The Zara store and its great economic growth
In 1975 he opened the first Zara store, of the Inditex Group, founded by businessman Amancio Ortega Gaona;In A Coruña, Spain.
In its principles, Amancio Ortega begins in a modest workshop, where he makes dresses and women’s bats for distribution in 1963. In ten years the squad became formed by 500 people. Its expansion throughout the Spanish territory did not take much, towards the 80s ’Zara had more than 25 stores in Spain. In 1988 he took his first step abroad, opening a store in Porto, Portugal. Later, towards the 90s, international expansion began.
Today, the Zara Group has a strong international presence, with more than 2000 stores around the world, all located in strategic areas.
Zara is the first Spanish company specialist in textile. Its model is based on manufacturing and distribution control, with effective logistics. It controls orders and deliveries, by applying the “just-in-time”, implanted in all units and departments;Through which Zara breaks the traditional rules of the fashion supply chain, betting on a reduced inventory and the renewal of their collections continuously, in order to respond to the needs of the consumer quickly.
The control and speed of the design, manufacturing and distribution process is the key factor of its success. Having a period of 15 days for the domestic market and 20 days in the international market. Adapting the design of your collections according to the destination. The capacity to respond to demand conditions is high, thanks to the proximity of production to points of sale.
The brand differentiating strategy is based on several factors: quality and design, offering quality products and new trends. Control over the entire value chain, integrating vertically all the main activities of the value chain (design, production, logistics and sales) in its own stores;While, for the rest of the processes such as the preparation, external and own workshops are subcontracted to reduce costs. The "Just-In-Time", mentioned above. The strong financial system, since the company has well -appreciated shares in the stock market. Homogeneity, whereby the brand follows the same strategy in all its stores. And finally, the segmented offer, covering the entire market.
By consolidating as an important brand in the Spanish State, Zara was able to enter the international market, increasing its growth since the national market was saturated. By extending internationally, the location of its factories changed, as well as its suppliers;which allowed him to reduce in costs, when opting for the Asian countries where the costs are considerably lower and it is more profitable to produce.
Zara advocates his international vocation. The company never limited its growth. From the first store in Porto and the success it had, which led Zara to expand to two markets with high international transcendence such as New York and Paris, fashion capitals;until you expand at least one country per year.
When selecting the countries to which Zara wanted to extend, those Spanish similar markets were sought in which to apply similar strategies. Starting with countries of the European Union and extending to countries as disparate as India or Ecuador, where it performs macroeconomic and microeconomic analysis to establish the viability of a possible entry into the country.
Once the expansion analysis of the area where you seek to open a store is carried out, the decision is made to carry out the expansion or look for another area that is more suitable for the company. The input strategy for the expansion is based on the maximum control of the administration and operation of the stores. As well as expansion in countries with high growth projections and with low risk of business failure.
Another of Zara’s entrance strategies is the so -called "Joint Venture", an agreement between Inditex and some local company in the country where they want to establish themselves;What is advantageous for the company because they already have a knowledge of the market and local experience. Zara’s first three Joint were Germany, Italy and Japan.
The last mode of entry into a new country is through the concession of franchises, applied in those countries with large cultural differences or small markets in the textile sector, where direct investment is not convenient. Some examples would be Kuwait or Saudi Arabia.
Currently, about 15% of sales come from Spain, while the rest is out of the country;highlighting Europe with approximately 40% of billing.
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