1. Alysia Gooden BUS 550 The Contemporary Firm
Zara Case Study
Alysia Gooden
BUS 550 The Contemporary Firm

2. Zara Case Study Objectives
Background information about Zara
Organization (Vertical Integration)
Turn around time
Technology
Business Challenges
Fast Fashion Competitors
Zara In the News
Mini Quiz
Question/Answer

3. What is Zara? Financial Metrics
YouTube Video: Zara Business Introduction
Zara Company (its parent company is Inditex)
Clothing and accessory retailer based in Galicia, Spain
Founded in 1975 by Amancio Ortega and Rosalia Mera
Provides services worldwide
Provides “instant fashion” at a decent priced value
Financial Metrics
Revenue: $31.3 Billion
Net Income: $4.2 Billion
Number of Stores: 7,475
Number of countries: 96
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4. Profitability of Vertical Integration
Harvard Business Review author wrote an interesting article about why vertical integration is profitable
Transaction cost
Supply assurance
Improved Coordination
Technological Capabilities
High Entry Barriers
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5. Profitability of Vertical Integration in Zara
YouTube Video: RFID Technology
Distribution center in La Coruna
Zargoza moves over 17 million items every week
Ceiling mounted racks and customized sorting machines
Clothes are ironed in advanced and packed on hangers with security and price tags affixed
RFID Technology
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6. Zara Reduces Turn Around Time
There are five key tactics that Zara uses from their production process to distribution management
Concentrate on In-Time production and distribution
Just in time inventory rather than forecasting the future
Reduce delivery time with a solid distribution management
Reduce marketing costs
Continue learning from customer feedback
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7. RFID Tags
Radio Frequency Identification (RFID) tags wirelessly emit a unique identifying code for the items that they are attached do. Allows Zara to keep track of product.
Technology
Zara affix tags to all products before sending them out to stores
Stores remove tags when customers buy items
Stores send tags back to Zara warehouses for reuse
Take in-store inventory four times a day
All items are flowed to Zara warehouses
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8. Technology Intelligence-Gathering Effort Customer feedback on products
Mobile devices recording data based upon customer feedback on product.
Customer feedback on products
Staff enters response on mobile device & sends back to headquarters
Data goes to “The Cube”, where the clothes are designed
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9. Business Challenges Financial Vulnerabilities Online Resale Market
The fashion industry is a fast moving market with several competitors. Zara could potential face financial currency issues along with online fashion resale markets such as ASOS and Boohoo.
Financial Vulnerabilities
Online Resale Market
More susceptible to financial vulnerabilities during periods when the euro strengthens relative to foreign currencies
Stronger euro would mean that Spain-centric costs would rise at higher rates compared to competitors
If fuel costs rise that would be a huge financial impact as Zara has twice-weekly deliveries
According to a Bloomberg business article- “The shift to internet shopping isn’t playing to the strengths of Zara as it’s exposing issues with the fashion retailer’s fit, product quality and online service, according to Credit Suisse analyst Simon Irwin
Incorporating E-Commerce (More Sales + Better Customer Experience)
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10. Fast Fashion Competitors
Online Retailers ONLY
“High End” Fashion Retailers
“Low End” Fashion Retailers
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11. Fast Fashion ANSWERS Online Retailers ONLY
“High End” Fashion Retailers
“Low End” Fashion Retailers
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12. Zara in the News
Fast Company
“People are loving Zara a little less after its worker pay issues went viral”
Zara partnered with Turkish factory for the labels and It was found that the workers were not getting paid
Workers started a campaign. They put tags on garments across every Zara store
Zara Change Petition
Inditex promised to look into event and strengthen supervision of its suppliers’ production facilities
“Has signed a Global Framework Agreement with IndustriAll Global Union and accepted responsibility for the basic rights of the workers in its supplier factories.”
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13. Zara in the News
Flat World
Tech for Good: The Fair Factories Clearinghouse
Provides systems where apparel and other industries can share audit information on contract manufacturers
Ethical clothing brans betting against fast fashion. “As consumers, we have become increasingly conscious about our purchases, channeling the power of our vocalized objections to make a positive difference for the people involved in making of our clothes and goods.” – The Good Trade
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14. Mini Quiz Question 1: Question 3: Question 2:
What is the average time for a Zara concept to go from idea to appearance in store?
Ten Days
Eleven Days
Fifteen Days
Thirty Days
Question 3:
What is the name of the location where the team members design new products for Zara?
“The Cube”
“The Design Center”
“Zara’s Cube”
“The Center”
Question 2:
Who acquired Zara?
Indeed
Inditex
Google
Amazon
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15. Answers! Question 1: Question 3: Question 2:
What is the average time for a Zara concept to go from idea to appearance in store?
Ten Days
Eleven Days
Fifteen Days
Thirty Days
Question 3:
What is the name of the location where the team members design new products for Zara?
“The Cube”
“The Design Center”
“Zara’s Cube”
“The Center”
Question 2:
Who is the parent company of Zara?
Indeed
Inditex
Google
Amazon
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16. Topics of Discussion
How do you think Zara could maintain their high revenue stream?
There are several news articles of Zara, of the news articles that we have discussed in class, which do you feel will have the most negative impact of the company? Can Zara survive without resorting to factories to third world countries?
What other technology could Zara implement besides POS, Mobile device feedback, and RFID technology?
Do you believe that a company such as Amazon could potentially buy out Inditex?
What other companies mirror the “Just in time” approach?
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17. Thank you! Alysia Gooden Alysia.gooden532@myci.csuci.edu 520-404-5665
Phone:

18. Source Data
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