Chiến lược kinh doanh của ZARA ( tiếng Anh)

DA NANG UNIVERSITY OF ECONOMICS - - ZARA’ S BUSINESS STRATEGIES AND ITS SUCCESS Teacher: Truong Thi Phuong Trang Group: Group members: Truong Thi Ngoc Anh Le Thi Minh Trinh Huynh Cong Dinh Vo Thi Thanh Huong Class: 39k01.2 Da Nang, July 10th 2016 I Overview of Zara Zara is a Spanish clothing and accessories retailer, was founded in 1975 by Amancio Ortega and Rosalia Mera It is the flagship retail store of the Inditex group that owns other brands such as Massimo Dutti, Pull and Bear, Uterque, Stradivarius, and Bershka Zara was described as "possibly the most innovative and devastating retailer in the world.” by Louis Vuitton Fashion Director Daniel Piette Zara has also been described as a "Spanish success story" by CNN a History Amancio Ortega opened the first Zara store in a central street in Galicia, Spain under the name Zorba Ortega named his store Zorba after watching the classic film Zorba the Greek, but apparently there was a bar that was called the same 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 During the 1980s, Ortega changed the design, manufacturing, and distribution process to reduce time and react to new trend in a quicker way, which he called “ Instant fashions” The improvement included the use of information technologies and using groups of designer instead of individual In 1988s, the company started its international expansion through Porto, Portual In 1989, it entered the United States In 1990s, it expanded through France (1990), Mexico( 1992), Greece( 1994), Belgium and Sweden( 1994), ect until reaching its current presence in over 88 coutries b Products Zara stores have men’s clothing and women’s clothing as well as children’s clothing Zara’s products are supplied based on consumer trends Zara produces over 450 milion items per year c Stores There are over 2100 Zara stores located across 88 coutries Zara usually selects the best located and most expensive real state locations in the world to open flagship store I ZARA’s business strategy: Manufacturing: Like other clothing retailers, Zara introduces a winter and a summer collection each year However, Zara delivers new products twice each week to its stores around the world This adds up to more than 10,000 new designs each year! It takes the company only 10 to 15 days to go from the design stage to the sales floor while their competitors spend up to over months in this period This is the biggest competitive advantage compared with their peers in the industry The important factor that contributed to this is the manufacturing of Zara which is a combination of the flexible and fast resources in Europe (mainly in Spain and Portugal) and low-cost resources in Asia This is in contrast to most other manufacturers, who mainly produce in Asia Approximately 40% of production capacity is by Zara itself Products with high uncertainty are made in Europe, while the products which can be predicted with greater accuracy are made in Asia Over 40% of the procurement and production is done at the time of promotion season started, compared to less than 20% of other retailers at the start of the promotion This delay allows Zara to reduce inventories and the errors in forecasting Moreover, since Zara does not depend on a complex global supply chain, the company does not have to make accurate sales forecasts Instead, Zara's design teams simply make an initial guess for the number of items needed and communicate the number to the factories Once the clothes arrive in the retail stores, the sales figures tell the company whether production levels should be quickly reduced or increased The local factories can adjust to these needs very quickly If clothing is not selling in a particular store, they can quickly adapt The flexibility and speed of Inditex has helped the fashion retailer to success and expand strongly Products: Zara is known as the Coca Cola of fashion Such is the craze of this brand among the fashion enthusiasts One of the major strength of the company is that it is able to respond very quickly to the changing needs of the customers Its unique selling preposition is to imitate or create the latest trends Zara copies fashion by adapting couture designs It manufactures, distributes, and retails clothes within weeks of the original design appearing on catwalks runway It owns the entire value added chain and competes on the basis of speed to market, having invented the concept “fast fashion” Zara main competency is selling fashionable and trendy clothes with high range of variety Zara designers are on a constant look out for new ideas to keep the product line fresh Zara designs around 10,000 new models every year and replenishes ranges within every one of its 650 retail stores twice per week, but in strictly limited quantities of stock This ensures Zara’s brand promise to customers of exclusivity, and also of design freshness Warehouse The entire products is in more than million feet of Zara distribution center in LA Coruna or similar parts in Zaragoza, northeastern Spain LA Coruna center is times larger than the Amazon warehouse The center distributes 2.5 million items per week and no items is in the warehouse more than 72 hours Clothing is ironed an then on hooks with stocks and prices attached to each Instead of struggling to find products in the inventory at busy time, employees in Zara’s shops just simply move products from the box to the shelves, spend most of their time to create increased value by helping customers find what they want The system stores There are more than 2,100 Zara stores located in 88 countries Zara often chooses the best places, the prime locations are often luxurious shopping streets in the world like New York's Fifth Avenue, the Champs-Elysees in Paris, Regent Street in London With an extensive distribution system, Zara products had to hand customers worldwide Zara’s stores represents main purposes: to show its face to the world and to perform the function of marketing research firm root Most products in the fashion industry produces are used in a very limited time This is the challenge and opportunity for all fashion retailers While GAP store in Los Angeles brings virtually the same product line, in Milwaukee, each store of Zara offers to match the tastes of a clientele Moreover, customers often buy Zara’s products immediately and in full price because the products’ wheel of Zara turns very quickly, if you wait up to three weeks to purchase it will have been sold or replaced by the other products Studies have shown that the average discount rate is 50%, but Zara’s rate is only 15% which means that Zara sells 85% full-value products New designs are released in the average of every two weeks to make customers to visit stores more often The times customers go to Zara stores are at an average of 17 each year while this frequency of its rivals is only 3-4 times a year Even more impressive is virtually unused Zara advertisement you will hardly see advertised on television The company has no press office outside Spain, it also does not let fashion magazines borrow its designs for photo shoots This is because Amancio – Zara’s boss, believes that advertising is not useful at all The main window of the Zara store image is the most effective promotion The average fashion spend 3.5% of sales to advertise their products while advertising accounts for only 0.3% of Inditex Not only that, for the short time the company makes to a minimum reduction of risk as the product error The failure rate for a product line of Zara reported only 1%, while the industry average rate of 10% II ZARA Success Success: - Zara is well- known for its ability to deliver new clothes to stores quickly and in small batches Deliveries from distribution centers to stores is done twice/ week This allows the store to meet the needs of customers - The company produces about 450 million items a year for over 2000 Zara stores located across 88 countries - Zara has posted third quarter profits that will make your eyes water: £631 million How did Zara that? a) Super-fast turnaround - On average, in the garment industry, it takes more than months for a new product from design to sell Zara has done this with a period of about to weeks This speed lets Zara introduce new products and changed weekly, 75% of its products has been sold in about three to four weeks - By the start of the season, Zara has prepared 50 or 60 per cent, this means the remaining 50 to 40 per cent is still up for discussion; so that if a new trend appears, Zara still has the capacity to follow it and get to stores, while its competitors can’t b) Zara listens to its customers - Twice a week, store managers send an order to HQ These orders take into account not only sales data from the store but also anecdotal evidence from customers c) It has perfected online shopping - Zara.com is a good online sales site with multiple functions to make the customers feel easy and enjoyable New stock drops twice a week, on Mondays and Thursday, so if you don’t live near a Zara shop, you still don’t miss any stock - Zara offers an ‘in-store availability’ function, fast, free delivery on orders over £50 to either an address or Zara store of your choice d) Zara Supply chain Synergy between business and operations strategy: The company owns its supply chain and competes on its speed to market, literally embodying the idea of “fast fashion” - Just in time production: Zara keeps a significant amount of its production inhouse and makes sure that its own factories reserve 85 percent of their capacity for in-season adjustments That allows the organization to be flexible in the amount, frequency, and variety of new products to be launched - Inventory management: It avoids piling up inventory in any part of its supply chain from raw materials to finished products - Centralized logistics: Each Zara outlet sends in two orders per week on specific days and timing Every staff involved (from design to procurement, production, distribution, and retail) knows the timeline and how their activities pan out with respect to other functions III Conclusion The fundamental business strategy of Zara is very simple which is linking customer demand to manufacturing, and linking manufacturing to distribution Zara has been running their business successfully in fashion industry which is susceptible to seasons and quick changing customer tastes Zara manages most of the steps of the supply chain from design, production to self-distribute their products Zara realized that by supplying standardized products with affordable price, businesses can balance the fixed costs in the design, manufacturing, and retail trade on global retail systems and thereby obtain economic benefits of scale IV References - https://www.wikipedia.org - http://www.zara.com - http://pandora.vn - http://successstory.com/companies/zara - http://www.doanhnhansaigon.vn/goc-nhin-quan-tri/3-tuyet-chieu-cua-thuonghieu-thoi-trang-zara/1079354/ - https://erply.com/in-the-success-stories-of-hm-zara-ikea-and-walmart-luck-isnot-a-key-factor/ -