%. Thus Zara reserves mill capacities to ensure
production facilities are available when needed.
Design collections are developed by creative teams
rather than groups of designers. Creative teams
consist of designers, sourcing specialists and
product development personnel. The teams work
simultaneously on different products, building on
styles that were previously successful. Designers
are trained to limit the number of reviews and
changes, speeding up the development process
and minimizing the number of samples to be
made.
Zara hires young designers and trains them to
make quick decisions. Decision-making is
encouraged and bad decisions are not severely
punished. Designers are trained to limit the
number of reviews and changes, speeding up the
development process and minimizing the number
of samples made. Failure rates of Zara's new
products were reported have been said to be just 1
per cent, considerably lower than the industry
average of 10 percent.
Some say Zara’s real strength is its well developed
culture, and that isn’t something that can be easily
knocked off.
Traditionally, design and development precedes
fabric procurement. Zara has turned this practice
on its head. Zara unlike rivals is fabric driven.
Designs are developed with available fabrics and
trims. This eliminates waiting for the long and
laborious process of fabric formation.
In today’s competitive environment, Zara has
shown that fine tuning the supply chain is no
longer a strategic tool, but a necessity. It has
shown that supply chain management can be
managed provide sustainable competitive
differentiation and positioning on the one hand
and increase throughput, reduce inventories and
operating expenses on the other.
To read more about strategies to grow your
business click here
Best wishes,
Andrew Pearson
Managing Director
Unique Business Strategies
* * * * * * * * * * * * * * * * * * * * * * *
The Strategist’s Choice
Unique Business Strategies
Making Good Businesses Better
T: + 44 (0) 1280 844966
Page 3
Something about us
Andrew M Pearson is widely considered to be a
leading expert in the fields of strategy,
marketing and business-development
coaching.
Trained in sales and marketing at J Bibby, the oils
and animal-feed business, Andrew set up his first
business aged 25 and steered it to market
leadership and a turnover of £11m in
6 years. Since then, he’s held senior management
and professorial posts at a number of UK firms,
including 4 years with Cargill, when he founded
pioneering strategies for business development in
Eastern Europe.
He now regularly works with top managers and
business owners in the UK and overseas, helping
them to create and exploit superior strategies and
business solutions.
Those who have submitted testimonials for his
coaching, training and consultancy services are like
a who’s who in business development...
• John Adams: Fowler Welch
• Rob Keene: Over Farm Market
• Andrew May: Mainland Marketing
• Paul Smith: Due Diligence
• Don Burgess: Freeminor Brewery
• Simon Harvey: Mack International
• Graeme Kemsley: Business Link
• David Neil: Andersons Consulting
• Brian Redrup: Velcourt
• Ann Louise and Bill Hartley: Hartley’s
Nurseries
• Paul Hebblethwaite: Cadburys
… to name but a few.
Coaching and Workshops
The content of this book and its sister publication,
How to Create Breakthrough Strategies for
Your Business forms the basis for coaching and
workshop events for executives wanting to
develop breakthrough strategies for their
businesses.
These learning events are available in a variety of
formats from a short talk, one or two day
workshop to extended coaching support.
The next one day open course will be held at
Whittlebury Hall Buckinghamshire.
______________________________________________________
doc_229172046.pdf
In such a data regarding the strategists choice unique business strategies.
The Strategist’s Choice
Unique Business Strategies
Making Good Businesses Better
T: + 44 (0) 1280 844966
Page 1
The Story of Zara –
the Speeding Bullet
How a Business can
Achieve Sustainable
Competitive Differentiation
and Positioning
ZARA HAS become Spain's best-known fashion
brand and the flagship brand of £2.5billion
holding group Inditex. Amancio Ortea Gaona, the
company’s founder, began retailing clothes in
1963. By 2005 Inditex emerged as one of the
world’s fastest growing manufacturers of
affordable fashion clothing. Now with over 2000
stores and promising to double that number by
2011, Inditex is one of the biggest business
success stories in Spanish history.
Zara’s success offers us all some instructive
lessons in how to create and sustain a break
through strategy. The striking thing is that Zara
has found differences that matter to customers
and differentiated itself from its competitors by
performing key activities [in its supply chain]
differently. It is this that sets challenges for
competitors because they will not find it easy to
imitate or equal Zara’s positioning and it is this
achievement that has given Zara sustainable
competitive differentiation and positioning.
This article shows how Zara has achieved this
level of uniqueness.
Let’s start with the market! Today’s consumers
are spending less on clothing—choosing to spend
their disposable income on healthcare, electronics,
education, and travel and leisure. Moreover they
can now choose from a wide assortment of
inexpensive products. Thus to capture today’s
elusive consumer, it is more important than ever
to find a breakthrough in the clothing market.
Through a clear focus and vision, Zara has tapped
into the power of fashion. It has shortened
conventional supply chain response from 5-7
month down to 2-2½ months and their customers
are eagerly awaiting next week’s—take note, not
next season’s new fashion!
Small and frequent shipments keep product
inventories fresh and scarce—compelling
customers to frequent the store in search of what’s
new and to buy now…because it will be gone
tomorrow. Thanks to the twice weekly deliveries
of replenishment stock as well as new items,
customers constantly return to stores to browse
new items. Zara's global average of 17 visits per
customer per year is considerably higher than the
three visits to its competitors
As the eyes and ears of the company, empowered
retail managers provide word-of-mouth
information on customer wants and preferences.
This is quite at odds with relying solely on
electronically collected data, an approach used by
competitors. Thus lines that are not selling well are
quickly removed and popular items quickly
replenished. A quick turn around on merchandise
helps generate cash, reduces inventories and
eliminates the need for significant debt.
Poor communication is often the culprit of
bottlenecks. Zara invested in information
technology (IT) early on. Their in-house IT is
simple and effective. Vendors and suppliers report
that people are accessible and answers can be
obtained quickly. Internal communication is
maximized by housing on one floor, the designers,
pattern makers and merchandisers, as well as
everyone else involved in getting the product
completed.
Ninety per cent of Zara stores are company-
owned; the rest are franchises or joint ventures.
Customers entering a Zara store in London, Paris,
New York or in Rio de Janeiro find themselves in
the same environment: a predominantly white,
modern and spacious store, well-lit and walled
with mirror. The latest fashions hung from the
The Strategist’s Choice
Unique Business Strategies
Making Good Businesses Better
T: + 44 (0) 1280 844966
Page 2
store racks around them. A long line of people
typically waited at the cash registers to pay for
their purchases: a few select items.
In comparison with other clothing retailers, who
spent 3-4 percent of sales on advertising, Zara
spent just 0.3 percent. The little it spends goes to
reinforce its identity as a clothing retailer; low-cost
but high fashion.
Controlling notorious bottlenecks along the
supply chain is key to speed. For example dyeing
and fit are critical processes within the supply
chain. Zara is a large investor in a dye and
finishing plant—a notorious bottleneck. Its
control allows them to oversee the dyeing process.
A further trouble spot is sewing. Even though
Zara uses sub-contractors some subcontractors, it
carries out the bulk of all cutting itself—a crucial
process that determines fit.
60% of the manufacturing processes are
outsourced in countries close to the Zara
headquarters in Spain to help achieve a quick
turnaround. Zara maintains a strong relationship
with their contractors and suppliers—viewing
them as part of the company.
To successfully react to consumers demands,
design decisions are delayed as long as
possible. Typically, Zara pre-commits to 50%-
60% of its production in advance of the season,
whereas other clothing retailers commit to 80%-
90%. Thus Zara reserves mill capacities to ensure
production facilities are available when needed.
Design collections are developed by creative teams
rather than groups of designers. Creative teams
consist of designers, sourcing specialists and
product development personnel. The teams work
simultaneously on different products, building on
styles that were previously successful. Designers
are trained to limit the number of reviews and
changes, speeding up the development process
and minimizing the number of samples to be
made.
Zara hires young designers and trains them to
make quick decisions. Decision-making is
encouraged and bad decisions are not severely
punished. Designers are trained to limit the
number of reviews and changes, speeding up the
development process and minimizing the number
of samples made. Failure rates of Zara's new
products were reported have been said to be just 1
per cent, considerably lower than the industry
average of 10 percent.
Some say Zara’s real strength is its well developed
culture, and that isn’t something that can be easily
knocked off.
Traditionally, design and development precedes
fabric procurement. Zara has turned this practice
on its head. Zara unlike rivals is fabric driven.
Designs are developed with available fabrics and
trims. This eliminates waiting for the long and
laborious process of fabric formation.
In today’s competitive environment, Zara has
shown that fine tuning the supply chain is no
longer a strategic tool, but a necessity. It has
shown that supply chain management can be
managed provide sustainable competitive
differentiation and positioning on the one hand
and increase throughput, reduce inventories and
operating expenses on the other.
To read more about strategies to grow your
business click here
Best wishes,
Andrew Pearson
Managing Director
Unique Business Strategies
* * * * * * * * * * * * * * * * * * * * * * *
The Strategist’s Choice
Unique Business Strategies
Making Good Businesses Better
T: + 44 (0) 1280 844966
Page 3
Something about us
Andrew M Pearson is widely considered to be a
leading expert in the fields of strategy,
marketing and business-development
coaching.
Trained in sales and marketing at J Bibby, the oils
and animal-feed business, Andrew set up his first
business aged 25 and steered it to market
leadership and a turnover of £11m in
6 years. Since then, he’s held senior management
and professorial posts at a number of UK firms,
including 4 years with Cargill, when he founded
pioneering strategies for business development in
Eastern Europe.
He now regularly works with top managers and
business owners in the UK and overseas, helping
them to create and exploit superior strategies and
business solutions.
Those who have submitted testimonials for his
coaching, training and consultancy services are like
a who’s who in business development...
• John Adams: Fowler Welch
• Rob Keene: Over Farm Market
• Andrew May: Mainland Marketing
• Paul Smith: Due Diligence
• Don Burgess: Freeminor Brewery
• Simon Harvey: Mack International
• Graeme Kemsley: Business Link
• David Neil: Andersons Consulting
• Brian Redrup: Velcourt
• Ann Louise and Bill Hartley: Hartley’s
Nurseries
• Paul Hebblethwaite: Cadburys
… to name but a few.
Coaching and Workshops
The content of this book and its sister publication,
How to Create Breakthrough Strategies for
Your Business forms the basis for coaching and
workshop events for executives wanting to
develop breakthrough strategies for their
businesses.
These learning events are available in a variety of
formats from a short talk, one or two day
workshop to extended coaching support.
The next one day open course will be held at
Whittlebury Hall Buckinghamshire.
______________________________________________________
doc_229172046.pdf