The founder of Zara, Amancio Ortega, opened the first Zara store in 1975. The first store was on the main street in La Coruna. His idea of producing, distributing and selling clothes without intermediaries at a lower price became the basis of the philosophy of “Zara”. Thanks to the success of Zara’s concept, the company began to expand and opened new stores in the future.
In their first store there were models of famous fashion houses at low prices. The store proved the success of the company, and Ortega began to open new Zara stores all over Spain. In the early 80’s Ortega began to develop a new model of the process of design and distribution of goods. The sewing industry usually used the production scheme, which required almost 6 months from the original design before the sale of garments. This scheme significantly limited producers and distributors to 2-3 collections per year. The attempt to foresee the tastes and preferences of consumers entailed inherent difficulties, because both manufacturers and distributors were constantly at risk of remaining with unsold goods.
Zara stores have 7 main lines of men’s and women’s clothing. Each product line consists of 5 sub-sections. Sub-sections are divided into: Underwear, Outerwear, Footwear, Cosmetics and Accessories. Zara’s catalogs also include a clothing line for children.
To date, the company has a high level of centralization, its shops in different countries serve only as points of sale, which help to collect information about local markets and consumer preferences, but do not make independent decisions about design or price policy (though, the assortment is made, in many respects based on local applications, and may differ in two neighboring stores by 40-50%).
It is necessary to emphasize the following strengths of the company:
Control of the whole production process. Design, production, distribution, sales are carried out by one person – the head of the holding, Ortega.
Zara’s clothing retail chain has a tightly integrated vertical structure that shortens the time between designing clothes and delivering it to customers in less than three weeks, while industry standards range from 6 to 9 months. This allows Zara to identify emerging fashion trends and launch new models to the market, far ahead of its competitors in the mass production market.
Quick change of collections. Each week, up to 35% of the collection is updated, no clothing model “lives” for more than a month.
Low advertising costs. The cost of advertising is very modest, compared with competitors. According to the representatives of the company, there is no better advertising for the brand than laconic packages with a large brand name in the hands of buyers, as well as “word of mouth” and attractive showcases are the best ways to attract customers.
Low costs for warehousing and storage of goods.
Production is concentrated in Spain. The company does not use the labor of the countries of the Third World.
Ortega’s companies on market capitalization ($ 11.8 billion) are on par with the US The Gap ($ 13.0 billion) or the Swedish giant Hennes & Mauritz ($ 14.8 billion). Today, against a constant decrease in clothing consumption in Europe, Zara demonstrates an impressive growth rate of about 15-20% per year. In H & M, for example, this figure is 9.5%, in Gap – 2-3%. Statistics say that if other average European consumer clothing stores visits about four times a year, then Zara stores – as many as seventeen times.
Target audience is people from 25 to 35 years old. The price range is average. Zara models are cheaper than Mango and Naf-Naf. Assortments are: clothes, shoes, accessories and cosmetics. Amancio Ortega does not favor business suits, so the company is engaged in the production of casual wear. According to people who know Ortega closely, he never wears a tie and prefers jeans. Style is brightness and unexpected moves in some lines of the brand are combined with the classic line of models. Zara brings the trends of the world fashion closer to a certain type expected by the consumer.
Thus, the concept of Zara is to create casual clothing that meets:
· The latest fashion trends;
· Tastes of the consumer;
· Favorable price-quality ratio.
Hence the marketing principles of the company are:
· In the proposal of fashionable and high-quality clothing;
· In instant reaction to market requests;
· In the unusual design of the interior and shop windows.