Zara’s the shops. This allows Zara to respond quickly

Zara’s collection includes men’s clothing (suits, trousers, shirts, T-shirts, jumpers, jackets, shoes,accessories, etc.), women’s clothing (dresses, blouses, trousers, skirts, T-shirts, jackets, handbags,shoes, accessories, etc.) and children’s clothing (collections for girls and boys between the ages of0 and 14).

H&M is often cited as its main competitor. Zara mainly distinguishes itself from H&Mthrough the strong, well-optimised vertical integration of all key activities from product designthrough production to sales in the shops. This allows Zara to respond quickly and flexibly whilemaintaining a reasonable cost structure. In contrast, H&M has outsourced many important functions(not least production) and focuses heavily on marketing activities. H&M’s collections are designedand defined far in advance.Zara’s success is based on a business system that achieves a speed of response to marketdemand that is without precedent in the fast-moving fashion clothing sector. Zara’s cycles of design,production, and distribution are substantially faster than any of its main competitors.

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For mostfashion retailers there is a six-month lag between completing a new design and deliveries arriving atretail stores. Zara can take a new design from drawing board to retail store in as little as threeweeks.Products are designed at the Inditex headquarters in La Coruna on the northwest tip of Spain. Over40’000 garments are designed annually with about one-quarter entering production. Designs aresketched, committed to the CAD system, then a sample is handmade by skilled workers locatedwithin the design facility. Working alongside the designers are “market specialists” who monitorsales and market trends in a particular country or region, and “buyers” who handle procurement andproduction planning. The three groups coordinate closely and jointly select which products go intoproduction.

In contrast to conventional chain stores like H&M or C&A, close to half of Zara’s productsare manufactured within Zara’s local network, which comprises Zara’s own factories andsubcontractors who undertake all sewing operations. The rest is outsourced to third-partymanufacturers.