Transcript Slide 1

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
• Per capita spending and preferences different in any
given market
INDUSTRY OVERVIEW:
COMPETITION
Gap, Inc.
H&M
Benetton
Zara
Production
Outsourced
Outsourced
In-House
40% In-House
60% Outsourced
Production
Lead Times
High
High
High
Low
Net Margins
-.06%
9.6%
7.05%
10.47%
INDUSTRY OVERVIEW:
POSITIONING
Price +
Benetton
Gap
Fashion -
Fashion +
ZARA
H&M
Price -
ZARA OVERVIEW
Owned by Inditex (Industria
de Diseno Textil)
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Largest of 6 Inditex Chains
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500 stores in 30 countries
For women, men, and youth
From infants to age 45
Zara vs. 5 other Inditex Chains
(2001 exchange rate: 1.15 Euro=$1)
$2,500
$2,153
Sales ('000,000's)
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$2,000
$1,500
$1,000
$782
$500
$0
Zara
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Zara starts with “Z”
Massimo Dutti + Bershka
+ Pull and Bear +
Stradivarius + Oysho
The “yoo-goo-goo-lizer” –
you know, the guy that speaks at
funerals!
ZARA OVERVIEW:
ADVANTAGES
•
Vertical Integration
•
Quick Response to Demand (Pull System)
•
Small Batch Production
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High Product Turnover
•
Central Distribution Center / Strong IT System
ZARA OVERVIEW:
SUPPLY CHAIN
Manufacturing
System is designed for short production
cycles, quick response (QR) to demand,
and reduced number of markdowns
ASIA
(20%)
Design
INDITEX
MANAGEMENT /
DESIGNERS
Determine apparel
designs and
manufacturing locations
Low QR
Low Cost
Distribution
Sale
DISTRIBUTION
CENTER
IN-HOUSE
(40%)
High QR
High Cost
EUROPE /
N. AFRICA
(40%)
High QR
High cost
Increased 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
Returns from stores either rerouted or
disposed of in local stores near dist.
center
IT SYSTEMS
Provides accurate
demand information to
determine
manufacturing locations
and production levels
ZARA CHALLENGES
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Aggressive growth strategy needed
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76% of equity value based on future growth expectations
Need to maintain competitive advantages in new
geographic markets
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Data collection, Quick response, High product turnover, Strong IT
System
RECOMMENDATIONS
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Short-Term Solution: Expand in Europe
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Long-Term Solution: Expand Outside of Europe
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Focus on Italy (63 Billion Euro Market)
Implement “Oil Stain” expansion method
Establish operations in North America
North American Distribution Center (Mexico)
Initially focus on coastal cities
Implement “Oil Stain” expansion method
Culturally Diverse Management Team
Q&A