Design Management Group

Zara fashion

Zara is the flagship brand of Spanish fashion group Inditex. The first Zara shop opened in La Coruna, Galicia, in 1975 and there are now over 400 Zara stores around the world. With year-on-year sales increasing at around 25% over the last 5 years, it has become one of the world's fastest growing retailers.

What sets Zara apart from the rest of the high street fashion retailers is that it has adopted a vertically-integrated business model covering design, just-in-time production, marketing and sales. Whereas a company such as H&M sources clothes from more than 900 firms, Zara makes more than half of its clothes in-house, at design and manufacturing centre in La Coruna.

The organisation is geared around speed and responsiveness. Using daily sales data from stores, supplied by a surprisingly minimalist IT system, designers can react to what is and isn't selling. Zara can make a new line in 3 weeks, against an industry average of nine months. This lead-time advantage lets Zara operate with lower inventory levels and permits frequent line changes, giving buyers a sense of exclusivity. Zara store managers place their twice-weekly orders using a PDA.

Zara designers are on a constant lookout for new ideas to keep the product line fresh. Breaking fashions can be quickly introduced in the shops, yet the business model helps guard against the risk that a new item may not sell. Zara introduces 11000 new garments in a typical year. Many lines will only be available for a matter of weeks before being replaced.

Further information

• Zara website
• Inditex corporate website
• Floating on air, Economist Vol 359, Issue 8222, 19 May 2001. Online version: Zara: A Spanish clothing chain's recipe of centralisation and integration, ebusinessforum.com, 21 May 2001
• McAfee, A. (2004) Do You Have Too Much IT? MIT Sloan Management Review, Vol. 45 Issue 3, p18-21
• Tungate, M. (2005) Fashion Brands: branding style from Armani to Zara, Kogan Page

All trademarks acknowledged.