Innovation Management - Zara

Topics: A Coruña, Supply chain, Supply chain management Pages: 4 (1354 words) Published: May 26, 2006
Zara: A Spanish clothing chain's recipe of centralisation and integration Key points:
„XZara is the world's fastest-growing retailer
„XAt the heart of the company's success is a vertically integrated business model that spans design, just-in-time production, marketing and sales, giving it more flexibility than its rivals to respond to changeable fashion trends „XUnlike other international clothing chains, Zara makes more than half of its clothes in-house, rather than relying on a network of slow-moving and disparate suppliers „XZara can make a new line from start to finish in three weeks, against an industry average of nine months A mixture of vertical integration and street smarts has transformed a small Spanish clothing chain into a global success, reports The Economist Most fashion retailers discreetly tuck their price tags inside their garments. Not Zara. Its sales tickets are big and colourful, emblazoned with the flags of a dozen countries, each accompanied by a local-currency price that is the same for that item around the world, from Madrid to Riyadh to Tokyo. In an industry traditionally geared to local tastes, this United Nations approach exemplifies the centralisation and integration that have turned Zara into the world's fastest-growing retailer. Over the past five years, the number of its stores has risen from 180, mainly in Spain, to 450 in 30 countries. Revenues have grown by an average of 27% a year since 1998. Founded in 1963 as a maker of ladies' lingerie in the Galician town of La Coruna, Zara today is the centrepiece of Inditex, a holding company for five fashion chains that is planning an initial public offering on the Madrid bourse on May 23rd. The flotation is expected to value Inditex at as much as euro9.3bn ($8.2bn) and cement the standing of its reclusive 65-year-old chairman and majority shareholder, Amancio Ortega Gaona, as Spain's richest man. Mr Ortega started the business with just Pta5,000 ($83). At the heart of...
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