...Zara is a Spanish brand of clothing store founded by the visionary Amancio Ortega Gaona and Rosalia Mera in Artexio, Galicia. The first Zara store opened in 1975 in La Coruna, a port town near Arteixo in the corner of northern Spain. It is one of the major selling brands of one of the biggest fashion retailer of "INDITEX". Zara is now available in 86 countries with total of 1,763 stores worldwide. Zara designs, manufactures, and sells apparel, footwear, and accessories for women, men and children around the world. Offering a high level of fashion at a reasonable price, effectively appealing to the middle to middle-high class customers. Further, Inditex itself is a huge fashion retailer company that owns eight other brands such as Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and lastly Uterque. unfortunetly these other five chains that are operated by Inditex have not matched the growth capabilities or revenue of Zara. Amancio Ortega, the founder of Inditex, was established in the year 1963 has adapted a unique business model, which were innovative and flexible, making Inditex one of the biggest retailers in the world. Among Inditex other, innovations, the company is introducing new methods to enable store managers to order and display merchandise faster and adding cargo routes for shipping goods. Unfortunetly inditex is respnding to difficulte situations shared by other companies that came up with other game changing plans. eventualy competitors...
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...dig further into them. Background: Inditex is an international fashion retailer that designed, manufactured and sold apparel, footwear, and accessories for women, men, and children through Zara and other five chains around the world. The six retailing chains were organized as separate business units within an overall structure that also included six business support areas and nine corporate departments or areas of responsibility. They are separate in the sense that each chain is responsible for its own strategy, product design, sourcing, and manufacturing, distribution, and image, personal and financial results. Inditex was based in the northwest of Spain; it also operated about 20 manufacturing and distribution facilities in the region It is most interesting to compare Inditex with its largest competitor-Gap- as Gap have the highest market capitalization of all Inditex competitors, the highest operating revenues and largest no. of store locations worldwide. So when comparing the financial results of Inditex with Gap we find out that: Gap Vs Zara: Gap had achieved stellar growth and profitability in the last ten years; it was one of the largest specialist apparel retailers in the world ahead of Inditex. It owned most of their stores but outsourced all production in contrast wit Inditex. Nevertheless it ends with a massive a decline in its stock prices and the departure of Its CEO in 2002. Although Gap and Zara follow the same business model, Zara's business model improved...
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...Case Study: Zara, IT for Fast Fashion EXECUTIVE SUMMARY The action recommended is to purchase a new POS system to support integration of all levels of the business from manufacturing to the customer. Because of Zara’s current solid financial position and leader in the marketplace, Zara will withstand the initial interruption of business to allow implementation of new technology due to their current solid financial position and leadership. KPIs are implemented to provide efficiencies within manufacturing, the DCs and sales to enhance the successful unique business model. ISSUE IDENTIFICATION The following are a list of issues/problems that must be addressed: • DOS system is no longer supported by Microsoft • In-house applications created by vendor • Writing applications versus buying applications • Transparency between stores • Order processing time • No formal IT process for setting budget or deciding on specific technology, investments or projects • Store managers scope of responsibility is high versus no discretion for store layout • No performance measures • No forecasting, buy and respond “on the fly” • Not high end fashion • High capital costs for DCs, manufacturing, and factories • Small batch production ENVIRONMENTAL AND ROOT CAUSE ANALYSIS 1. DOS system is no longer supported by Microsoft since 2003. Zara chooses to write all their applications in house. This matches the philosophy for...
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...Zara: IT for Fast Fashion Abstract The case describes a discussion Zara Executives are having whether to update or to keep the current IT equipment of its stores. It goes into detail how the company works and that speed and adaptability are its key objectives. Finally the advantages of both options are shown, leaving it to the reader to decide which option is the best. Company Zara, based in La Coruna, Spain, was found in 1963. Since 1958 they are part of Inditex, a Holding Company atop several clothing retail chain. In 2002 they had about €3.9 billion in revenue and a net income of €438 million, with 11% net margin. Zara is the biggest retailer of the holding with 550 of the 1558 stores from the Inditex companys. Moreover it is responsible for 73,3% or Inditex’ revenues, coming 46% from Spain, with Fance as the second-largest market. Zaras woman sector has 60% contribution to its revenues; men and the fast-growing child sector both 20%. Product/System The store employees work with great autonomy and responsibility. They can choose which items they want to order from a given offer, which was chosen by the Product Store Manager. Each department gets new items 2 times a week. Commercials organize that orders and produced items match and decide in case of a mismatch which store gets the items. Zara does all of the production processes in Spain and Northern Portugal, making it possible that the time from design conception until it can be in store is as little as three weeks. Business...
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...ÍNDICE 1. Zara – Fast Fashion 2 1.1. Modelo dos 7 S’s - 2001 3 1.1.1. Superordinate goals 3 1.1.2. Strategy 4 1.1.3. Structure 5 1.1.4. Style 6 1.1.5. System 6 1.1.6. Staff 7 1.1.7. Skills 7 1.2. Modelo das 5 forças de Porter 8 1.3. Análise SWOT 9 Conclusão 10 Bibliografia 11 Zara – Fast Fashion A história da Zara está intimamente ligada ao seu fundador e actual “Chairman” do grupo Inditex: Amancio Ortega Gaona. Depois de onze anos de sucesso como fabricante de roupas, Amancio Ortega decide em 1975 abrir a primeira Zara na cidade da Corunha. local onde ainda hoje se encontra a sede do Grupo. Posteriormente, e até 1985, continuou a expandir o negócio, abrindo novas lojas “Zara” nas principais cidades espanholas, culminando nesta data com a fundação do Grupo Inditex. Consolidada a estrutura do grupo, em 1988 abre a primeira loja fora de Espanha, mais concretamente em Portugal. Seguiram-se Nova York e Paris nos dois anos seguintes, para em 1991 fundar a marca Pull&Bear e comprar 65% do Grupo Massimo Dutti. A expansão internacional continua por diversos países, e paralelamente é criada a Berska e adquirida a Stradivarius, duas marcas que vieram em 1998 e 1999 aumentar a diversidade da oferta do Grupo. 2000 foi um ano de mudança, com a inauguração de um novo edifício-sede na Corunha, mas também pela contínua entrada em novos mercados. No ano seguinte, é inaugurada a nova marca...
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...Individual Assignment 1 Zara: Fast Fashion 1. + 2. Zara’s business and operating model is focused on speed and the need for fast fashion, I think a word that would classify it is mass customisation. It is targeted at young fashion and price conscious urban dwellers and is built on a vertically integrated system focussed on demand and supply. Zara is constantly updating its design and production base to deliver exactly what the client wants based on their buying habits and the latest trends. They have limited outsourcing and produce almost everything all in house. Zara is very close to its customers and provides them exactly with what they want, making Zara sell a trend value proposition at affordable prices. They can achieve this because of their integrated verticle supply chain; production time of a new product (estimated at under 5 weeks) and re-production and delivery of an existing product (estimated at under 2 weeks). Following this brief introduction it would be best to compare Inditex’s financial results with H&M as they are competing in very much the same markets and although their products and value chains are different their target consumer has the most overlap. Also GAP and to a lesser extent Benetton do not follow the fashion precisely but predict and produce in advance in bulk. Inditex despite being present in 39 countries, compared to H&Ms 14, and having over 50% more stores than H&M, they still manage to have considerably lower operating expenses...
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... 2. Build in-store networks 3. Build in-store inventory lookup capabilities 4. Build store-to-store inventory lookup capabilities 5. Build online shopping capabilities a. Customers 1. Internal – store managers; want an upgraded system to make ordering, store-to-store exchanges, and inventory easier 2. External – customers; fashion conscious, know Zara inventory turns over rapidly, want continued quickness to market, no significant price increases b. Costs – very low for current IT system, a new investment could cost as much as €43.8 million initially and nearly €340000 annually. See table 1 in Appendix. c. Competition – mainly Gap, H&M, & Benetton (see Table 2 in Appendix for financial comparison) d. Context – international brand with room to grow, particularly outside of Spain KSF – design/manufacture/deliver fashionable clothes quickly, maintain simplicity and low costs, push decisions out to front line workers Cash flows – More efficient system could reduce worker-hours needed in stores Strategy – Begin to develop POS application so that when DOS enabled systems are unavailable Zara will not be shut down People – this is a good mix of the right people; the fact that Salgado and Sanchez switch sides in the IT investment argument shows their wisdom and commitment to making the right decision a. Xan Salgado Badas – Head of IT b. Bruno Sanchez Ocampo – Technical Lead for POS System c. Jose Maria Castellano Rios – Iditex...
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...customers are young fashion conscious city dwellers. Historically this demographic of customers are hard to reliably forecast there tastes. Zara has found that their taste in clothes change rapidly and they have manufactured there clothing with the idea that they are only being warn at most of ten (10) times. Zara has a decentralized decision making model. The managers in each regional stores, throughout the company, have input of what are being stocked and sold in each of their stores, not a small set of people in their corporate office in La Coroña, Spain. These managers have the power to order what they think will sell in there stores from the collections that they are offered, plus some “test” items that are supplied from La Coroña. IT is split into 3 different processes in Zara’s business model: Ordering, Fulfillment and Design & Manufacturing. The Point of Sale (POS) System is directly used in the Ordering and Fulfillment Systems. Information Systems tracks the theoretical inventory of each SKU. Shipments increase the inventory, while sales decrease it. This inventory could be off by inaccurate record keeping, they, damage and other losses. Senior Management believed having a 100% accurate inventory is too expensive, where 95% is good enough. Zara has no CIO (Chief Information Officer) and no formal process to set the IT budget. There is no formal justification for IT effort, nor does any cost Benefit analysis for their projects. Zara has a 50 member IT...
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...Caso Zara: “Moda Rápida” 1. ¿Qué tan sostenible es la estrategia competitiva Zara? Zara tiene múltiples ventajas competitivas que la han hecho ser exitosa a través de los años. Según José María Castellano: “Nuestra estructura nos da tremendas ventajas sobre la competencia.” Una de sus ventajas es que fabricaban internamente sus productos más sensibles a la moda; incluyendo los textiles. Esto le da un control total a Zara en cuanto a la calidad, cantidad y tiempo de entrega de sus productos. Luego de ser fabricados, los productos se envían directamente de los centros de distribución a las tiendas dos veces por semana eliminando la necesidad de almacenes y manteniendo los inventarios en un nivel bajo. Además, el recibir mercancía dos veces en semana es una herramienta que logra que el consumidor regrese a la tienda a observar las nuevas piezas de ropa. Otra característica que hace a Zara una tienda exitosa es que se mantenía a la par con la moda, no tenía que esperar a que las tendencias pasaran para entonces venderlas. Esto era posible ya que Zara era capaz de crear un diseño y tener los artículos acabados en las tiendas en un plazo de cuatro a cinco semanas; en comparación con la competencia que podía lograr lo mismo en un periodo de seis meses para el diseño y tres meses para la fabricación. La mayoría de los clientes de Zara son innovadores en el mundo de la moda; por tal razón es importante la rotación rápida de inventario. Otro estrategia importante es la...
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...Case: “Zara: IT for Fast Fashion” Issue Zara, the flagship chain of Spanish based holding company Inditex, has grown to great prominence in the international retail fashion industry. It has done so by advantage in recognizing and responding to changing fashion. Recognizing and quickly responding to the changes in fashion trends is largely achieved through a collaborative system of store managers and mid-management level commercials. The exponential growth of Zara has been upon the backbone of a reliable but increasingly antiquated IT system that begins to counterproductively threaten the speed by which the majority of the 32,535 employees operate. At the center of the technical issue is the Point of Sale (POS) system commonly used in each of Zara’s stores. Focal Stakeholder Opinion It is an open issue frequently in the mind of Xan Salgado Badas, the head of IT for Inditex. The current POS system exists in each store as a non networked terminal operating upon the outdated Disk Operating System (DOS). Though incredibly stable and familiar to Zara’s employees, it proves to be increasingly lacking in functionality across the current and future needs of the expanding international chain (McAfee, Dessain, Sjoman, 2). The heart of the issue is not a debate over whether to upgrade the operating system and the POS application itself, but rather when and how to facilitate such a large modernization. Salgado’s advisor Bruno Sanchez Ocampo expresses, “We could mess it up in the process...
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...ZARA :IT FOR FAST FASHION CASE EXECUTIVE SUMMARY I would highly recommend a company like Zara to adopt new windows/ Linux based operating system. Skyscrapers are not built on weak foundations and in this case, everyday, the company is achieving new heights. Their SCM is fast and flawless, but if the terminal vendor changes it's machine design and makes it incompatible with DOS, the success story will be in doldrums. Even if the IT department buys enough POS terminals, it still means the company is putting a limit on its growth. Will the company not open any more stores when their inventory for POS terminals depletes out? Speed is the essence in today's business and a speedy supply chain is the real strength of ZARA. There is no point in keeping a lame horse in a stable of fast ones. With the new system in place, every location can have a theoretical inventory of all stores. Unsold merchandise from a location can be quick and cost effectively moved to another close location, thus giving better response time to customer demands as well as saving transportation costs. On the cost front, the total cost for upgrading the system is 13.3 Million Euros, and with debt to assets ratio of just 41.57%, upgradation cost can be very easily met. Also the company has fixed assets to current ratio of 123 %, which is way higher than any competitor, and with this high...
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...ZARA :IT FOR FAST FASHION CASE EXECUTIVE SUMMARY I would highly recommend a company like Zara to adopt new windows/ Linux based operating system. Skyscrapers are not built on weak foundations and in this case, everyday, the company is achieving new heights. Their SCM is fast and flawless, but if the terminal vendor changes it's machine design and makes it incompatible with DOS, the success story will be in doldrums. Even if the IT department buys enough POS terminals, it still means the company is putting a limit on its growth. Will the company not open any more stores when their inventory for POS terminals depletes out? Speed is the essence in today's business and a speedy supply chain is the real strength of ZARA. There is no point in keeping a lame horse in a stable of fast ones. With the new system in place, every location can have a theoretical inventory of all stores. Unsold merchandise from a location can be quick and cost effectively moved to another close location, thus giving better response time to customer demands as well as saving transportation costs. On the cost front, the total cost for upgrading the system is 13.3 Million Euros, and with debt to assets ratio of just 41.57%, upgradation cost can be very easily met. Also the company has fixed assets to current ratio of 123 %, which is way higher than any competitor, and with this high...
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...Zara: IT for Fast Fashion Case Alternatives |ISSUE |PRO |CON |ALTERNATIVE | |POS System – Upgrading |1) Avoid future issue, such as|1) Cost lot of money and time |1) Purchase extra terminal to avoid | | |software can not work with |to do the new system |software and hardware issue for now; | | |hardware; | | | | | |2) Takes time to find out if |2) Analyse/Test new IT system and | | |2) New system can support more|the new IT system and operation|operation system at same time. | | |function, such as check |system can work well as | | | |inventory; |expected. | | | | | | | | |3) Place order more flexible; | | ...
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...May 20, 2013 Table of Content Summary 2 Introduction of Zara 2 Porter’s Six Forces model in Zara 3 Existing competitors 4 The bargaining power of suppliers 4 The bargaining power of customers 4 Potential competitors 5 Alternative products or services 5 The power of cooperative dealer 6 IT is the heart of ZARA mode 6 Track fashion with the information base 6 Information standardizing and optimizing design 7 Zara’s competitive advantage – based on value chain perspective 8 Design 8 Marketing 9 Conclusion 12 ZARA's Informational Rapid Response Mechanism and Fast Fashion Summary In recent years, with the unique marketing strategy, fast fashion apparel business has developed rapidly in the world. Some of enterprises engaged in the fast fashion business have obtained considerable sales and global business expansion, it can be said that fast fashion has been become one of the most valuable fields in the clothing industry, and carrying out fast fashion business has become an ideal choice for clothing enterprises to develop rapidly and create performance (Hayes & Jones, 2006). In this paper, it chose an international fast fashion clothing brand--ZARA of Spain, which is characterized on marketing and has won widely recognized worldwide, as the research object. Through the analysis of the brand's marketing strategy, it interprets the universal business model used the fast fashion clothing brand to do business. This paper adopts the method of...
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...the fast fashion industry Table of Contents 1. Introduction 3 2. Industry environment of fast fashion 4 2.1 PEST analysis 4 2.2 Five forces analysis 6 2.3 Summary of findings 7 3. Analysis of Zara and H&M 7 2.1 Analysis of Zara 7 2.1.1 Vision, mission and objectives 7 2.1.2 Internal analysis 8 2.1.3 Business model canvas 8 2.1.4 Value proposition canvas 9 2.2 Analysis of H&M 10 2.2.1 Vision, mission and objectives 10 2.2.2 Internal analysis 10 2.2.3 Business model canvas 11 2.2.4 Value proposition canvas 12 2.3 Summary of findings 12 4. Comparison of business models between Zara and H&M 12 4.1 Comparison of business models 13 4.2 Comparison of value proposition canvas 14 4.2 Summary of research insights 14 5. Development of a new entrant 15 5.1 Strategic model 15 5.2 Business model canvas 16 6. Reflection on strategic insights 16 7. Conclusion 17 References 18 1. Introduction Fast fashion is a sub sector of the fashion industry that boasts fast response to consumer demand and efficient distribution of materials and products in the global landscape (Hines and Bruce 2007). Hines and Bruce (2007) also imply that fast fashion could quickly identify and capture business opportunities and transform them into products in a timely manner. As fast fashion retailers need to deliver trendy apparels to end customers, low cost production and efficient distribution become primary trends of fast fashion industry...
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