Zara (retailer)

Zara España, S.A.

Type	Sociedad Anónima
Industry	Retail
Founded	Arteixo, Galicia (Spain) (24 May 1974 (1974-05-24))
Founder	Amancio Ortega Rosalía Mera
Headquarters	Arteixo, Spain
Number of locations	2,000+ stores
Area served	Worldwide Key people=
Products	Clothing
Revenue	$14.8 billion
Parent	Inditex
Divisions	Zara Diseño, S.L. Zara Logística, S.A
Website	zara.com

Zara (Spanish: [ˈθaɾa]) is a Spanish clothing and accessories retailer based in Arteixo, Galicia, and founded in 1975 by Amancio Ortega and Rosalía Mera. It is the flagship chain store of the Inditex group, the world's largest apparel retailer. The fashion group also owns brands such as Massimo Dutti, Pull and Bear, Uterqüe, Stradivarius, Oysho and Bershka.

Zara was described by Louis Vuitton Fashion Director Daniel Piette as "possibly the most innovative and devastating retailer in the world." Zara has also been described as a "Spanish success story" by CNN.

Origins and history

Amancio Ortega opened the first Zara store in 1975 in a central street in downtown A Coruña, Galicia, Spain. Ortega named his store Zorba after watching the classic film Zorba the Greek, but apparently there was a bar that was called the same, Zorba, two blocks away, and the owner of the bar came and said, "this is going to confuse things to have two Zorbas." They had already made the molds for the letters in the sign, so they just rearranged them to see what they could find, and they found Zara, which leaves fans wondering where the additional A came from, but there is speculation that they had more than one set of letters. In addition, the price for the letters "B" and "O" were double the price as it costs more to make them round and at the time this presented a significant cost for the new company. The first store featured low-priced lookalike products of popular, higher-end clothing fashions. The store proved to be a success, and Ortega began opening more Zara stores throughout Spain. During the 1980s, Ortega started changing the design, manufacturing, and distribution process to reduce lead times and react to new trends in a quicker way, in what he called "instant fashions". The company based its improvements in the use of information technologies and using groups of designers instead of individuals.

Zara's previous logo

In 1988, the company started its international expansion through Porto, Portugal. In 1989 it entered the United States, and in 1990, France.

This international expansion was increased in the 1990s, with Mexico (1992), Greece (1994), Belgium and Sweden (1994), etc. until reaching its current presence in over 88 countries.

Zara stores are company-owned, except where local legislation forbids foreigner-owned businesses; In those cases, Zara franchises the stores.

Products

As of 2007, Zara stores have men's clothing and women's clothing, each of these subdivided in Lower Garment, Upper Garment, Shoes, Cosmetics and Complements, as well as children's clothing (Zara Kids). Currently their sizing on women's clothing goes to a US size 12 or a UK size 14 .

Manufacturing and distribution

Zara in Dundee, UK

The men's department of a typical Zara store. Almere, The Netherlands

Zara clothing made in Portugal

Zara is a vertically integrated retailer. Unlike similar apparel retailers, Zara controls most of the steps on the supply-chain, designing, manufacturing, and distributing its products.

It is claimed that Zara needs just one week to develop a new product and get it to stores, compared to the six-month industry average, and launches around 12,000 new designs each year. Zara has resisted the industry-wide trend towards transferring fast fashion production to low-cost countries. Perhaps its most unusual strategy was its policy of zero advertising; the company preferred to invest a percentage of revenues in opening new stores instead. This has increased the idea of Zara as a "fashion imitator" company and low cost products. Lack of advertisement is also in contrast to direct competitors such as Uniqlo and United Colors of Benetton.

Zara set up its own factory in La Coruña (a city known for its textile industry) in 1980, and upgraded to reverse milk-run-type production and distribution facilities in 1990. This approach, designed by Toyota Motor Corp., was called the just-in-time (JIT) system. It enabled the company to establish a business model that allows self-containment throughout the stages of materials, manufacture, product completion and distribution to stores worldwide within just a few days.

Regarding the design strategy, an article in Businessworld magazine describes it as follows: "Zara was a fashion imitator. It focused its attention on understanding the fashion items that its customers wanted and then delivering them, rather than on promoting predicted season's trends via fashion shows and similar channels of influence, which the fashion industry traditionally used.

Zara in Santo Domingo, Dominican Republic.

50% of the products Zara sells are manufactured in Spain, 26% in the rest of Europe, and 24% in Asian and African countries and the rest of the world. So while some competitors outsource all production to Asia, Zara makes its most fashionable items—half of all its merchandise—at a dozen company-owned factories in Spain and Portugal, particularly in Galicia and northern Portugal where labour is somewhat cheaper than in most of Western Europe. Clothes with a longer shelf life, such as basic T-shirts, are outsourced to low-cost suppliers, mainly in Asia and Turkey.

Zara can offer considerably more products than similar companies. It produces about 11,000 distinct items annually compared with 2,000 to 4,000 items for its key competitors. The company can design a new product and have finished goods in its stores in four to five weeks; it can modify existing items in as little as two weeks. Shortening the product life cycle means greater success in meeting consumer preferences. If a design doesn't sell well within a week, it is withdrawn from shops, further orders are canceled and a new design is pursued. Zara relies on sophisticated information technology, such as PDAs with wireless transmission capabilities, in the hands of store managers, to monitor customers' fickle fashion changes. Zara has a range of basic designs that are carried over from year to year, but some fashion forward designs can stay on the shelves less than four weeks, which encourages Zara fans to make repeat visits. An average high-street store in Spain expects customers to visit three times a year. That goes up to 17 times for Zara.

On 6 September 2010, Financial Times reported that Inditex launched the first online boutique for its best-selling brand Zara. The website began in Spain, the UK, Portugal, Italy, Germany and France—six countries that were among the most important of the company's 76 markets. When asked about the company's late arrival to internet retailing, Pablo Isla, chief executive, said they had been waiting for online demand to build before launching into cyberspace. All items on sale at Zara outlets are available online and at the same prices. Customers can choose from the usual range of paying methods and opt either for a free store pick-up or paid-for postal delivery. The online return and exchange policy is identical to the store system, with shoppers given 30 days to change their minds. Queries are handled by customer service operators or via e-mail or chat messaging. Mobile applications exist for iOS and Android.

On 4 November 2010, Zara Online extended the service to five more countries: Austria, Ireland, the Netherlands, Belgium and Luxembourg. Online stores began operating in the United States and South Korea in 2011. The simple website allows shoppers to filter a search for garments by; type of garment, colours, sizes, prices, reference number, etc. Customers can view products in precise detail from different angles and use a SuperZoom feature to get an exceptional close-up look at the details of each item.

In 2011, Zara entered the Australian market with a three story, 1400sqm store in the Westfield Sydney complex opened on 21 April 2011 and a second three story 1800sqm store at Bourke Street Mall Melbourne which opened on 15 June 2011. Zara will open its third Australian store in November 2011 at Burnside Village Shopping Centre in Adelaide, South Australia. It will be Australia's largest at 2,300sqm, and modelled on the design of their Fifth Avenue, New York store.

In November 2011, Zara entered the South African market with a flagship store in the upmarket suburb of Sandton, in Sandton City Shopping Complex, Johannesburg. In March 2012, Zara opened their second store in South Africa, at Gateway Theatre of Shopping in Durban. Later in 2012, a third store was opened in Cape Town at the Victoria & Alfred Waterfront mall.

Toxic-free production

In 2011, Greenpeace started a dialog with Zara to ban harmful toxins from the clothing production. In November 2012, Greenpeace published the "Toxic threads: the big fashion stitch-up" report, in which Zara was identified as the worst. In 6 of the 10 clothes that were examined, nonylphenol ethoxylates were found, and in 2 cases cancer-inducing amines from azo dyes were found. After this publication, Zara was chosen as an example as biggest retailer in the world to raise awareness. Multiple protests were held at Zara shops all over the world, demanding Zara to come up with an ambitious plan to detox its clothes and value chain.

After 9 days of intense public pressure, Zara decided to switch to a fully toxic-free production. The fashion retailer promised to stop discharging toxins for its clothing production, which also affects 7 other brands in the Inditex Group: Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Üterque. Some of the most damaging toxins will be refrained of earlier, for example PFC's will be banned by 2015. Zara also promised to make information about its suppliers discharging of toxins publicly available for at least 100 suppliers (at least 40 of which are located in China) by the end of 2013. With this commitment, Zara follows Nike, Adidas, Puma, H&M, Marks & Spencer, C&A and Li-Ning, who implemented a Detox-policy as well.

Human rights concerns

On 16 August 2011, a Brazil television show called A Liga (of the Bandeirantes TV network) accused the company of using suppliers who were running sweatshops for their outsourced production. The following day, the Regional Superintendency of Labour and Employment of São Paulo, Brazil, closed a factory that produced Zara's clothing for its poor labour conditions. Illegal Bolivians sewed clothes for 12–14 hours a day, getting paid a small fraction of what the dress was retailed for. Many of the workers were forced into paying their wages to human traffickers who had smuggled them into the country. In a statement, Zara’s representatives said that the accusations of slave labour made against the retailer represent a “serious breach in accordance with the Code of Conduct for External Manufacturers and Workshops of Inditex.” They also countered that all factories responsible for unauthorized outsourcing have been asked to regularize immediately the situation of the workers involved. “The Inditex group, along with Brazil’s Ministry of Work, will strengthen the supervision of the production system of all its suppliers in the country to ensure that such cases do not occur again.”

Controversial products

In 2007, Zara withdrew a handbag from their shelves after a customer noticed a swastika on the bag's design. The bag came from an external supplier and Zara said the symbol was not visible when the handbag was chosen. Zara spokesman Susan Suett said had they noticed the handbag featured the symbol, they would not have sourced it. Once informed of the swastika symbol, they immediately withdrew the item from their shelves.

In 2009, there was an email rumor claiming that Zara "has been openly anti-Semitic for a long time." The email contained a picture of the handbag that featured a swastika symbol in 2007. The Anti-Defamation League addressed the email and said Zara is not anti-semitic and the incident involving the bag was remedied by removing the bag from their shelves. The handbag was produced by an India-based supplier and the swastika is a religious symbol for Hindus and Buddhists that represents the sun, strength, and good luck.

In August 2014, Zara received criticism for selling a toddler T-shirt for closely resembling uniforms worn by Jewish concentration camp inmates. The T-shirt was striped and featured a yellow star very similar to the Star of David. Zara said that the design of the shirt was inspired by "the sheriff's stars from the classic western films." After being on sale for a few short hours, Zara immediately removed the shirt and apologized. The shirt was stitched in Turkey and sold in Zara's Albanian, French, Israeli, and Swedish online stores. Zara received heavy criticism for selling the T-shirt in Israel because Israel does not have sheriffs. Additionally, the word "Sheriff" is outlined in transparent letters on the bright yellow star. Hana Levi Julian wrote in the Jewish Press that the design of the word makes it difficult to see. The company said that the sales received from the T-shirts were marginal and any remaining T-shirts would be destroyed. The Anti-Defamation League response to the shirt was "The shirt emblazoned with the yellow star is in poor taste and is deeply offensive to Jews and Holocaust survivors. To anyone who knows their history, this kind of imagery should be off-limits. We welcome Zara's recognition of the shirts potentially offensive imagery and removal from sale."

Stores

There are over 2000 Zara stores located across 88 countries. Some Zara stores operate as Lefties stores instead of Zara, a brand for low-cost fashion.

Zara stores are located in shopping malls and in the most important retail streets worldwide. Zara usually selects the best located and most expensive real state locations in the world to open its flagship stores. Zara has flagship stores on Fifth Avenue in New York, Oxford Street in London, Calle Serrano in Madrid, Via del Corso in Rome, Champs-Élysées in Paris, Nevsky Prospect in Saint Petersburg, GUM in Vladivostok, Shibuya and Ginza districts in Tokyo, Myeongdong in Seoul, among many others.

Zara sells its goods online in 29 markets in http://www.zara.com/ offering its customers a total omnichannel experience, as they can have delivered the goods purchased online in any Zara store as well as by courier delivery in their desired address.

The number of Zara stores in each country, as of 31 October 2015:

Africa

Country	Store Count	Online Store
South Africa	6	No
Egypt	5	No
Morocco	4	No
Tunisia	3	No
Algeria	1	No
Total	18

Americas

Country	Store Count	Online Store
Mexico	68	Yes
United States of America	62	Yes
Brazil	55	No
Canada	26	Yes
Colombia	12	No
Argentina	10	No
Venezuela	10	No
Chile	9	No
Guatemala	3	No
Puerto Rico	3	No
Costa Rica	2	No
Dominican Republic	2	No
Ecuador	2	No
El Salvador	2	No
Honduras	2	No
Panama	2	No
Peru	2	No
Uruguay	2	No
Total	274

Asia

Country	Store Count	Online Store
China	177	Yes
Japan	96	Yes
South Korea	43	Yes
Turkey	38	No
Saudi Arabia	30	No
Israel	23	No
India	17	No
Hong Kong	14	Yes
Indonesia	13	No
United Arab Emirates	11	No
Thailand	10	No
Malaysia	9	No
Singapore	9	No
Philippines	8	No
Taiwan	8	Yes
Lebanon	7	No
Kuwait	6	No
Kazakhstan	4	No
Bahrain	2	No
Jordan	2	No
Macau	2	Yes
Qatar	2	No
Oman	1	No
Total	532

Europe

Country	Store Count	Online Store
Spain	451	Yes
France	128	Yes
Italy	101	Yes
Russia	89	Yes
Portugal	84	Yes
Germany	80	Yes
United Kingdom	68	Yes
Poland	48	Yes
Greece	46	Yes
Belgium	27	Yes
Netherlands	26	Yes
Romania	23	Yes
Switzerland	18	Yes
Austria	14	Yes
Sweden	11	Yes
Croatia	9	No
Ireland	9	Yes
Ukraine	9	No
Hungary	8	No
Czech Republic	7	No
Bulgaria	6	No
Cyprus	6	No
Lithuania	5	No
Slovenia	5	No
Denmark	4	Yes
Finland	4	No
Latvia	4	No
Norway	4	Yes
Serbia	4	No
Georgia	3	No
Luxembourg	3	Yes
Slovakia	3	No
Armenia	2	No
Azerbaijan	2	No
Bosnia and Herzegovina	2	No
Estonia	2	No
Iceland	2	No
Albania	1	No
Andorra	1	No
Macedonia	1	No
Malta	1	No
Monaco	1	Yes
Montenegro	1	No
Total	1321

Oceania

Country	Store Count	Online Store
Australia	14	No
New Zealand	Opening 2016	No
Total	14

Totals

Region	Store Count	Online Store Count
Africa	18	0
Americas	274	3
Asia	532	6
Europe	1,321	20
Oceania	14	0
Total	2,159	29

See also

• List of companies of Spain
• European Retail Round Table

References

• Ferdows, K., M.A. Lewis, J.A.D. Machuca. 2004. "Rapid-fire fulfillment". Harvard Business Review, 82(11)

External links

• Official website