Zara’s Successful Supply Chain Management Strategy

Alina Mozzhukhina, (December 8, 2015), How Zara Uses Supply Chain to Execute Business Model, https://www.tradegecko.com/blog/zara-supply-chain-its-secret-to-retail-success

The clothing brand Zara is world renowned for its affordable yet trendy, high quality products. With over 1,770 stores, Founder and CEO Amancio Ortega has grown his small store in Spain into a well-recognized fashion brand in more than 86 different countries!

Fast Fashion Trends

The secret to all this success? Zara has managed to keep up with the constant change in fashion throughout the world – whether it’s in Japan, Italy, Canada or the USA. Like a chameleon, Zara has been able to quickly adapt to the fast fashion trends.

As a result of keeping up with constantly changing consumer trends, Zara ends up producing approximately 450 million items a year for their stores. Just walk into a store and speak to an associate. If you ask them when they expect new product, they always respond with something along the lines of “We’re getting new shipments in every day.” Are you now looking for that dress shirt you were thinking of buying last week? Chances are your size or that style is gone! If you get to the store a week too late, nearly half the products will be completely different.

Supply chain management strategy

So how has Zara been able to stand-out from all other fashion competitors? It’s well constructed supply chain management strategy. This strategy encompasses many stages. It begins by redesigning couture trends for the mainstream market and then leads to manufacturing, distribution and then retailing. All of this can be done in two weeks. Most designers and stores can take up to six months or more to get their new products in stores for consumers.

To manage the overarching process, a significant amount of production is kept in-house. By doing so, Zara is able to adjust the frequency, amount and variety of new products when they need to. This creates the opportunity to create products that are in trend and get them on the market when the trend is still at its peak. And this is a major key to their high performance on social media.

In conjunction with their ability to produce fast fashion, Zara has also managed to take advantage of the mobile digital world. With shopping and fashion lookbooks accessible online, especially through Instagram, Zara’s looks and new product are very quickly communicated to their fashion conscious followers. As soon as a new style is produced and sent to stores, it’s already on social media. Their ability to produce products quickly and communicate to audiences instantly has a direct correlation to their high follower count on Instagram.

On Instagram, Zara has an astounding 9.7 million followers and over 14.7 million posts under the hashtag #zara. Their posts are constantly communicating what new styles are in stores and online. And a smart move on their end, they even post the reference number for their featured products – making the exact item easier to find.

Gap, their American competitor, has 1.1 million followers on Instagram and just over 1.5 million posts under their hashtag #gap. If you compare the quality of their Instagram posts, you can see a difference in their approach to social media, which also reflects on their quickness to produce new items and encourage audiences to buy products. Gap’s Instagram posts don’t highlight what’s new in stores, nor do they identify product codes. The business model at Zara allows them to push product out quick. As a result, their posts are highly focused on communicating when new product reaches stores and easing the process of purchasing them.

Lessons for Others

With such fast paced production, expeditous inventory management, and social media networks that are exploding with followers, Zara has been able to successfully develop an internal and profitable supply chain strategy like no other. With limiting their production of their inventory items, Zara reduces their risk of stockpiling unwanted clothes. This artificial scarcity means there is not much inventory to be disposed of or discounted at sale prices, which ultimately means they are selling most of their inventory at full price, compared to the industry norm of 50%. Well done Zara!

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