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ZARA: FAST FASHION

ZARA: FAST FASHION. AGENDA. Industry Overview Zara Overview Zara Supply Chain Zara Challenges Recommendations. INDUSTRY OVERVIEW. High Demand Uncertainty Push vs. Pull Method 30% of world production exported from developing countries Geographic Differences

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ZARA: FAST FASHION

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  1. ZARA: FAST FASHION

  2. AGENDA • Industry Overview • Zara Overview • Zara Supply Chain • Zara Challenges • Recommendations

  3. INDUSTRY OVERVIEW • High Demand Uncertainty • Push vs. Pull Method • 30% of world production exported from developing countries • Geographic Differences • Per capita spending and preferences different in any given market

  4. INDUSTRY OVERVIEW: COMPETITION

  5. INDUSTRY OVERVIEW: POSITIONING Price + Benetton Gap Fashion - Fashion + ZARA H&M Price -

  6. ZARA OVERVIEW • Owned by Inditex (Industria de Diseno Textil) • Largest of 6 Inditex Chains • 500 stores in 30 countries • For women, men, and youth • From infants to age 45 • Zara starts with “Z”

  7. The “yoo-goo-goo-lizer” –you know, the guy that speaks at funerals!

  8. ZARA OVERVIEW: ADVANTAGES • Vertical Integration • Quick Response to Demand (Pull System) • Small Batch Production • High Product Turnover • Central Distribution Center / Strong IT System

  9. ZARA OVERVIEW: SUPPLY CHAIN INDITEX MANAGEMENT / DESIGNERSDetermine apparel designs and manufacturing locations System is designed for short production cycles, quick response (QR) to demand, and reduced number of markdowns Manufacturing ASIA(20%) Low QRLow Cost Design Distribution Sale DISTRIBUTION CENTERIncreased shipment frequency increases QR Small batch production lowers cost of demand uncertainty STORES Decentralized store management supplements QR Managers determine products to sell and return IN-HOUSE (40%) High QRHigh Cost EUROPE / N. AFRICA (40%) High QRHigh cost Returns from stores either rerouted or disposed of in local stores near dist. center IT SYSTEMSProvides accurate demand information to determine manufacturing locations and production levels

  10. ZARA CHALLENGES • Aggressive growth strategy needed • 76% of equity value based on future growth expectations • Need to maintain competitive advantages in new geographic markets • Data collection, Quick response, High product turnover, Strong IT System

  11. RECOMMENDATIONS • Short-Term Solution: Expand in Europe • Focus on Italy (63 Billion Euro Market) • Implement “Oil Stain” expansion method • Long-Term Solution: Expand Outside of Europe • Establish operations in North America • North American Distribution Center (Mexico) • Initially focus on coastal cities • Implement “Oil Stain” expansion method • Culturally Diverse Management Team

  12. Q & A

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