The Secret Of Zara’s Success: How It Went From Just 30 Euros To Opening Over 7,000 Stores Worldwide
Zara has gone a long way since it began its adventure in 1975 with a meager budget of 30 Euros. Today, Zara is one of the most well-known fashion brands in the world, and it is among the most successful fashion companies in its industry. Inditex, the parent company of Zara and one of the largest distribution groups in the world, owns Zara.
It has been expanding both its variety and its reach, and it now owns about 7,000 stores across the globe. This expansion has included the addition of apparel for men, women, and children, as well as shoes, accessories, and other fashion products. Let’s take a look at the secret of Zara’s success.
Amancio Ortega and Rosalia Mera opened the first Zara store in Spain in 1975. They planned to name the store Zorba, after the film Zorba, but there was already a bar on the same street with that name. Instead, they settled on the name Zara. Therefore, as a result of this, they decided to go with the name Zara because having two Zorba stores on the same street can cause customers to become confused. In its early days, Zara was known for selling knockoff versions of well-known, more expensive brands of clothes and accessories at much-reduced prices. The 1980s, however, were the beginning of the shift.
Zara first gained fame not long after the turn of the century, and its fame quickly spread beyond the borders of Spain. By the 1990s, the retailer had already opened locations in numerous countries across Europe and the United States, including France. Because of their vertical integration, Zara is able to maintain control over processes such as dying and processing, and they have the capacity to process fabrics whenever they need them. This enables them to produce the appropriate materials for new trends based on the preferences of their customers.
Zara is one of the most powerful fashion brands and it is well-known for its promptness in fast providing new clothes to its stores, which is achieved by adhering to a regular routine. This is one of the reasons why Zara is so successful. The store managers place orders for new garments twice a week at specific times, and those orders are fulfilled twice a week, just on schedule. It is claimed that Zara's success story, as well as the company's continuous dominance and appeal, can be traced back to its practices and culture.
And that's not the end of it. A significant advantage that Zara possesses is the ability to exercise superior control over its supply chain in comparison to that of most other retailers. Zara is able to be flexible in the number, frequency, and diversity of new products that are launched because the company produces its own goods in-house. After only approximately two weeks have passed since the initial appearance of the original design on catwalks, the entire cycle of designing, production, and distribution has been finished.
In addition to this, it removes the requirement for warehousing and assists in mitigating the effects of fluctuating demand. Because Zara manufactures over 450 million items and introduces approximately 12,000 new designs each year, it is essential that its supply chain be as efficient as possible in order to ensure that the constant refreshment of store-level collections is carried out in a manner that is both smooth and effective.
The success story of this popular fashion brand is truly inspirational. The implementation of a centralized enterprise resource planning system is at the center of Zara's success story. The primary software that is hosted in the cloud is responsible for managing the inventory, products, and logistics. In addition, Zara receives approximately 85% of the entire price for each item of clothing it sells, although the average for the industry is only 60%–70%.
Zara has, throughout the course of many years, served as a paradigmatic example of the type of enterprise that fully comprehends its clientele and caters to its specific needs. Instead of trying to predict what fashion would be like in the distant and unknowable future, the company has been concentrating on meeting the actual requirements of the fashion industry. This has unquestionably been the guiding principle behind Zara's meteoric rise to prominence.
Zara is behind in mobile commerce and must catch up quickly. Market data suggests mobile commerce will eclipse desktop e-commerce later this year. Most firms get 15-20% of their website traffic from mobile devices, and this is growing. With a deluge of anticipated mobile commerce investments and Zara's competitors having an advantage, Zara must immediately make mobile buying effortless and pleasurable.
Sources: Martin Roll, Fashinza, WSJ
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