Read the full case [[here|/static/files/MBI/Module%2017/zara.pdf]]

!Questions
#  Map out Zara’s product design, production, supply chain management, and retailing processes. What do you find interesting, different or surprising about them?
## Large 'control of own destiny;
## Little outsourcing
# What are the reasons behind Zara’s success? What does it do well and how does it do them?
## Sales forecasting
## Branding through stores at high end locations
## Limited supply and affordable exclusivity
## "The retailer is therefore highly competitive. If a design doesn't sell well within a week, it is apparently withdrawn from shops, further orders are cancelled, and a new design is pursued. No design stays on the shop floor for more than four weeks, which encourages Zara shoppers to make repeat visits"
# Who should pay for inventory at the retail shops: store managers or the headquarters? What about joint-venture and franchised stores? Why?
## It should be headquarters, also for the joint-ventures and the franchised stores, crucial for the brand is the high turn over, if the risk for inventory of non-current fashion assets will rely at the franchise, it will hurt the Zara brand
# Compare Zara’s approach to two other successful competitors: H&M and Benetton (look for information on these two others using their internet websites)
## H&M:
### Owns the stores
### Outsources manufacuring
### Direct distribution from production suppliers to the stores (no central warehouse)
## Beneton
### Owns manufacturing and design
### Sells through 3rd party stores
!Summary
* Sending out small 'test batches' of clothing to stores in top locations
* Mariage between retail and manufacturing
* Zara is one brand in a bigger mother company, Inditex
* Each brand operated with its own stores, warehouses.
* Corporate service were:
** Legal, Finance, Acquisitions
** Focus on affordable fashion
** Share business model for control of supply, distribution and production
* Negative working capital model: cash came in faster than it would go out
* Zara owned most of the stores (small portion in franchises and joint ventures
* Extensive market research on the viability of retail locations
* Prestigious locations: expensive but still 'pleasant' use of available floor space
* Stores were designed in La Coruna and one team was responsible to rebuild new stores.
* "Store managers should focus on sales and customers: not on furniture"
* Little spend on marketing and advertizing: "our stores are our image and we rely on word of mouth"
* Deliberate decision not to focus on internet sales
* Focus on training the sales people
* Simple metric to track sales improvements (compare with same day a year earlier)
* "Fashion not clothing": low inventory to ensure local exclusivity. Affordable fashion.
* Market specialists allocated to regions of stores to create personal relationships with the store managers
* Owned manufacturing facilities in Spain
* Inditex also owned a fabric supplier (90% of the revenue was with Zara)
* Central warehouse with impressive volumes
* Less pre season commitments - High focus on sales forecasts
* Fast turnover - Max 3 weeks - Customers had incentive to buy and decide on the spot or risk that the piece would be gone
* For future expansion the # franchises was expected to grow

!Answers
bag
mbi_public
created
Sat, 17 Sep 2011 07:42:36 GMT
creator
dirkjan
modified
Sat, 17 Sep 2011 07:42:36 GMT
modifier
dirkjan
tags
Case
M17
creator
dirkjan