What are the company’s competitive advantages? Zara is ‘fast fashion’. In order to proof this statement we are taking a look at different components where we can see their competitive advantages. Design The designers go to fashion shows, they develop sketches and while they select fabrics, the price of each product is already determined. The collection has to arrive in the stores at the start of the selling season. In order to keep up with the trends they not only look at the sales data but they also have frequent conversations with the store managers.
They do this trough the whole season, not only at the end. When there is an obvious trend, they adapt their products immediately , if possible. Sourcing and manufacturing They have an efficient process: it took only one week to finish fabric. Zara’s factories are heavily automated and focused on the capital-intensive parts, the final finishing and inspection. In 1990 Zara did an investment for using just in time management. Distribution The director of logistics of Inditex (Lorena Alba) regarded the warehouse as a place to move merchandise rather than to store it.
The clothes never stayed longer at the distribution center than three days. The distribution center is more than needed. For example: At the beginning of the two selling seasons there are more than 1000 workers employed in the distribution center in Zaragoza (Spain). Retailing & merchandising The price of Zara’s clothes are supposed to be lower than the price of most competitors. This is possible because of a shortened supply chain, reductions in advertising and markdown requirements.
Zara spent less revenue on advertising compared for most specialty retailers. Because they only advertised at the end of the season with the start of a sales period, they did not create a strong Zara image of a specific target group (like Mango did with ‘Mango Girl’). Zara wanted to create a climate of scarcity and opportunity. The client walks into a beautiful store with the latest fashion. If they see something nice, they have to buy it at that moment because the fashion changes and will be replaced within a few weeks.
Zara did make some design mistakes but these clothes would be sold at other Zara stores (in other countries) or disposed of to a separate chain of close-out stores. Store operations Zara is always located in a big and important upscale street in a city. They relocate their stores when it is needed, when the shopping environment has changed. Older stores get a makeover. They are getting bigger and bigger every year. The store is the market image of Zara. The window and what the employees are wearing is important and all decided by the management.
