Case Study Assignment : Marketing Internship under Prof. Sameer Mathur, Indian Institute of Management Lucknow

• Zara is a Spanish clothing retailer

• 1700 stores

• 78 countries worldwide

• Zara practices fast fashion – trends moves from the runway to stores within weeks, as opposed to months.

• Zara’s supply chain has undergone tremendous changes in order to sustain its competitive advantage in today’s market

• Zara has continually maintained its mission to provide fast, affordable, and fashionable items

Zara has developed a highly responsive supply chain that enables delivery of new fashions as soon as a trend emerges.

Zara delivers new products twice each week to its 1,763 stores around the world.

Zara delivers new products twice each week to its 1,763 stores around the world.

Inventory Management• Focus on reducing

response time• Launched

approximately 11,000 new items per year, compared to 2,000 - 4,000 for H&M and Gap

Inventory Management

• Stock outs are not uncommon

• Short shelf life attracts more customers more often

• Zara holds 6 days worth of inventory, while H&M holds 52 days, and Spanish retailer Cortefiel holds 94 days of inventory

Forecasting Extensive market research Quick input and output

response Frequent new styles

• Near-term forecasts

• Short product life cycles to reduce errors and improve current products

• Customer feedback

Key success factors of Zara

Short Lead Time = More fashionable clothes

Lower quantities = Scarce supply

More styles = More choice, and more chances of hitting it.

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Procurement• Keeps approx. half of its production in-house

• Separate procurement staff for each clothing line

• Procures basic textiles from global suppliers

• Uncomplicated items are outsourced to China

• Difficult items are produced in Zara factories and by local subcontractors

• Most suppliers are located in close proximity to its distribution centers

Production Planning• Centralized Design & Production

Centre

• Constant flow of data throughout the supply chain

• Zara allows its retailers to change 40%-50% of its orders

• Factories operate on a single-shift mentality, and can change quickly according to unforeseen demands

• Under produces products in order to create scarcity value

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Warehousing• “High-velocity” shipping

• Merchandise is selected, sorted, and routed to the “lungs” of the warehouse

• Merchandise is delivered, Retailers hold products in local distribution centres or in retail store stockrooms

• “High-velocity” shipping relies on rapid information flows

Warehousing• Stores are electronically linked to the company’s headquarters

• Logistics system is based on two core concepts: speed and flexibility.

• Currently building a new state-of-the-art warehouse and facility complex in Zaragoza, Spain.

PRODUCTSZara 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 .

Transportation • Effective and efficient transportation

network

• Fast delivery time

• Coordinates with all aspects of logistics

• Quick response in supply chain

• Ability to distribute merchandise within 2 weeks

• Final step in order fulfillment

• Promotes service quality

Customer Service• Founder: Amancio Ortega

• Customer Service

• Elements & Measures of Customer Service

• Product Availability

• Order Cycle Time

• Logistics Operations• Response to Certain Events

• Stock-outs• Extra Inventory

• Future outlook

Performance Measurement

• Dedicated to creating time to market efficiency

• Order fulfilment and customer satisfaction

• Tight linkages between demand and supply

• Improve performance in accordance with changes in demand

• Customer loyalty and brand recognition

• Expansion into a global market

EFFECTIVENESS

EFFICIENCY

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Technology• Competition: 2% of revenue and 2.5% workforce in IT

• Zara: 0.5% of revenue and 0.5% workforce in IT

• In store:

• handheld PDA

bi-weekly order, communication with HQ, feedback from customers, inventory.

• In Store: DOS=old, slow.

• Suggested: POS=speed, efficiency, connectivity.

• WWW: Online stores open now. Better late than never.

• iPad + Smart phone apps

• In house: 200km tracks=60,000 items/hour

Zara brands success Zara is one of the most well known brands in the world and is also one of the

largest international fashion companies. They are the third largest brand in the garment industry.

The Zara clothing line accounts for a huge bulk of its parent group’s revenues.

• Short-term goals should see Zara expand into North American and Asian markets as well as continued growth throughout Europe

• In the future, Zara should increase its production outsourcing to Asian countries to reduce costs

• Overall, Zara seems to be heading in the right direction as the company is growing at a tremendous rate and does not show any signs of slowing down

Strengths1.Cost leadership strategy 2.Efficient distribution 3.Information technology 4.Fast delivery of new products,and trends

Weaknesses1.Centralized distribution system2.Doesn't spend much money on advertising 3.Zara only has one manufacturing and distribution centre in the world

Opportunity1.Global market penetration 2.Online market

3.Distribution centre in us

Threats1.Local competitors 2.Global competitors3. Zara based in Spain and has a huge no of stores in Europe will dent in revenues.

SWOT analysis

MIS (MANAGEMNT INFORMATION SYSTEM)

MARKETING OBJECTIVES

PRODUCTION

DESIGN

Strategies

DISCLAIMERCreated by Nishchay Misra, University Of Petroleum And Energy Studies Dehradun, during Marketing Internship under Prof. Sameer Mathur, Indian Institute Of Management Lucknow.

( See www.IIMInternship.com)

Prof. Sameer Mathur, IIM LucknowNishchay Misra, UPES Dehradun