An average street store in Spain expects customers to visit 3 times a year. But for Zara, the expectation is that customers should visit about 17 times a year.
Zara’s super efficient supply chain
Zara’s vertically integrated, highly responsive supply chain allows the export of apparel 24 hours a day, 365 days a year, as well as shipping new products to the store twice a week. After the product was designed, it took them about 10 to 15 days to reach the stores. All clothing items are processed (checked, sorted, tagged) through a distribution center in Spain. In most cases, clothing items are delivered to stores within 48 hours. It also helps eliminate warehouse demand and reduces the impact of demand fluctuations. Zara produces more than 450 million items and launches around 12,000 new designs every year, so the efficiency of the supply chain is crucial.
Frequency of collecting customer details: Information trends move into the database at headquarters, used by designers to create new lines and modify existing ones.
Standardize product information: Zara Warehouse has standardized product information with common definitions, allowing quick and accurate preparation of designs with clear production instructions.
Product information management and inventory management: By effectively managing thousands of their fabric, decoration and design specifications and physical inventory, Zara is able to design a fabric that already has the necessary materials.
Shopping strategy: About two thirds of the fabric is not dyed and purchased before the designs are finalized.
Production approach: Zara uses the “make and buy” method. That is, they will create more fashionable and risky items (need testing) in Spain, and will outsource the production of standard designs with higher predictive demand in Morocco, Turkey and Asia to reduce production costs. More fashionable and risky items (about half of ZE’s products) are produced in more than a dozen factories owned by the company in Spain (Galicia), Portugal and Turkey. Clothing with a longer shelf life (for example, the one with a more predictable need), such as basic t-shirts, are outsourced to low-cost suppliers, mainly in Asia. Even when production is in Europe, Zara still tries to reduce costs by assembling in small outside factories.
In addition to the effects of this supply chain, Zara can also modify existing items for at least 2 weeks. Shortening the product life cycle means greater success in meeting consumer preferences. If a design does not sell well within a week, it will be withdrawn from the store, subsequent orders will be canceled and a new design replaced. Zara closely monitors changes in customer preferences for fashion. The brand also has a range of basic designs made from year to year, but some of the latest trendy, trendy fashions can stay on shelves for less than 4 weeks, encouraging guests to The goods carry out repeated visits. An average street store in Spain expects customers to visit 3 times a year. But for Zara, the expectation is that customers should visit about 17 times a year.
Culture of Zara: The word “impossible” does not exist
Zara employs a lot of young talents who quickly advance through the many positions of the company. 90% of store managers go up from inside the company. The brand creates a culture of assigning responsibility to young people and a culture that encourages adventure (as long as you learn something) and done fast (mantra of fashion).
Senior managers give store managers full freedom and control of store operations and performance with clearly defined cost, profit and growth goals.
In addition, when an employee is selected for promotion, the store will develop a comprehensive training program for that individual with the personnel department, receive additional periodic training, reflecting Zara’s commitment to talent development.
Customers are the most important source of information for Zara, but like any other fashion brand, Zara also employs trend analysts, customer review experts and retains some good talent. the most in the fashion world. Zara’s creative team consists of more than 200 professionals. They all embody and adhere to the company’s philosophy that words “can not” does not exist in Zara.
Zara encourages a culture of exchange. Sales and marketing teams who receive feedback tend to speak regularly with designers and sellers. It is important to have constant two-way communication so that sales and marketing teams can talk about new streams for customers. Production planning is also closely coordinated so there is no wasted time on approvals. The design team also focused on carefully interpreting the catwalk trends that fit the mass market – Zara’s customers. The product design and development team works closely to produce 1,000 new models each month.
Zara has no main designer. All of its designers are uniquely independent in approving products and campaigns, based on daily data sources that indicate which types are popular.
Another important reason that makes Zara’s employee strategy so successful is the fact that it empowers its employees to make decisions based on data. Zara has no main designer. All of its designers are uniquely independent in approving products and campaigns, based on daily data sources that indicate which types are popular.
Due to customer focus, the entire business model is designed so that the demand for finished goods is the direction of the production process, instead of producing according to the available materials.
Zara brand communication strategy
Similar to Apple, Zara has almost no advertising policies. Zara spent only 0.3% of its revenue on advertising compared to the 3.5% average of competitors. The founder of Amancio has never spoken to the media nor tried to advertise Zara. This is really a sign of a truly successful brand when customers appreciate and loyal to that brand.
Instead of advertising, Zara uses her store location and display in the store as a key element of her marketing strategy. By choosing the most prominent places in the city, Zara ensures a very high number of visits. In the introduction screen / banner there will be the most prominent parts in the collection. Following Zara’s fast fashion philosophy, window screens are constantly changing. All Zara employees are required to wear Zara clothes when working in stores, but these “uniforms” vary from different Zara shops to reflect the socio-economic differences in the regions in which they live. This effectively communicates Zara’s focus to the mass market as well as being close to customers.
To exploit the emerging e-commerce trend, Zara launched its online store in September 2010. The site was initially available in Spain, England, Portugal, Italy, Germany and France, and has been expanded to Austria, Ireland, Netherlands, Belgium and Luxembourg. For the next 3 years, the online store was present in the United States, Russia, Canada, Mexico, Romania and South Korea. In 2017, Zara’s online store launched in Singapore, Malaysia, Thailand, Vietnam and India. More recently in March 2018, the brand launched online in Australia and New Zealand. By 2017, online sales accounted for 10% of Zara’s global sales.
The Zara brand was born with customer acumen. It is the ability to understand, anticipate and provide our customers with fashion priorities and affordable prices. In addition to an effective supply chain, the customer’s brand ability to create co-creative designs is unique and give it a competitive advantage. Most fashion trends often start unexpectedly, originating from uncommon places.
In a world flooded with Big Data and collected more at a faster rate than before, brands still need to be careful and observant. Because big data does not provide answers to all business challenges.
One of the secrets behind Zara’s global success is culture and respect for the fact that no one is more responsible for the authenticity and the better of the customers themselves. This philosophy should be further reflected in all upcoming business strategies.
So why not consult your customers to get started? Zara always like that.
* Source: Economic life