Zara Fashion Company
Zara, a retail branch of Inditex (Industrias De Diseno Textil) is among the leading companies in the textile industry and has its headquarters at Galicia in Spain. The key company’s roles are to design and manufacture an assortment of fashion wares such as foot wares, apparels, together with accessories for all categories of people. According to statistics, the company operates a number of chains throughout the world. As indicated in some sources, by 2001, Zara had already established an approximate of 507 stores around the globe. Inditex has undertaken the management roles for Zara and has ensured that 80% of its employees work in the sales section (Tiplady, 2006). They find it essential to apportion such a hefty fraction of their employees to sales so that they can broaden their market coverage. Additionally, 8.5% of Zara’s employees work in manufacturing, IT, as well as in the logistics departments. The remaining 11.5% is part of the Inditex headquarters. Zara benefits from the sovereignty of operating independently as Inditex only acts as the controller of all its chains, but does not influence its operations. Besides, it only approves and improves the strategies utilized in performing business operations.
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The freedom endowed to Zara by its controller has enabled it to craft massive investments from diverse perspectives. For instance, Zara has invested decidedly in manufacturing and designing of new fashions, along with establishing the most current information systems. This has boosted its output, thus forcing it to design an outsized warehouse for storing its goods. Zara has employed a body of designers that have the expertise to identify their customers’ preferences at ease. This, as a result, has enhanced their productivity, since customers readily purchase their products (Tiplady, 2006).
Sources disclose the existence of three fashion design international companies that compete with Zara. They are the Gap, Benetton, and “Hennes and Mauritz” (H&M). Compared to the three competitors, Zara has made tremendous advancements in technology adoption. Additionally, they have a narrow vertical scope as opposed to Zara. Zara possesses the capacity to own stores; therefore, boosting its sales. H&M operates similarly to Zara in terms of fashion-orientation and lowered pricing. Conversely, Gap and Benetton fail to concentrate on the invention of current fashions, and its products are costly (Tiplady, 2006).
Zara utilizes a Hi-tech information system in distributing its products to customers. The use of an information system at Zara ensures that goods reach the designated stores within 48 hours. In its supply chain, numerous key areas utilize the information systems concept, therefore, enhancing its distribution speed. For example, information systems are useful in the storage of information that concerns the consumers’ needs. Afterwards, the concerned personnel keep such information in the database and continue to update it accordingly. As a result, this enhances the designers’ access to real-time information that enables them to design fabrics highly demanded. It also utilizes a number of automated distribution facilities that require minimal human intervention for their functionality. According to several stated cases, Zara also utilizes underground tracks in easing the transportation of goods to their designated destinations. Literature has shown that Zara has constructed a 200 km road for fetching goods to its 400 stores (Tiplady, 2006). The utilization of optical devices, which is the current technology, enhances the process of distributing and sorting fabrics prior to their dispatch.
The supply chain ISs has helped the company remain competitive in numerous ways, as indicated in a number of sources. In Zara, these information systems have deemed useful in the process of information integration, therefore, easing the method to use for supplying such products. This has helped in plummeting delays, thus boosting its profits. This strategy acts as its competitive advantage to its counterparts. Upon a careful review of the current literature, it is notable that Zara owns almost all the processes needed for a smooth operation of the company. These processes range from designing, manufacturing, as well as distribution. Concerning the above argument, store managers utilize such information systems in the provision of feedback pertaining to the demanded fashions, therefore, distributing them easily. As designers get to establish the highly demanded fashions, they are acquainted with information, which boosts their innovations as they devise new fashions. Because of this information, they are able to bring new designs into the market, compared to its competitors who can even take months. This is favourable in its profits augmentation.
In their innovative field, Zara initiated the “fast fashion” concept, which has helped them in bringing new fashions to the market (Tiplady, 2006). In achieving their already set goals, they enacted some key changes in all areas of operation such as designing, manufacturing, as well as the distribution of such products to the respective storage locations. Moreover, they transformed their marketing strategy to suit their current situation. After its competitors learnt about Zara’s best practice, many decided to try to establish whether it could work for them. Despite the current economic uncertainty, the wall street journal illuminates that Zara endeavours to innovative new methods of enhancing its profits. For instance, despite the fact that the company reported a decrease in its sales, it effortlessly plans to expand to new locations. According to the same journal, Inditex opened an approximated 560 new stores in the last year. It has done this during a time of economic uncertainty, thus depicting seriousness in their zeal to expand. Although the company already utilizes the usage of handheld computers in illustrating how garments rank, the company plans to utilize a more recent technology. This will aid in boosting its sales, thus an improvement in its profit margin (Tiplady, 2006).
Zara’s website has a lot of information, having what the majority of customers require in deciding their suitable fashions. The home page of the website allows one to choose his/her home country, therefore, viewing the different fashions available for them to choose. Additionally, the web page utilizes the usage of option boxes useful when deciding the category for which one wants to view their fashions. The three categories available are men, women, and children. The company’s strategy is to increase its sales to diverse parts of the globe. Therefore, the ease with which customers can interact with the website is significant to its growth.
Benetton is a family-owned business founded by four brothers in the small city of Ponzano Veneto back in 1965. During its launch, it designed and manufactured sweaters, and later distributing them to their few retailers who assumed the initiative of selling them to the available customers. The utilization of a network of local subcontractors proficient in different fields such as knitting and sewing contributed appreciably to its growth. The onset of the year 1970 saw the company reach the Italian market as a key supplier of sweaters. Eventually, its improved innovations enabled it to produce garments such as shirts, as well as jeans. Sources have highlighted that the 1970s were the years of intensification for the company. It is during the same time that it opened more than 500 stores operated by diverse subcontractors under dissimilar brands. The sustained promotional strategies and advertising of the 1980s allowed people located in different regions to learn about their products, thus its amplified sales. As the company underwent its growth, it enjoyed its camouflage ability that allowed its exemption from charges after using some of the government’s facilities.
Later in the 1980s, it incorporated in its management team individuals that possessed much skills and proficiency in management (Maguire, 2007). Such people made key decisions that have propelled it to attaining its current international status. Stefanel and Gap are the two main competitors of the company. The gap is a direct competitor as it offers similar products, as well as services. As opposed to offering similar products and services, it is notable that the company has assumed similar franchising efforts in its zeal to achieve its international standards. In its endeavour to distribute its products to some parts of Dubai, it established an agreement with Al Tayer group for assistance. After learning about this, Gap also devised a strategy aimed at helping it establish new markets in Asia. On the contrary, Stefanel is an Italian fashion company manufacturing similar products. In some years back, through the application of franchising, it was able to establish a distribution system that helped it penetrate into international markets in Europe. Therefore, Benetton was forced to develop a strategy to assist it in capturing vast markets. The current use of information systems by Benetton has allowed it to compete effectively.
In an effort to be competitive in the market, Benetton continues altering the supply chain in order to incorporate the most current technology, thus helping it remain competitive. The literature reveals the company’s concept of outsourcing its labour-intensive activities to other individuals. Some of these activities were tailoring, finishing, ironing, among others. It also discouraged outsourcing a number of activities, therefore, holding them internal to the company. These were weaving, dyeing and not forgetting the process of packaging the already finished products. After such products are packaged, the Distribution Centre (DC) takes the responsibility of distributing these products to the retailer outlets located at diverse locations across the globe (Maguire, 2007). The magnitude of this distribution centre is so immense that it can only be serviced by some loading and offloading bays. For transportation of such garments with efficacy, distributors pack them in barcoded boxes later transported using conveyors. Moreover, it is necessary to note that Benetton has employed 85 agents situated at varied locations. The basic responsibility of such agents is to recruit retailers at these locations. Retailers are useful in taking products to the consumer.
The environment in which Benetton operates in faces constant competition. The precariousness of the industry makes the production of some products a risky undertaking. In an effort to monitor the fluctuation in demand for a product, it is crucial to implement an efficient information system. An effective information system would serve the purpose of obtaining basic information concerning the consumers’ needs. This helps design and manufacture garments that are on par to the customer’s preference and taste. In simple terms, Benetton believes that information technology can act as a link between the manufactures and the market. This implies that an information system that is up to date allows the manufacturer’s access to information that only allows the manufacturer to produce what is on demand. This strategy has heavily benefited Benetton, therefore, maintaining its competitiveness (Maguire, 2007).
The strong organizational structure adopted by Benetton since its inception has contributed notably to its growth. Such an innovation allowed the application of a network to assist in the entire manufacturing process. Although technological advancement was low during its establishment, the directors tried such technological know-how in bringing more fashions into the market. The company’s innovativeness enabled it to devise the concept of franchising in the textile industry. In fact, Benetton was the first in applying such a concept, which eventually culminated to its tremendous expansion. Currently, the company utilizes information systems, thus making communication a less complicated undertaking.
Benetton’s website has utilized different colours that make it attractive to human eyes. On consequent, after visiting their website, one can hardly ignore to view the products advertised on the home page. Additionally, the use of graphics-aided option buttons eases the difficulty encountered when accessing some of its sites. In addition, the websites direct an individual on how one can access such information from numerous social sites. After customers access such information, they can comfortably search for the available stores within their surroundings; therefore, helping the company boost its sales.
Maguire, M. (2007). United colors of Benetton – A Company of colors and controversies. Norderstedt, DE: GRIN Verlag.
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Tiplady, R. (2006). Zara: Taking the lead in fast fashion, business week. Web.