The secrets to Zara’s breakout success appear to lie primarily in its mastery of the retail supply chain (Dishman, 2012; Lu, 2014; Pearson, 2015), provision of affordable, cutting edge, and high quality fashion (Lutz, 2013), and above all, absolute control over its retail stores, which allows for efficiency and product control. The success of Zara has attracted a great deal of commentary in business media, primarily because of its global reach—Zara is a Spanish-based company, but has retail stores throughout the entire world.
Because of its outstanding ability to present the most fashion-forward clothing to the average women, with the latest fashions sometimes hitting Zara stores only two weeks after the original haute couture designs appear on European fashion catwalks (Lu, 2014). Even more amazingly, Zara has achieved global business success with very little formal advertising; Pearson (2015) reports that Zara, on average, spends only 0.3 percent of its sales revenue on advertising, which is tiny compared to the average expenditure of 3-4 percent of sales revenue on advertising by its peers in the clothing retail industry.
A major factor in Zara’s commercial success despite a lack of spending on advertising is the firm control the corporate office in Spain maintains over its worldwide network of retail stores. Only about 5 percent of Zara stores are franchises; the vast majority are corporate-owned. This high level of control means that clothing stock is turned over and replenished with amazing speed (Lu, 2014). Additionally, Zara corporate headquarters places limits on how many units of a specific new design can be manufactured and shipped to stores (Pearson, 2015). This artificial scarcity and quick turnaround practically guarantees that shoppers will frequently return to their closest Zara retailer in order to shop for the latest “new thing” in the Zara fashion repertoire.
A loyal Zara shopper can fully expect the unexpected; if she (or he) sees an item that she or he likes, they had better be sure to buy it right then and there, because that item, or a duplicate thereof will most likely not be there even if they return to the store just a few days later (Lutz, 2013; Pearson, 2015). This artificial scarcity and quick turnaround of stock virtually guarantees that even the most iron-willed Zara shopper will give in to impulse buying. Additionally, Zara clothing items are relatively inexpensive, especially compared with items on the shelf at many of their major competitors’ stores, so the “impulse buyer” does not have to worry about that hot new dress or blazer draining their bank account or maxing out their credit card limit.
If one were required to boil down the key to the success of Zara to one concept, that concept would be control. From the outset, executive management at Zara appeared to be intent on building an empire, a goal that they have clearly attained. Pearson (2015) notes that even in its earliest days, Zara invested heavily in IT communications technology, which has led for seamless communication between managers, between corporate headquarters and retail stores, and between suppliers and manufacturers. The extensive commentary on Zara’s business strategy is unanimous on the thing that Zara does best, and that is execute a flawless supply chain (Dishman, 2012;Lutz, 2013;Lu, 2014; Pearson, 2015).
Almost all of the materials Zara uses to manufacture its clothing line comes either from its home country of Spain, or from the neighboring nations of Portugal and Morocco (Dishman, 2012). This not only cuts down on shipping and manufacturing costs, but it helps to ensure that Zara is able to get the hottest fashion trends on its retail shelves as quickly as possible, and this is what keeps customers coming back for more, week after week after week.
