Zara a Spanish Success Story

Due to its unique but effective practices, it is acclaimed as the high fashion/low-cost brand for all. Zara has been described as "possibly the most innovative and devastating retailer in the world," by LVMH fashion director Daniel Piette (CNN, 2001). They break all rules of the apparel industry. Zara wanted to conquer the world of fashion using a low-cost approach (Heyden, 2007). In the apparel, industry demand is uncertain because it is difficult to foresee the fashion trends in advance for a certain season and product failure rates can be as high as 10 percent (Diaz, 2005). Demand can also be volatile because demand can change suddenly due to a variety of external factors. Zara is able to react to market trends immediately. It always keeps itself abreast of the change in trends and its product life cycles are shorter. Because it has control over the entire process from the factory to the shop floor, it can react fast to the changing fashion trends and consumer tastes (CNN, 2001).

While competitors like Gap and H&amp.M take up to nine months to change the product line, or get new lines to their outlets, Zara takes just two to three weeks. Zara introduces about 12,000 new items per year and maintains an SKU of 300,000 per year which is four times higher than the industry average. Their product life cycles are three weeks, twelve times faster than the industry average (Diaz, 2005). Zara’s product range is updated constantly. They cater to a broad range of customers – right from infants to the forty-plus range. They run three parallel, but operationally distinct product families. Their product range includes men’s, women and children’s good quality, mid-priced fashions (Dinero, 2004).
Bakewell, Mitchell, and Rothwell (2006) contend that clothing for every season is being produced to suit every market and every generation. The emergence of market power concentration is strongly linked to the&nbsp.development of strong retailer brands (Moore, 1995).&nbsp.