ZARA-IT FASHION INDUSTRY

HISTORY Founded by Amancio Ortego. In 1963, started clothing factories and believed retailing and manufacturing are closely linked. Zaras 1st store in La Coruna in 1975. Jose Maria castilano rios joined company as an IT manager. SPEED AND DECISION MAKING Ortego and Castilano shared 2 beliefs: a. Quickly respond to the demand of target customer i.e. young, fashion-conscious city dwellers. Fashion Missses style coming in with extensive advertising and through which new style could appear suddenly. Zara wanted to produce styles which were hot.

b. They wanted to take advantage of intelligence and trust and the judgment of employees throughout the company instead of relying on a small set of decision-makers. Zara store managers decided what garments on sale at stores, placed orders for items they would sell. Group of people at La Coruna are called commercials as had power to decide what clothes to be designed and produced.
Zaras Collection was not designed by small elite team. 2 designers, 2 product managers - purchased material, placed production order and set prices.

 Another group of Commercials called Store product Managers. These had close proximity to product teams, travelled a lot and saw what consumers are demanding more.
DE-CENTRALISED DECISION-MAKING Employees decided to which clothes each store would order. If orders of 2,3 more stores exceeded availability, Commercials decided which store would get.

MARKETING, MERCHANDISING, ADVERTISING Main competitors H&M, Gap, Benetton. Zara did know advertising. Only placed ads for promotion just twice- once at the time of sale and other at opening of a new store. Marketing expenditure : Zara- 0.3% of revenue Competitors- 3-4% of revenue Spent on location as used to choose best prime locations. Store used to change layout every 4-5 years. Changed more frquently the window display, sales rack and artwork.

PRICE OF PRODUCT Individual stores had no freedom to set price, product managers used to do it. In Spanish market, prices were established and dominated in Euros. And other countries fixed % of the baseline.(distribution cost, market conditions)
Zara clothes are of short life-span and cant be worn more than 10 times. Implication: 1. customers bought product on spot as new range would be launched by next visit. 2. Customer often visit the store because of new styles. 3. Clothes not highly durable.

 Zara not sold online- 1. as distribution centers not made for picking small orders and shipping them. 2. complicate to handle returns of merchandise bought online.
FINANCIAL GROWTH In 2003, 1558 stores, 45 countries, 550 part of Zara. France- largest international market- 60% Women sales, 20% Men, 20% Children. Earning tripled in 1996 and 2000.