An Examination of The Business Strategies of Zara, a Fashion Retailer

One of the phenomena in Spain is the rise of Inditex, known for its ownership of Zara. It would seem odd that Inditex, an aggressively expanding, global company would be headquartered in La Coruña, a typical, quiet European city. Yet despite being based in a troubled country with over 50% unemployment for those under 30, it is still able to generate large demand for clothes. Zara is a company that has taken advantage of “fast fashion” where the most recent trends displayed at fashion shows are redesigned and manufactured cheaply for the general populace. Many people at the forefront of the fashion industry agree that Zara’s “fast fashion” has changed the fashion industry.

Zara’s “fast fashion” has evolved as a result of people’s continuous desire for change and new things. Why exactly do people desire to change clothes constantly despite it being seemingly frivolous and the evolution of fashion having seemingly no sense of direction? Agnes Brooks Young answers this quandary by presenting the theory that our spiritual needs for “experience, recognition, and response” (167) must be fulfilled, which are just as necessary as our physical needs i.e. food, shelter and clothing. Brooks states in his book, “the fashion of each new season is a tentative experiment in partial, cautiously embraced by women until its general assurance is assured” (170). In the case for women, they want to be beautiful and stand out from her peers. At the same time, these changes are slow because women do not want to be undesirably conspicuous for wanting to be unique. No other belonging is as personal or revealing of a woman’s personal preferences. Fred Davis also offers a supplementary explanation for the origination of fashion cycles. In Davis’ book, he points to Charles Frederick Worth as the man who revolutionizes fashion. In the mid nineteenth century, Worth become the first person to label a clothing line, thereby publicizing himself to the public. Prior to this event, clothing styles would not change for more than decades at a time. In his research, he uses Sprole’s theory to analyze fashion. This theory conceptualizes fashion as a process: invention, fashion leadership, increasing social visibility, conformity within and across social groups, social saturation, and decline and obsolescence - each step is equally important. Modern technological advancements have made brands more well-known and changes in fashion more publicized; as a result, people are more knowledgeable of what they want. Davis concludes that “Intensive capitalization…of the apparel industry, consumer affluence along with the democratization and loosening of class boundaries, and the greatly quickened flow of information via electronic media” (Davis 107) as the reasons to the quickly changing consumer preferences. “Fast fashion” has developed as a result of this modern phenomenon. Its success stems from its ability to take advantage of the quickened pace of each step of Sprole’s theory, becoming a highly successful business model for a company such as Zara.

Zara’s effective copying of designs has increased the speed of copying among all fashion designers. Raustiala comments one of the unique things about the fashion industry is that “Fashion firms take steps to protect the value of their trademarked brands, but appear to accept appropriation of their original designs as a fact of life” (Raustiala, Sprigman 4). Legally, it would seem that intellectual property would be more highly guarded in an industry that produces a huge variety of goods. Critics of the industry have criticized current legal regime for failing to protect apparel designs. Despite this, the fashion industry is surprisingly quiet on the subject of copying. Also unique to this industry is that there have not been any anti-piracy campaigns. Raustiala argues that this low emphasis on protecting intellectual property causes innovation in the retail industry in what is the so called “piracy paradox.” Nebahat Tokatli also concludes this as well, observing that Zara has “‘whisking budget interpretations of catwalk styles into its stores with breathtaking speed’” (29). A designer dress photographed on a model during fashion week usually will not arrive in department stores for months but an imitation or a derivative can be spotted hanging in Zara in a couple of weeks. While discussing this issue with his colleague, she mentions that the clothes she saw on a visit to a Zara store reminded her of Prada, Alexander Wang, Balmain, and many other high-end brands. Such high-end designers are now forced to reanalyze their marketing and release schedule in response to Zara’s success in order to remain competitive. Hansen acknowledges Zara’s success for their ability to “make 840 million garments a year and has around 5,900 stores in 85 countries, though that number is always changing because Inditex has in recent years opened more than a store a day, or about 500 stores a year.” Zara has taken copying to its limits, doing away with the innovation process and has perfected the production process. As a result of this efficiency, Zara has been able to grow quickly.

Zara’s quick response to trends has affected the rate at which other fashion companies respond to consumer demands. Tokatli notes in her research that “fast fashion” looks to increase variety to customers. Shortened lead times and production runs are characteristics that are associated with “fast fashion” versus traditional ready to wear and haute couture. Zara offers customers with decently made and inexpensive clothes in high end looking stores. As a result, customers do not receive the feeling that they are buying something “cheap” (Tokatli 28). Hansen notes that “a brand at Inditex will make a fall collection, and then ship only three or four dresses or shirts or jackets in each style to a store.” Because styles cycle quickly, customers are forced to purchase impulsively because they know will not get a second chance to purchase the clothing a week later. Zara stores are located within close proximity to its factories, allowing it to quickly respond to customer preferences. More than half of Zara’s factories are owned by Zara itself – this vertical structure allows for fast flow of information when changes of production need to be made (Hansen). As a result, there’s very little excess inventory, driving down losses that traditional retailers deal with. The money saved here is used to respond more quickly to producing clothes that fit the newest consumer preferences. Store managers are trained to request more if there’s demand for a particular style. Popular styles are copied instantly. Raustiala notes that the beauty to copying is that it also generates new ideas. “Of course, many “copies” are not point-by-point reproductions at all, but instead new garments that appropriate design elements from the original and re-cast them in a derivative work” (Raustiala, Sprigman 40). The combination of consumers having access to the internet and lower costs of production has significantly accelerated the pace of changing consumer preferences. Consumers are much more knowledgeable about what they want and Zara must respond appropriately to these trends. Hansen quotes a spokeswoman commenting, “They thought that animal prints would finish by summer, but it kept going…In the beginning of this season we had fluorescent colors. It was a trend in April and May, and it was very successful and then that was it.” Trends can last a half a year, but some can be finished in a month. Close monitoring of consumer demands is required to make good decisions in production runs. Consumer preferences are highly volatile, but with Zara’s high level of reactivity, old styles can be cycled and new designs can emerge to fit newer consumer demands.

Zara’s high reactivity to consumer preferences has affected fashion retailers. Founded in 1974, it has grown in a little over 40 years to become the world’s largest fashion retailer. “Fast fashion” has taken the world by a storm. It is a new way of supply immense variety with competitive pricing. It is changing the way producers must think about producing goods in order to compete with Zara. New markets are tapped into daily as a new Zara store is opened. Perhaps this is the future of fashion retail. However, is this really a sustainable business model? In the end, it is up to the consumer to make the decision.