|Founded||Arteixo, Galicia (Spain) (24 May 1974 )|
Number of locations
|Óscar Pérez Marcote, Director-general|
|Revenue||€7.071 billion (2009)|
Zara (Spanish: [ˈθaɾa]) is a Spanish clothing and accessories retailer based in Arteixo, Galicia, and founded in 1975 by Amancio Ortega and Rosalía Mera. It is the flagship chain store of the Inditex group, the world's largest apparel retailer. The fashion group also owns brands such as Massimo Dutti, Pull and Bear, Uterqüe, Stradivarius, Oysho and Bershka.
It is claimed that Zara needs just one week to develop a new product and get it to stores, compared to the six-month industry average, and launches around 12,000 new designs each year. Zara has resisted the industry-wide trend towards transferring fast fashion production to low-cost countries. Perhaps its most unusual strategy was its policy of zero advertising; the company preferred to invest a percentage of revenues in opening new stores instead. This has increased the idea of Zara as a "fashion imitator" company and low cost products. Lack of advertisement is also in contrast to direct competitors such as Uniqlo and United Colors of Benetton.
Zara was described by Louis Vuitton Fashion Director Daniel Piette as "possibly the most innovative and devastating retailer in the world." Zara has also been described as a "Spanish success story" by CNN.
Origins and history
Amancio Ortega opened the first Zara store in 1975 in a central street in downtown La Coruña, Galicia, Spain. Ortega named his store Zorba after watching the classic film Zorba the Greek, but apparently there was a bar that was called the same, Zorba, two blocks away, and the owner of the bar came and said, "this is going to confuse things to have two Zorbas." They had already made the molds for the letters in the sign, so they just rearranged them to see what they could find, and they found Zara, which leaves fans wondering where the additional A came from, but there is speculation that they had more than one set of letters. In addition, the price for the letters "B" and "O" were double the price as it costs more to make them round and at the time this presented a significant cost for the new company. The first store featured low-priced lookalike products of popular, higher-end clothing fashions. The store proved to be a success, and Ortega began opening more Zara stores throughout Spain. During the 1980s, Ortega started changing the design, manufacturing, and distribution process to reduce lead times and react to new trends in a quicker way, in what he called "instant fashions". The company based its improvements in the use of information technologies and using groups of designers instead of individuals.
This international expansion was increased in the 1990s, with Mexico (1992), Greece (1994), Belgium and Sweden (1994), etc. until reaching its current presence in over 88 countries.
As of 2007, Zara stores have men's clothing and women's clothing, each of these subdivided in Lower Garment, Upper Garment, Shoes, Cosmetics and Complements, as well as children's clothing (Zara Kids). Currently their sizing on women's clothing goes to a US size 12 or a UK size 14 .
Manufacturing and distribution
Zara is a vertically integrated retailer. Unlike similar apparel retailers, Zara controls most of the steps on the supply-chain, designing, manufacturing, and distributing its products. Zara set up its own factory in La Coruña (a city known for its textile industry) in 1980, and upgraded to reverse milk-run-type production and distribution facilities in 1990. This approach, designed by Toyota Motor Corp., was called the just-in-time (JIT) system. It enabled the company to establish a business model that allows self-containment throughout the stages of materials, manufacture, product completion and distribution to stores worldwide within just a few days.
Regarding the design strategy, an article in Businessworld magazine describes it as follows: "Zara was a fashion imitator. It focused its attention on understanding the fashion items that its customers wanted and then delivering them, rather than on promoting predicted season's trends via fashion shows and similar channels of influence, which the fashion industry traditionally used.
50% of the products Zara sells are manufactured in Spain, 26% in the rest of Europe, and 24% in Asian and African countries and the rest of the world. So while some competitors outsource all production to Asia, Zara makes its most fashionable items—half of all its merchandise—at a dozen company-owned factories in Spain and Portugal, particularly in Galicia and northern Portugal where labour is somewhat cheaper than in most of Western Europe. Clothes with a longer shelf life, such as basic T-shirts, are outsourced to low-cost suppliers, mainly in Asia and Turkey.
Zara can offer considerably more products than similar companies. It produces about 11,000 distinct items annually compared with 2,000 to 4,000 items for its key competitors. The company can design a new product and have finished goods in its stores in four to five weeks; it can modify existing items in as little as two weeks. Shortening the product life cycle means greater success in meeting consumer preferences. If a design doesn't sell well within a week, it is withdrawn from shops, further orders are canceled and a new design is pursued. Zara relies on sophisticated information technology, such as PDAs with wireless transmission capabilities, in the hands of store managers, to monitor customers' fickle fashion changes. Zara has a range of basic designs that are carried over from year to year, but some fashion forward designs can stay on the shelves less than four weeks, which encourages Zara fans to make repeat visits. An average high-street store in Spain expects customers to visit three times a year. That goes up to 17 times for Zara.
On 6 September 2010, Financial Times reported that Inditex launched the first online boutique for its best-selling brand Zara. The website will begin in Spain, the UK, Portugal, Italy, Germany and France—six countries that are among the most important of the company's 76 markets. When asked about the company's late arrival to internet retailing, Pablo Isla, chief executive, said they have been waiting for online demand to build before launching into cyberspace. All items on sale at its Zara outlets would be available online and at the same prices. Customers can choose from the usual range of paying methods and opt either for a free store pick-up or paid-for postal delivery. The online return and exchange policy is identical to the store system, with shoppers given 30 days to change their minds. Queries will be handled by customer service operators or via e-mail or chat messaging. Inditex said that iPhone and iPad applications that allowed purchasing would soon be available.
On 4 November 2010, Zara Online extended the service to five more countries: Austria, Ireland, the Netherlands, Belgium and Luxembourg. Online stores began operating in the United States and South Korea in 2011. The simple website allows shoppers to filter a search for garments by; type of garment, colours, sizes, prices, reference number, etc. Customers can view products in precise detail from different angles and use a SuperZoom feature to get an exceptional close-up look at the details of each item.
In 2011, Zara entered the Australian market with a three story, 1400sqm store in the Westfield Sydney complex opened on 21 April 2011 and a second three story 1800sqm store at Bourke Street Mall Melbourne which opened on 15 June 2011. Zara will open its third Australian store in November 2011 at Burnside Village Shopping Centre in Adelaide, South Australia. It will be Australia's largest at 2,300sqm, and modelled on the design of their Fifth Avenue, New York store.
In November 2011, Zara entered the South African market with a flagship store in the upmarket suburb of Sandton, in Sandton City Shopping Complex, Johannesburg. In March 2012, Zara opened their second store in South Africa, at Gateway Theatre of Shopping in Durban. Later in 2012, a third store was opened in Cape Town at the Victoria & Alfred Waterfront mall.
In 2011, Greenpeace started a dialog with Zara to ban harmful toxins from the clothing production. In November 2012, Greenpeace published the "Toxic threads: the big fashion stitch-up" report, in which Zara was identified as the worst. In 6 of the 10 clothes that were examined, nonylphenol ethoxylates were found, and in 2 cases cancer-inducing amines from azo dyes were found. After this publication, Zara was chosen as an example as biggest retailer in the world to raise awareness. Multiple protests were held at Zara shops all over the world, demanding Zara to come up with an ambitious plan to detox its clothes and value chain.
After 9 days of intense public pressure, Zara decided to switch to a fully toxic-free production. The fashion retailer promised to stop discharging toxins for its clothing production, which also affects 7 other brands in the Inditex Group: Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Üterque. Some of the most damaging toxins will be refrained of earlier, for example PFC's will be banned by 2015. Zara also promised to make information about its suppliers discharging of toxins publicly available for at least 100 suppliers (at least 40 of which are located in China) by the end of 2013. With this commitment, Zara follows Nike, Adidas, Puma, H&M, Marks & Spencer, C&A and Li-Ning, who implemented a Detox-policy as well.
Human rights concerns
On 16 August 2011, a Brazil television show called A Liga (of the Bandeirantes TV network) accused the company of using suppliers who were running sweatshops for their outsourced production. The following day, the Regional Superintendency of Labour and Employment of São Paulo, Brazil, closed a factory that produced Zara's clothing for its poor labour conditions. Illegal Bolivians sewed clothes for 12–14 hours a day, earning about 1 USD for each dress they sewed, although the retail price in Brazilian stores was about 70 USD for the same dress. Many of the workers were forced into paying their wages to human traffickers who had smuggled them into the country. In a statement, Zara’s representatives said that the accusations of slave labour made against the retailer represent a “serious breach in accordance with the Code of Conduct for External Manufacturers and Workshops of Inditex.” They also countered that all factories responsible for unauthorized outsourcing have been asked to regularize immediately the situation of the workers involved. “The Inditex group, along with Brazil’s Ministry of Work, will strengthen the supervision of the production system of all its suppliers in the country to ensure that such cases do not occur again.”
On 21 March 2012, the Swedish investigative journalism television program Uppdrag Granskning (from Sveriges Television) reported stories of 25 Zara employees, both shop managers and staff, that testified about severe abuse and terror against Zara employees in Sweden and Europe. Zara's representative responded that the company will investigate and solve these problems. The union of shop workers, Handels, responded that Zara had promised improvement and was breaking its legal agreements and Unionen, which organises white-collar workers such as shop managers, called Zara's management style "management by fear".
There are over 2000 Zara stores located across 88 countries. Some Zara stores operate as Lefties stores instead of Zara, a brand for low-cost fashion.
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