1. ZARA: FAST FASHION

2. AGENDA Industry Overview Zara Overview Zara Supply Chain
Zara Challenges
Recommendations

3. 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

4. INDUSTRY OVERVIEW: COMPETITION
Gap, Inc.
H&M
Benetton
Zara
Production
Outsourced
In-House
40% In-House
60% Outsourced
Lead Times
High
Low
Net Margins
-.06%
9.6%
7.05%
10.47%

5. INDUSTRY OVERVIEW: POSITIONING
Price +
Benetton
Gap
Fashion -
Fashion +
ZARA
H&M
Price -

6. ZARA OVERVIEW Owned by Inditex (Industria de Diseno Textil)
Largest of 6 Inditex Chains
500 stores in 30 countries
For women, men, and youth
From infants to age 45
Zara starts with “Z”

7. The “yoo-goo-goo-lizer” – you know, the guy that speaks at funerals!

8. ZARA OVERVIEW: ADVANTAGES
Vertical Integration
Quick Response to Demand (Pull System)
Small Batch Production
High Product Turnover
Central Distribution Center / Strong IT System

10. ZARA OVERVIEW: SUPPLY CHAIN
System is designed for short production
cycles, quick response (QR) to demand,
and reduced number of markdowns
Manufacturing
ASIA (20%)
Low QR Low Cost
Design
Distribution
Sale
DISTRIBUTION CENTER 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
INDITEX MANAGEMENT / DESIGNERS Determine apparel designs and manufacturing locations
IN-HOUSE (40%)
High QR High Cost
EUROPE / N. AFRICA (40%)
High QR High cost
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

11. ZARA CHALLENGES Aggressive growth strategy needed
76% of equity value based on future growth expectations
Need to maintain competitive advantages in new geographic markets
Data collection, Quick response, High product turnover, Strong IT System

12. RECOMMENDATIONS Short-Term Solution: Expand in Europe
Focus on Italy (63 Billion Euro Market)
Implement “Oil Stain” expansion method
Long-Term Solution: Expand Outside of Europe
Establish operations in North America
North American Distribution Center (Mexico)
Initially focus on coastal cities
Culturally Diverse Management Team

13. Q & A