Zara – Fast Fashion Model
Discuss about the causes of success behind the success of Zara in the global market.
Zara is a reputed Spanish fast fashion brand currently headquartered in Galicia. Zara is the flagship brand of Inditex Group and in the current market Zara is the largest apparel dealer. Zara was initially inaugurated in the year of 1975 by Amanico Ortega. In the year of 1988, the management of Zara took an expansionist approach and set their foot in the global market. In United States Zara opened their first store in the year of 1989, and later they expanded their business in the markets of Mexico, Sweden, Greece, Romania, Hungary and in many more nations. Individuals can order Zara products by ordering online and the management of Zara ships product for customers in more than 20 countries worldwide (Bruner et al., 2017). Zara achieved a huge popularity and prosperity in a short period of time by delivering products of the highest quality and due to their top notch business strategy. The purpose of this report is to highlight the basic reasons behind the success of the organization with contrast to another successful and an unsuccessful Organization operating in the same field. Apart from that the report highlights how the organization sustains its competitive advantage and how Zara’s strategy might suite to another organization working in the same field.
The main cause behind the immense success of Zara is the model of ‘fast fashion’ followed by the management. In this way, the target customers play a major role behind the making of designs and the activities regarding the production. In this way, the management incessantly gathers customer feedbacks and those feedbacks are sent to the production house in order to make new designs or to amend the existing designs.
The management of Zara has a complete control over the distribution and sourcing of the products. The management of Zara does not remain dependent on the third party partners and instead they carry out all the activities regarding the designing the products, the warehousing procedure, distributional works and works of logistics internally. It is seen that the management of Zara believes in ‘production in proximity’. The managers of Zara want to keep minimum 50% of the products in-house and do not believe in the concept of outsourcing (Xia and Wong, 2014). Inditex Group has developed a concept where their production chain is highly dependent on the geographical clusters.
The management of Zara stresses on the ‘Rapid–fire Supply Chain’. The management can deliver the products very quickly because of the centralized structure of Zara where the management can deliver orders by producing the goods overnight. This type of pace is seen nowhere in the fashion industry and thus it can be considered as one of the pillars behind the success of Zara.
Apart from that the brand value of Zara helps a lot in sustaining their profitability. In today’s world, where the market competition is fierce, the management needs to sustain their reputation to maintain the customer base (Bruner et al., 2017). Thus, it can be said that, the organization has gained enormous success because of three major points and those are the excellent supply chain management, appropriate process model for the organization and the huge brand image in the global market.
Zara – Control over Distribution and Sourcing
In this section of this report a contrasting study has been provided, where Zara’s strategies of doing business will be contrasted with another successful fashion organization and with a fashion organization that has not tasted desired success yet. To contrast the business strategy of Zara with a successful and another unsuccessful organization, Gucci and TopShop can be chosen respectively.
Gucci
Gucci is currently one of the most successful apparel companies in today’s world. In the last financial year the organization generated a profit of 4.3 billion US dollars and their growth in profitability is almost 28%.
The management of Gucci quite like Zara’s management believes in not outsourcing the jobs and they are not dependent on any third party organizations for the processes of the business. Gucci currently owns 10 warehouses and with the help of their own delivery fleets, the organization can deliver products in more than 300 nations around the world (Alexander, and Heyd, 2014). Quite like Zara, Gucci has earned a huge brand value over the years that help the management to sustain the customer base in the oddest situations in the market.
The management of Gucci ensures that the products they are delivering are of the highest quality to sustain their reputation in the global market. Like Zara, the target customers of Gucci are also the solvent individuals who would pay a sizable amount to get a product of the highest quality and of the unique design (Bruner et al., 2017). Thus maintaining quality is one of the most important tools for the management of Gucci to sustain their profitability over the years.
Unlike Zara, the management of Gucci is quite inclined towards investing a fortune for the advertising activities. The directors of Gucci believes that in the current global market, to sell products whose prices are on the higher side, the organization needs to make people believe that they are paying for the best in class products, otherwise they would not be able to sustain the profitability for the long term. The management of Gucci spends a lot of money for advertising purpose, currently they are focusing on the digital promotional works along with paying celebrities to do word of mouth publicity for them. In this way they can connect to more individuals. The management of Gucci has planned their marketing ideas in this way, as their target customers are either teenagers or the adults from the age group of (20 to 35 years) age.
Gucci quite similar to Zara has a centralized business process that allows them to deliver products within a short period of time while maintaining the quality of the products. Thus it can be said that Gucci has become one of the highest revenue generator organization in the global market.
TopShop
TopShop is a global retailer of clothing, shoes and cosmetics headquartered in UK. TopShop was initially founded in the year of 1960 and later on their business expanded and become a global brand. In today’s global market, the organization owns over 510 shops in United Kingdom and more than 300 stores in the global market. TopShop became one of the leading business organizations with respect to their productivity and profitability, but in the last few financial years it is seen that the management is losing the competitive advantage in the global market and somehow incurring loss (Xia and Wong, 2014). The management of TopShop planned a five year expansion plan in the year of 2011 and somehow it was seen that the planning was not successful as it was expected to be.
Zara – Rapid-fire Supply Chain
In recent years there has been some controversies regarding TopShop and it was seen that there has been some controversies regarding various policies and tax arrangements made by the management of the organization. The most concerning situation raised when it was found that the management was using cottons picked by ‘slave labor’. These situations potentially ruined the reputation of the organization and it was evident that the organization will end up losing their competitive advantage in the global market and incurred losses (Chu, 2016). Apart from these issues, in the year of 2013, pop star Rihanna filed a lawsuit against the organization to use her image officially without having any consent from her end. The organization was also criticized for using abnormally tall and skinny mannequins in the stores and several complaints were found online and in the complaint boxes provided by the management.
The business strategies taken by the management of TopShop is quite different from the strategies chosen by the management of Zara and Gucci. TopShop’s directors are somewhat has an inclination towards outsourcing the jobs and that is why maintaining quality has become a matter of concern for the management of the organization.
The management of TopShop is somehow planning to enhance their CSR (Corporate social responsibility) to improve their reputation in the market, as the above mentioned controversies and deliverance of products of bad quality has ruined their reputation in the global market.
In the global market full of competition the management of Zara is sustaining the competitive advantage because of four main pillars behind their success.
The management of Zara is focused in maintaining the quality of the products as they believe that the quality of their products have helped them to achieve success in the global market and that is why there can be no question of compromising with the qualitative factors (Xia and Wong, 2014). Thus by producing best in class products, the management of Zara is aiming to sustain their competitive advantage.
Though Zara is a global brand and delivers good quality products, keeping in mind the affordability of their target customers along with the affluence of the individuals in many countries, the management of Zara has set a moderate pricing on their products.
The management of Zara has a tendency to expand their business in the global market and that is why currently they are operating in more than 50 countries across the world. As the business of the organization is currently widespread and the customer base has become huge, the organization is currently experiencing a lot of revenues getting generated in each financial year (Alexander, and Heyd, 2014). Thus, it can be said that the organization can experience huge competitive advantage as the business is quite expanded in the global market.
Zara over the years has achieved a huge brand value that is providing them a constant customer base and that is one of the most important pillars behind sustaining the competitive advantage in the global market. It is seen that the organization currently has a huge brand value and that is helping the organization immensely to sustain the customer base of the organization. It is seen how the management of the organization is using their brand image to expand their business and improve the profitability of the organization.
Zara – Brand Value
As in today’s world Zara has become a reputed organization, thus the other organizations operating in the same field should adopt some of their business strategies to achieve desired success (Alexander, and Heyd, 2014). It is seen that the strategies like improving the quality of the products, modifying the pricing structure according to the affordability of the target customers and having the mentality to expand the business can be adopted by the other organizations to improve their profitability.
In today’s world, the awareness regarding the products has increased heavily and thus, the management of business organizations should consider the fact that they should stress on improving the quality of the products. If a business organization incessantly continues to deliver good quality products, with ease the organization will be able to establish itself as a reputed brand in the domestic or global market. Thus, it should be a duty of the managers to keep an eye on the quality control in their organization.
The pricing is another important aspect of sustaining the customer base. The managements of the business organizations should keep in mind this fact that they should make the pricing in a way so that their target customers comfortably can browse their products and is able to purchase the products (Agrawal and Smith, 2015). Thus it can be said that to gain competitive advantage the organizations can choose to make a moderate pricing in their products just like the management of Zara did.
Apart from that another important issue is to have a mentality to expand the business serves the purpose of increasing expanse of the business. The management of the organizations must try to reach the global market to sell their products. In the domestic market, the chances of getting desired profitability might be challenging, but when a company expands their business in the global market, naturally they will experience many opportunities there.
Conclusion
Thus to conclude, it can be said that in a very short period of time, the management of Zara has been able to establish the business in the global market and already have earned a solid reputation in both the domestic and global market. Currently the brand Zara is the largest retailer chain operating in the fashion industry. It is seen that it is the excellent business strategies chosen by the management of Zara that has enabled the organization to taste success in a short span of time, and thus it can be said that the organizations which are struggling to adapt to the changes of the globa market and losing the competitive advantage; can surely try to use some of the strategies taken by the management of Zara. Gucci is an extremely successful retail chain in the global market despite having some strategies that are directly opposite to some of the strategies taken by the management of Zara. On the other hand, TopShop is also an organization operating in the fashion industry, but currently they are lagging behind in the market competition as, to deliver products faster, they have compromised with the quality of their products to some extent. This is something that might potentially the reputation o an organization and being an well established organization, TopShop did not have to face any major changes and they still have time to recover the losses. In this scenario, the management of TopShop can surely take up some strategies taken by the management of Zara.
Contrasting Zara with Gucci
In this present scenario, the management of Zara can make some strategic changes to make most of the situation. As in the changing market some of the old organizations which are already established in the market and used to have a loyal customer base are missing out the competitive advantage; the management of Zara can definitely use the occasion and make the most of the situation.
The management can split the shifts of the employees into two parts and lower the shift hours. Currently the labors are putting in 8 hours of labor at a stretch. If the management makes it a double shifter industry, then half of the workers can work the first half of the day and the other part of the workforce can work in the second part of the day. In this way the workers can work with full energy and motivation, and the rate of perfection will be much higher.
The management of Zara can stress on the technological improvements to make the production faster than before and to keeping the quality good as before. In today’s world, the management should continue to improve their performance to sustain their competitive advantage in the global market.
References
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