Current Situation
Created in 1975 in Spain, ZARA, belonging to the Inditex Group, is the world’s third, and Spain’s number one apparel brand, setting up more than two thousands clothing chain in 62 countries around the world. The first Zara shop opened in 1975 in La Coruña, Spain, a city in which the group first began doing business and which is still its headquarters. ZARA is loved by the fashion young people with its excellent design and cheap price. 《Business Review》 assessed ZARA as “DELL in the apparel industry”, Harvard Business School assessed that ZARA is the brand that most worthy of study in Europe.
Although ZARA total stores only accounted for one-third of all the branches of Inditex, but its sales are about 70% of total sales. 2004 its global revenues was 4.6 billion Euros, profit was 440 million Euros, the profit rate was 9.7% which was better than the largest USA clothing chain brand GAP with 6.4%. ZARA launched about 12,000 kinds of fashion every year and each kind had not a big amount for sale. Even the best-selling models, ZARA only supply a limited amount; it is often that in a store there was only two pieces for one style and without replenishment. Through this "manufacturing shortage" approach ZARA acquired a large number of loyal followers and achieved breakthrough for economies of scale.
ZARA business success in recent years, can be summarized into four factors: ① it has a large group of designer and big design center for information exchange; ②the company itself has nine garment factories, the new style garment from planning to production in the factory, it can be completed within a week with fast speed; ③ZARA has fast delivery; ④take a variety of small amount of mode operation, every 3 weeks for all of its clothing products must be all changed to new ones. With this business model, ZARA had 450 stores in 33 countries and the new stores opening speed was 10 new stores per month in 2002.