The secret behind Zara’s success

Zara is one of the world’s most successful fashion retail brands – if not the most successful one.
With its dramatic introduction of the concept of “fast fashion” retail since it was founded in 1975
in Spain, Zara aspires to create responsible passion for fashion amongst a broad spectrum of
consumers, spread across different cultures and age groups. There are many factors that have
contributed to the success of Zara but one of its key strengths, which has played a strong role in it
becoming a global fashion powerhouse as it is today, is its ability to put customers first. Zara is
obsessed with its customers, and they have defined the company and the brand’s culture right from
the very beginning.
The Zara brand offers men and women’s clothing, children’s clothing (Zara Kids), shoes and
accessories. The sub-brand Zara TRF offers trendier and sometimes edgier items to younger
women and teenagers.

The Zara brand story

Zara was founded by Amancio Ortega and Rosalía Mera in 1975 as a family business in downtown
Galicia in the northern part of Spain. Its first store featured low-priced lookalike products of
popular, higher-end clothing and fashion. Amancio Ortega named Zara as such because his
preferred name Zorba was already taken. In the next 8 years, Zara’s approach towards fashion and
its business model gradually generated traction with the Spanish consumer. This led to the opening
of 9 new stores in the biggest cities of Spain.
In 1985, Inditex was incorporated as a holding company, which laid the foundations for a
distribution system capable of reacting to shifting market trends extremely quickly. Ortega created
a new design, manufacturing, and distribution process that could reduce lead times and react to
new trends in a quicker way, which he called “instant fashion”. This was driven by heavy
investments in information technology and utilising groups instead of individual designers for the
critical “design” element.
In the next decade, Zara began aggressively expanding into global markets, which included
Portugal, New York (USA), Paris (France), Mexico, Greece, Belgium, Sweden, Malta, Cyprus,
Norway and Israel. Today, there is hardly a developed country without a Zara store. Zara now has
2,264 stores strategically located in leading cities across 96 countries. It is no surprise that Zara,
which started off as a small store in Spain, is now the world’s largest fast fashion retailer and is
the flagship brand of Inditex. Its founder, Amancio Ortega, is the sixth richest man in the world
according to Forbes magazine.
Today, Inditex is the world’s largest fashion group with more than 174,000 employees operating
more than 7,400 stores in 202 markets worldwide including 49 online markets. The revenues of
Inditex was USD 23.4 billion in 2019. The other fashion brands in the Inditex portfolio are:

 Zara Home: Home goods and decoration objects founded in 2003. Operating in 183
markets, 70 of them with stores.
 Pull & Bear: Casual laid-back clothing and accessories for the young founded in 1991.
Operates in 185 markets, 75 of them with stores.
 Massimo Dutti: High end clothing and accessories for cosmopolitan men and women
acquired in 1995. Operates 186 markets, 74 of them with stores.
 Bershka: Blends urban styles and modern fashion for young women and men founded in
1998. Operates in 185 markets, 74 of them with stores.
 Stradivarius: Casual and feminine clothes for young women acquired in 1999. Operates
180 markets, 67 of them with stores.
 Oysho: Lingerie, casual outerwear, lounge wear and original accessories founded in 2001.
Operating in 176 markets, 58 of them with stores.
 Uterqüe: High-quality fashion accessories at attractive prices founded in 2008. Operating
in 158 markets, 17 of them with stores.
Apart from fashion brands, Amancio Ortega has also set up a global real estate investment fund,
Pontegadea Inversiones, which manages corporate offices across 9 countries including United
States (Seattle), Britain (London), France (Paris), Canada, Italy, South Korea. These corporate
properties house large companies including Facebook, Amazon and Apple, and prestigious luxury
and retail brands.

The Zara brand strategy

In 2019, Zara was ranked 29th on global brand consultancy Interbrand’s list of best global brands.
Its core values are found in four simple terms: beauty, clarity, functionality and sustainability.
The secret to Zara’s success has largely being driven by its ability to keep up with rapidly changing
fashion trends and showcase it in its collections with very little delay. From the very beginning,
Zara found a significant gap in the market that few clothing brands had effectively addressed. This
was to keep pace with latest fashion trends, but offer clothing collections that are a combination
of high quality and yet, are affordable. The brand keeps a close watch on how fashion is changing
and evolving every day across the world. Based on latest styles and trends, it creates new designs
and puts them into stores in a week or two. In stark comparison, most other fashion brands would
take close to six months to get new designs and collections into the market.
It is through this strategic ability of introducing new collections based on latest trends in a rapid
manner that enabled Zara to beat other competitors. It quickly became the people’s favourite brand,
especially with those who want to keep up with fashion trends. Founder Amancio Ortega is
famously known for his views on clothes as a perishable commodity. According to him, people
should love to use and wear clothes for a short while and then they should throw them away, just
like yogurt, bread or fish, rather than store them in cupboards.
The media often quotes that the brand produces “freshly baked clothes”, which survive fashion
trends for less than a month or two. Zara concentrates on three areas to effectively “bake” its fresh
fashions:
1. Shorter lead times (and more fashionable clothes): Shorter lead times allow Zara to ensure
that its stores stock clothes that customers want at that time (e.g. specific spring/ summer or
autumn/ winter collections, recent trend that is catching up, sudden popularity of an item worn
by a celebrity/ socialite/ actor/ actress, latest collection of a top designer etc.). While many
retailers try to forecast what customers might buy months in the future, Zara moves in step
with its customers and offers them what they want to buy at a given point in time.
2. Lower quantities (through scarce supply): By reducing the quantity manufactured for a
particular style, Zara not only reduces its exposure to any single product but also creates
artificial scarcity. Similar to the principle that applies to all fashion items (and more
specifically luxury), the lesser the availability, the more desirable an object becomes. Another
benefit of producing lower quantities is that if a style does not generate traction and suffers
from poor sales, there is not a high volume to be disposed of. Zara only has two time-bound
sales a year rather than constant markdowns, and it discounts a very small proportion of its
products, approximately half compared to its competitors, which is a very impressive feat.
3. More styles: Rather than producing more quantities per style, Zara produces more styles,
roughly 12,000 a year. Even if a style sells out very quickly, there are new styles waiting to
take up the space. This means more choices and higher chance of getting it right with the
consumer.
Zara only allows its designs to remain on the shop floor for three to four weeks. This practice
pushes consumers to keep visiting the brand’s stores because if they were just a week late, all the
clothes of a particular style or trend would be gone and replaced with a new trend. At the same
time, this constant refreshing of the lines and styles carried by its stores also entices customers to
visit its shops more frequently.
In the following sections, the key components of Zara’s winning formula in the fashion retailing
industry are illustrated.

Customer co-creation: Zara’s principal designer is the customer

Zara’s unrelenting focus on the customer is at the core of the brand’s success and the heights it has
achieved today. There was a fascinating story around how Zara co-creates its products leveraging
its customers’ input. In 2015, a lady named Miko walked into a Zara store in Tokyo and asked the
store assistant for a pink scarf, but the store did not have any pink scarves. The same happened
almost simultaneously for Michelle in Toronto, Elaine in San Francisco, and Giselle in Frankfurt,
who all walked into Zara stores and asked for pink scarves. They all left the stores without any
scarves – an experience many other Zara fans encountered globally in different Zara stores over
the next few days.
7 days later, more than 2,000 Zara stores globally started selling pink scarves. 500,000 pink scarves
were dispatched – to be exact. They sold out in 3 days. How did such lightning fast stocking of
pink scarves happen?
Customer insights are the holy grail of modern business, and the more companies know about their
customers, the better they can innovate and compete. But it can prove challenging to have the right
insights, at the right time, and have access to them consistently over time. One of the secrets to
Zara’s success includes using Radio Frequency Identification Technology (RFID) in its stores. The
brand uses cutting-edge systems to track the location of garments instantly and makes those most
in demand rapidly available to customers. Additionally, it helps to reduce inventory costs, provides
greater flexibility to launch new designs, and allows fulfillment of online orders with stock from
stores nearest to the delivery location thereby reducing delivery costs.
Another secret of Zara’s success is that the brand trains and empowers its store employees and
managers to be particularly sensitive to customer needs and wants, and how customers enact them
on the shop floors. Zara empowers its sales associates and store managers to be at the forefront of
customer research – they intently listen and note down customer comments, ideas for cuts, fabrics
or a new line, and keenly observe new styles that its customers are wearing that have the potential
to be converted into unique Zara styles. In comparison, traditional daily sales reports can hardly
provide such a dynamic updated picture of the market. The Zara empire is built on two basic rules:
“to give customers what they want”, and “get it to them faster than anyone else”.
Due to Zara’s competitive customer research capabilities, its product offerings across its stores
globally reflect unique customer needs and wants in terms of physical, climate or cultural
differences. It offers smaller sizes in Japan, special women’s clothes in Arab countries, and clothes
of different seasonality in South America. These differences in product offerings across countries
are greatly facilitated by the frequent interactions between Zara’s local store managers and its
creative team.
In the fashion world, a trend starts small, but develops fast. Zara employees are trained to listen,
watch and be attentive to even the smallest seismographic signals from their customers, which can
be an initial sign that a new trend is taking shape. Zara knows that the quicker it can respond, the
more likely it is to succeed in supplying the right fashion merchandise at the right time across its
global retail chain. Zara has set up sophisticated technology driven systems, which enable
information to travel quickly from the stores back to its headquarters in Arteixo in Spain, enabling
decision makers to act fast and respond effectively to a developing trend. Its design teams regularly
visit university campuses; nightclubs and other venues to observe what young fashion leaders are
wearing. In its headquarters, the design team uses flat-screen monitors linked by webcam to offices
in Shanghai, Tokyo and New York (the leading cities for fashion trends), which act as trend
spotters. The ‘Trends’ team never goes to fashion shows but tracks bloggers and listens closely to
the brand’s customers.
The fact that Zara’s designers and customers are inextricably linked is a crucial part of the brand
strategy. Specialist teams receive constant feedback on the decisions its customers are making at
every Zara store, which continuously inspires the Zara creative team.

Zara’s super-efficient supply chain

Zara’s highly responsive, vertically integrated supply chain enables the export of garments 24
hours, 365 days of the year, resulting in the shipping of new products to stores twice a week. After
products are designed, they take around 10 to 15 days to reach the stores. All clothing items are
processed through the distribution center in Spain, where new items are inspected, sorted, tagged,
and loaded into trucks. In most cases, clothing items are delivered to stores within 48 hours. This
vertical integration allows Zara to retain control over areas like dyeing and processing and have
fabric-processing capacity available on-demand to provide the correct fabrics for new styles
according to customer preferences. It also eliminates the need for warehouses and helps reduce the
impact of demand fluctuations. Zara produces over 450 million items and launches around 12,000
new designs annually, so the efficiency of the supply chain is critical to ensure that this constant
refreshment of store level collections goes off smoothly and efficiently.
Here are some of the characteristics of Zara’s supply chain that highlight the reasons behind its
success:

 Frequency of customer insights collection: Trend information flows daily into a database
at head office, which is used by designers to create new lines and modify existing ones.
 Standardization of product information: Zara warehouses have standardised product
information with common definitions, allowing quick and accurate preparation of designs
with clear manufacturing instructions.
 Product information and inventory management: By effectively managing thousands
of fabric, trim and design specifications and their physical inventory, Zara is capable of
designing a garment with available stock of required raw materials.
 Procurement strategy: Around two-thirds of fabrics are undyed and are purchased before
designs are finalized so as to obtain savings through demand aggregation.
 Manufacturing approach: Zara uses a “make and buy” approach – it produces the more
fashionable and riskier items (which need testing and piloting) in Spain, and outsources
production of more standard designs with more predictable demand to Morocco, Turkey
and Asia to reduce production cost. The more fashionable and riskier items (which are
around half of its merchandise) are manufactured at a dozen company-owned factories in
Spain (Galicia), northern Portugal and Turkey. Clothes with longer shelf life (i.e. the one
 with more predictable demand patterns), such as basic T-shirts, are outsourced to low cost
suppliers, mainly in Asia. Even when manufacturing in Europe, Zara manages to keep its
costs down by outsourcing the assembly workshops and leveraging the informal economy
of mothers and grandmothers.
 Distribution management: Zara’s state-of-the-art distribution facility functions with
minimal human intervention. Optical reading devices sort out and distribute more than
60,000 items of clothing an hour.
In addition to these supply chain efficiencies, Zara can also modify existing items in as little as
two weeks. Shortening the product life cycle means greater success in meeting consumer
preferences. If a design does not sell well within a week, it is withdrawn from shops, further orders
are canceled and a new design is pursued. Zara closely monitors changes in customer preferences
towards fashion. It has a range of basic designs that are carried over from year to year, but some
in-vogue, high fashion, inspired by latest trends items can stay on the shelves for less than four
weeks, which encourages Zara fans to make repeat visits. An average high-street store in Spain
expects customers to visit thrice a year, but for Zara, the expectation is that customers should visit
around 17 times in a year.
This expectation for such a high frequency of repeat visits is evidence of Zara’s confidence that it
is keeping on top of changing consumer needs and preferences and is helping them shape their
ideas, opinions and taste for fashion. In reality, Zara is also helping in giving birth to new trends
through its stores or even helping in extending the longevity of some seasonal styles by offering
affordable lines.

Sustainability at the core of Zara’s operations

Sustainability has been a hot topic in business for the last decade and is now quickly becoming a
must-have hygiene factor for companies that want to resonate with and win the loyalty of its global
customers. For Inditex, this means having a commitment to people and the environment.

 Commitment to people: Inditex ensures that its employees have a shared vision of value
built on sustainability through professional development, equality and diversity and
volunteering. It also ensures that its suppliers have fundamental rights at work and by
initiating continuous improvement programs for them. Inditex also spends over USD 50
million annually on social and community programmes and initiatives. For example, its
“for & from” programme which started in 2002 has enabled the social integration of people
with physical and mental disabilities, by providing over 200 stable employment
opportunities across 15 stores.
 Commitment to environment: Being in a business where it taps on natural resources to
create its products, Inditex makes efforts to ensure that the environmental impact of its
business complies with UNSDGs (United Nations Sustainable Developmental Goals).
 Inditex has pledged to only sell sustainable clothes by 2025 and that all cotton, linen and
polyester sold will be organic, sustainable or recycled. The company also runs Join Life, a
scheme which helps consumers identify clothes made with more environmentally friendly
materials like organic cotton and recycled polyester.
Additionally, Inditex takes wide-ranging measures to protect biodiversity, reduce its consumption
of water, energy and other resources, avoid waste, and combat climate change. For example, it has
outlined a Global Water Management Strategy, specifically committing to zero discharge of
hazardous chemicals. It has also been expanding its waste reduction programme through which
customers can drop off their used clothing, footwear and accessories at collection points in 2,299
stores in 46 markets today.

Zara’s culture: The word “impossible” does not exist

Zara has a very entrepreneurial culture, and employs lots of young talent who quickly climb
through the ranks of the company. Zara promotes approximately two-thirds of its store managers
from within and generally experiences low turnover. The brand has no fear in giving responsibility
to young people and the culture encourages risk-taking (as long as learning happens) and fast
implementation (the mantra of fashion).
Top management gives its store managers full liberty and control over their store’s operations and
performance with clearly set cost, profit and growth targets with a fixed and variable compensation
scheme. The variable component amounts to up to half of the total compensation – making store
level employees heavily incentive-driven.
In addition, once an employee is selected for promotion, his or her store develops a comprehensive
training program for that individual with the human resources department, which is followed up
by periodic supplemental training – reflecting Zara’s commitment to talent development. The
organizational structure is also flat with only a few managerial layers.
Customers are the most important source of information for Zara, but like any other fashion brand,
Zara also employs trend analysts, customer insights experts, and retains some of the best talents in
the fashion world. The creative team of Zara comprises of over 200 professionals. They all embody
and enact the corporate philosophy that the word “impossible” does not exist in Zara.
For example, while many companies struggle with long lead times in discussions and decision
making, Zara gets around this challenge by getting various business functions to sit together at the
headquarters and also by encouraging a culture (through structures and processes) where people
continuously talk to each other. The sales and marketing teams who receive trend feedback talk
regularly with designers and merchandisers. It is important that there is constant two-way
communication so that sales and marketing teams can talk about new lines to customers and
designers / merchandisers have a strong visibility of customers’ needs and preferences enacted at
a store level. The production scheduling is also closely coordinated so that there is no time wasted
on approvals. The design team structure is very flat and focuses on careful interpretation of catwalk
trends that are suitable for the mass market – the Zara customer. The design and product
development teams, who are based in Spain, work closely to produce 1,000 new styles every
month.
Besides being customer centric, another important reason why Zara’s employee strategy is so
successful is the fact that it empowers its staff to make decisions based on data. Zara has no chief
designer. All its designers are given unparalleled independence in approving products and
campaigns, based on daily data feeds indicating which styles are popular.
Due to the unwavering focus on the customer, the entire business model is designed in such a way
that the pattern of needs for the finished goods dictate the terms of the production process to follow,
instead of having the raw materials determine the nature of the production process – something
that is very rare in multinational companies of similar scale.
In sum, the entire brand culture is extremely customer-centric, which has been and continues to be
a significant contributor to Zara’s success.

The Zara brand communication strategy

Zara has used almost a zero advertising and endorsement policy throughout its entire existence,
preferring to invest a percentage of its revenues in opening new stores instead. It spends a meager
0.3 per cent of sales on advertising compared to an average of 3.5 per cent by competitors. The
brand’s founder Amancio has never spoken to the media nor has in any way advertised Zara. This
is indeed the mark of a truly successful brand where customers appreciate and desire the brand,
which is over and above product level benefits but strongly driven by the brand experience.
Instead of advertising, Zara uses its store location and store displays as key elements of its
marketing strategy. By choosing to be in the most prominent locations in a city, Zara ensures very
high customer traffic for its stores. Its window displays, which showcase the most outstanding
pieces in the collection, are also a powerful communication tool designed by a specialized team.
A lot of time and effort is spent designing the window displays to be artistic and attention grabbing.
According to Zara’s philosophy of fast fashion, the window displays are constantly changed. This
strategy goes down to how the employees dress as well – all Zara employees are required to wear
Zara clothes while working in the stores, but these “uniforms” vary across different Zara stores to
reflect socio-economic differences in the regions they were located. This effectively communicates
Zara’s focus on the mass market, yet another detail that reflects its close attention on the customer.
To tap into the emerging e-commerce trend, Zara launched its online boutique in September 2010.
The website was initially available in Spain, the UK, Portugal, Italy, Germany and France, and
was extended to Austria, Ireland, the Netherlands, Belgium and Luxembourg. Over the next 3
years, the online store became available in the United States, Russia, Canada, Mexico, Romania,
and South Korea. In 2017, Zara’s online store launched in Singapore, Malaysia, Thailand, Vietnam
and India. More recently in March 2018, the brand launched online in Australia and New Zealand.
Today, its online store is available in 66 countries. As of 2019, online sales grew to constitute 14%
of Zara’s total global sales.
As a fast fashion retailer, Zara is definitely aware of the power of e-commerce and has built up a
successful online presence and high-quality customer experience.

Zara’s future brand and business challenges

Charting a new digital strategy in the COVID-19 crisis: With its primarily offline shopping
experience, Zara has been hard hit by global store closures amid the COVID-19 crisis in 2020,
with sales falling 44% year-on-year in Q1 2020 and the company reporting a net loss of USD 482
million. Inditex has announced that it will be closing between 1,000 to 1,200 stores worldwide,
focusing on smaller ones in Asia and Europe. While online sales have been encouraging – Zara’s
online sales for Q1 2020 grew 50% – it is not enough to mitigate the damage.
Amancio Ortega plans to spend USD 1.1 billion scaling up its digital strategy and online
capabilities by 2022 and a further USD 2 billion in stores to improve integration between online
and offline for faster deliveries and real-time tracking of products. Its goal is for online sales to
constitute at least 25% of total sales. To achieve this goal, Zara will need to think of new ways to
engage its customers digitally, not just through its online store, but through online communities
and social media.

 Mobile commerce: Zara woke up late to the potential of mobile commerce and needs to
catch up fast with competitors. Different forms of market analysis strongly point towards
a scenario wherein spends on mobile commerce will overtake desktop based ecommerce
by 2021. On an average, most brands currently get about 15-20% of their website traffic
via mobile devices and this is growing rapidly. With the deluge of investments planned in
the mobile commerce space and Zara’s competitors already having an advantage on the
mobile front, Zara needs to quickly make mobile shopping not only an effortless experience
but also a delightful one.
 Price is not an advantage anymore: Offering the latest fashion lines at affordable prices
continues to be a strategic advantage for Zara, but cannot continue to be the only one.
Across the world, and closer to home in Europe, competitors are cutting prices and refining
their business models to cut the competitive advantage that Zara has. Swedish fast fashion
retailer H&M, which is placed #30 just behind Zara on Interbrand’s list, launched an online
store in Spain in 2014 to take own Zara in its home turf. Again in its home market, it now
faces increasing competition from brands like Mango, which cut prices and started focusing
on fashion segments in which Zara enjoyed popularity. In addition to H&M and Mango,
 other competitors like Gap and Topshop are all fighting for a share of the fast fashion retail
market pie. Also with the rise of e- and m-commerce, the number of indirect competitors
has mushroomed. We now have online fashion aggregators that bring in multiple brands
under one single online platform and cut through borders and price segments. Some
examples of such aggregators who are doing well include Lyst, Farfetch, Spring and Yoox
Net-a-Porter.
For Zara to effectively compete and maintain its strategic advantage, the focus needs to shift away
from price but towards quality. Even today the Zara brand enjoys high levels of appeal, which is
evident by the serpentine queues outside its stores when it launches in new markets. There is a
need for Zara to start investing in building a strong brand positioning and aggressively
communicate it. Additionally, Zara needs to adopt, imbibe and leverage social media and digital
platforms in its advertising and communication strategies deeper going forward.

 Need for marketing strategy to evolve: As discussed above, Zara does not engage in
advertising and instead uses its store locations as a marketing strategy. However, brand
communication is crucial in attracting new customers to the brand to support its growth.
Without advertisements, Zara relies heavily on word of mouth or social media. This causes
the perception of potential customers towards Zara to be heavily shaped by family and
friends, which may not be accurate. In addition, Zara’s social media platforms such as
Facebook and YouTube exists merely as a feed for updates rather than a platform that
consumers can interact with. Its videos on YouTube are also seeing very low viewership
in comparison with its follower count, which is not ideal as videos are a powerful medium
for brands in the fashion industry. This is a gap that Zara needs to plug immediately as the
reach and impact of social media marketing gets stronger. As Zara’s target customer
segments start using more social and digital platforms for communication and for sharing
their lives, it is important for Zara to have a strong presence on such platforms.
 Family business planning and succession: With various technological and business
disruptions in the past decade, leadership in the 21st century will be influenced by constant
change, geopolitical volatility, and economic and political uncertainty. For Zara’s first 36
years in business, the brand has been controlled by its founder Amancio Ortega, who is
currently 85 years old. In 2011, Ortega passed the chairman title on to Pablo Isla, Zara’s
Deputy CEO since 2005.
Succession is currently taking place at Inditex and generational transfer will empower the next
generation in one of the wealthiest business families in the world. Pablo Isla, chairman of Inditex
since 2011, steps down in April 2022, and 37-year-old Marta Ortega will take over as chair in the
company that her father Amancio Ortega started with his ex-wife Rosalia in 1975 in Galicia, Spain.
Marta Ortega is the youngest of Amancio Ortega’s three children.
Marta Ortega will become a non-executive chair, and will head the Inditex group, the portfolio of
companies including supervision of strategic operations. She has been with Inditex for over 15
years, starting out working in a Zara store at King’s Road in London, and as an assistant at the
portfolio brand Bershka. In recent years, Marta Ortega has been involved in strategy, brand
building and fashion proposals for the Inditex portfolio of brands.
Marta Ortega will not be involved in daily management of the financial performance to shield her
and the family from too much public exposure. Amancio Ortega has always been known for
appearing less in public and avoiding any media exposure. His photo did not appear in the Inditex
annual report until 2000. Marta Ortega seems to be more open to media interviews and public
appearance, and granted her first interview with Wall Street Journal in August 2021.
Óscar García Maceiras will be appointed CEO of Inditex in April 2022 and will run the daily
business. He joined Inditex in March 2021 and is currently general secretary of Inditex and
secretary of the board.
The sharing of executive powers between the chair and the CEO to enhance corporate governance
has historically been less common in the corporate world in Spain but is often seen in Europe and
elsewhere. Inditex will therefore return to dual leadership in April 2022 with Marta Ortega as chair
and García Maceiras as CEO, the very same structure that ran for six years with Amancio Ortega
as chairman and Pablo Isla as CEO until 2011.
Despite working at Inditex for over 15 years, Marta Ortega Pérez does not hold an office. Her
father, Amancio Ortega, never had an office either and always preferred to work in an open space
in the fashion design department to be close to teams around him.
To effectively manage the above changes, Zara’s next generation leadership needs to step up to
the succession planning challenge by being resilient in staying true to the brand promise to
consistently produce “freshly baked clothes” for its fashion-forward consumers, and by balancing
both short-term (profitability) and long-term goals (growing the business and reaching more
consumers).
More importantly, despite Zara’s global reach and consequent product standardization, it needs to
constantly find new ways to serve local fashion needs and preferences of its consumers across the
globe. This will be a challenge for the brand’s leadership in the next decade.

Conclusion: Take Zara’s cue and listen to your customers

The Zara brand was born with a keen eye on its customer – its ability to understand, predict and
deliver on its customers’ preferences for trendy fashion at affordable prices. In addition to its
effective supply chain, the brand’s ability to have its customers co-create designs is unique and
provides it with a competitive advantage. Most fashion trends often start unexpectedly, originate
from uncommon places and grow out of nowhere. With reference to the pink scarf trend mentioned
above, it could have been that Hollywood actress Scarlett Johansson had worn a pink scarf to a
charity gala the evening before in Los Angeles, or golf star Michelle Wie had showcased a pink
scarf at a celebrity tournament in Asia. The fact that Zara was able to quickly jump on to this trend
and provide hundreds of customers with the pink scarves they desperately wanted to buy.
In a world swamped with Big Data, and yet more collected at an even more rapid pace than before,
brands still need to be careful and observant. Big Data does not provide answers to all business
challenges, and it may be too hyped to be considered as the Holy Grail.
One of the secrets behind Zara’s global success is the culture and the respect for the fact that no
one is a better, authentic trendsetter than the customer himself or herself – and this philosophy
needs to be continually reflected in all its business strategies going forward.
So, why not consult your customers for a start? Zara always does.

Discussion:
1. What’s Zara competitive strategy?
2. What are the strategic resources and core competencies behind Zara’s competitive
advantage?
3. Describe Zara’s business model.
4. Explain Inditex’s corporate strategy. Doest it make sense to you?
5. What should Zara do to stay competitive in the years ahead?