A Project Report On Zara hscprojects.com.docx

a complete project report on zara fashion company

1. ZARA




Project report
on study of
“ZARA”
By: Seema IT
GFGC
Ranebennur-581115

2. OUTLINE
Introduction
Timeline
Marketing Strategy
Objectives
Information Technology
Market Research
Main Strategy
Competitors
SWOT Analysis
Current Market Share
Technological Advancements
Operations Strategy
Conclusion

3. It is group of over 700 stores located worldwide whose
main aim was to deliver fashion apparel at reasonable cost
to young fashion conscious city dwellers.
Zara identified clothes with low cost but high
fashion.
There critical focus is to design and display an
attractive setting in there stores presentations in
order for the to entice customers.

4. TIMELINE
1975- the Opening of Zara first store was opened
in La Coruña, in Northwest Spain
1976- along with the operation of its first stores in
Spain, GOASAM was also founded by the owner
of ZARA stores.
1985- INDITEX was established as the head of
the corporate group
1988- In December of this year ZARA opened its
first store outside of Spain in Oporto Portugal
1989- A new outlet was opened in New York (US)
1990- Another new outlet was opened in Paris
(France)

5. TIMELINE
1992- the entire capital share of MASSIMO DUTTI
was acquired by INDITEX
1993-1994 : A store was opened in Malta in 1993
and another in Cyrus in 1994
1997- INDITEX joined new market such as Norway
and Israel
1998- The young female market was the main
market of the BERSHIKA chain, also new
stores was opened in 8 different countries.
1999- New stores were opened in 9 different
countries, also they manage to acquire a fifth
chain of the group which was known as
STRADIVARIUS
2000- New stores were opened in Austria,
Denmark, Qatar and Andorra.

6. MARKETING STRATEGY
Only spends about 0.3% of their revenue on promotion.

Places much focus and emphasis on their product, place and
pricing as opposed to promotion

Rarely advertises any store sales or have sales promotions
other than sale items

Their innovative products and affordable pricing keeps
customers returning to their stores

Their products seemingly advertise itself

7. MARKETING STRATEGY
Has remarkable logistics which makes them able to
get a product from design to the shelf in just two
weeks.
Due to their fast fashion, popular products may
disappear from the shelf within days, forcing
customers to constantly check for new items
Market their brand through rapid expansion

8. SPECIFIC OBJECTIVES
 Strategically segment the market
 Visualize the impact of the new line
 Integrate consumer input into development
 Strategically plan the integration of new
lines within the existing business
 Model- use core competencies and re-
enforce brand values with a new list.

9. IT infrastructure was relatively simple and significantly lower
than its competitors.
Stock is maintained minimal, drastically reducing the possibility
of excess remaining goods
Production failure for new products is considered to be at 1%
as compared to industry average of 10%.
Zara distribution center held optical reading devices that
sorted out and distributed over 60,000 item per hour.
Zara was able to produce over12000 different items per year.
competitors. Zara spends less than 0.5% of total revenue on
IT and IT employees account for only 0.5% of Zara‟s total
workforce

10. MARKET RESEARCH
Zara‟s Success= unique approach to product
development (fashionable clothing at
affordable prices).
Source of information for Designs
POS data
Industry Publication
TV Internet
University Campuses
This company has the ability to create a new
design, produce a finished product and have it in
stores in 4 to 5 weeks.

11. MARKET RESEARCH
They also have the ability to modify
existing items in as little as two weeks.
Shortening the product life cycle which
means greater success in meeting
consumer preferences.
Zara‟s ability to adopt to new trends,
understanding differences b/w markets
was highly relied on “High Frequency
Information Systems.”

12. ZARA‟S MAIN STRATEGY:
React Rather Than Predict
Zara conducts business on reacting swiftly rather than
forecasting.
Zara‟s forecast is focus on the type of raw material it
needs to purchase and the quantity of this material.
This becomes hedging by Zara because a type of
material can be used in multiple apparels and error
with raw material are cheaper than with final product.
Zara produces garment is on demand in small quantities
and thus has a high turnover rate and is always stocked
with new fashion.
Zara, because of its flexibility, is able to secure partially
processed or un-colored fabric with it is needed (similar
to just-in-time inventory).
Because of this competitive edge and effective
production process, Zara is able to fulfill the urge of
clientele.

13. REDUCED RISKS
Zara „s way to obtain and maintain profitability is by
eliminating all the risk factors.
Zara tends to produce the quantity of each style
manufactured and keeps low inventory of one style
and creates a scarcity of product.
Shoppers at Zara are well aware that “window
shopping” today and returning for the item tomorrow
does not work since styles tend to change on a
weekly basis.
This “first come, first serve” basis has made Zara‟s
outlets to be some of the most profitable outlets.

14. MINIMAL OUTSOURCING
Eighty percent (80%) of Zara's products are
manufactured in Europe.
This gives Zara the competitive edge
because customers can depend on timely
delivery and service.
Competitors outsource mostly from Asia.
The workshops that provide finished goods for
Zara employ informal economy workers, that is
to say, mothers, grandmothers and teenagers
looking for income for their house hold.

15. As noted by the figures, Europe has the
largest number of stores.
Europe is where their factories are located
and it is where they started off.
The styles and fashion might be more oriented
to the European culture and fashion, in
comparison to the other countries.
It is also more cost efficient to have more
stores in the same country where their base is
for manufacturing and export purposes. Also,
the standards and quality can be monitored
easily and efficiently. The number of stores
listed is according to March 2005. Now there
are currently, 1,671 stores worldwide.

16. INDITEX and its COMPETITORS
On comparing Gap, H&M and Inditex; it is noted that
Gap is the biggest company out of the three, with
sales doubling those of Inditex and H&M.
Inditex had the lowest operating profit compared to its
rivals in 2004. However, the company strived hard in
the following year to attain a higher profit.
The company maintained its position in market
although it held the least amount of asset and
inventories.
Its stores outnumbered those of H&M in 2004 and
were almost the same as Gap in 2005. With
employees numbering up 47,046 it entered markets in
56 countries far beyond, 5 of Gap and 20 of H&M.
Even though it occupied less than half square meters
of land compared to Gap, Inditex made its presence
noticeable in the market.

17. INDITEX vs. H&M
Although Inditex‟s sales were lower than those of
H&M during this six year period, Inditex managed to
attain a greater market share by creating a global
presence.
In 2004, Sales for Inditex were 5,670 million
Euros, compared to 6,029 million Euros of H&M.
However, Inditex had 2.244 stores throughout 56
countries compared to 1,068 stores in 20 countries
for H&M. We must note that H&M had higher sales,
but the profits of both were within the same range.
Zara‟s production cycle consisted of 24 days.
This was comprised of everything from style
concepts and designs to final garment
production.

18. SWOT ANALYSIS
Strengths:
Brand loyalty
Brand awareness
Efficient distribution
Technology integration
Trend setters

19. SWOT ANALYSIS
Weaknesses:
Higher costs from vertical integration and
training personnel
Lack of e-commerce
Limited advertising

20. SWOT ANALYSIS
Opportunities:
Global Market
Online market
Brand image
Boutique style stores

21. SWOT ANALYSIS
Threats:
Exchange rates
Barriers to entry in specific markets
Design challenge
Global competitors

22. CURRENT MARKET SHARE
ZARA is today the Spanish retail group
with the most profitable brand, Indite X
SA. According to 2011 statistics the group
has held presence in five continents and
has thus passed the 5,500 store mark,
with shops in 82 markets. Zara has one
of the worlds most successful business
model which has put them above their
competitors including GAP.

23. TECHNOLOGICAL ADVANCEMENTS
DBMS: a set of software programs that controls the
organization, storage, management and retrieval of data in a
database. e.g. MySQL , Orade

ERP: software applications to improve the performance of
organizations’ resource planning, management control and
operational control. E.g. SAP and People soft

Centralized Server: Managing and controlling of data and
command from a single pint. E.g. Napster

Radio Frequency Identification (NFID): is a technology that
uses communication via radio waves to exchange information
via a reader and an electronic tag attached to an object for the
purpose of identification and tacking. E.g. Barcode detector

24. OPERATING STRATEGY
Achieving global expansion and making sure they understand and
sell to local customers according to customs
Careful execution of tailored retail strategies
Seek out prime real estate along established shopping corridors
Changed up its retail strategy to cater to the different seasons such
as including a line of custom weather appropriate collection
They went e-commerce: US, Europe and Japan customers can now
buy online

25. CONCLUSION
The competitive advantage of Zara,
especially in the areas of product
development, strategic partnerships
and cost of production, advertising and
marketing, and information technology
infrastructure allowed the firm to
significantly stand out from their
competitors and gain additional value
and profitability.