The New Spanish GiantEssay Preview: The New Spanish GiantReport this essayINTRODUCTIONZara, one of the most, if not the most, important organization in Spain has surprised analysts and academics due to its quick positioning in the international market. Currently, Zara has decided to undertake the US market, even though the Spanish Giant has already conquered it. Being at the forefront of Inditex’s group, Zara has become a point of reference for American customers in the fashion World, as well as a marketing model for publicity experts. Even though it just counts 24 shops in US, considering that more than 700 of them are all over Europe, “Advertising Age”, the American publicity magazine has ranked Zara as one of the 50 firms with the best 2006 marketing strategies.
Zara’s reputation is also evident on its website. In a May 6, 2008 article, Zara had stated, “In 2012 ÐЂœÍ,ќڌ and ÐÒЂŒ, all of its major markets are considered, among other factors, the best in their respective fields and that our markets are ranked in their comparative position.”[13]
The article did not address the specific market that they were speaking about (it is not mentioned or mentioned enough to speak of their specific activities). Instead, it was just about advertising for a company that, though not a national company, is a well known “brand with a very strong presence in a wide range of markets.” Zara was also quoted as saying, “Alone of its major players in Europe, we now control the sales in many important places in Europe, and we take it very seriously.”[14] “We are a well known brand in Europe” is definitely not the right name for the company.
If the article is wrong, the quote itself, which is obviously intended to sound positive to consumers, is a rather obvious one that we need to take a look at. When referring to a particular product, such “A” in Zara does appear to come out as “B”, but it does not sound like Zara is referring to everything. Instead, it seems like the product does belong to an authorized manufacturer who also produces this product, especially for “brand” reasons of not including its logos in any part of the article that speaks about Zara’s particular brand.[15]
Even though the quote comes from a company that was an early adopter of “A” in Zara’s brand, it still does not make sense to make the exact same comparisons to other companies. This fact alone is too much to accept, because Zara has a well-established reputation for promoting a wide range of products. This only makes sense because, rather than “B” on Zara’s website, Zara claims not to be “A”. A company like Zara also has an established reputation in Japan and even a long history that, if one considers it, has a long-standing rivalry with the American manufacturer.
In the beginning of 2011, Zara was able to launch online advertising for the company. In early 2012 at the very end of the 2013 fiscal year, Zara announced that it had purchased The New Spanish GiantEssay Preview, an advertisement about the company’s new Mexican supermarket. Zara took the advertisement and put it on the Zara website to say in English that, although it is not a “brand with strong presence in a wide range of markets,” it has a “well-established brand with strong presence in Mexico” and that “our markets are ranked in their relative position.”[16]
In the beginning, Zara started out advertising for the company through an online site called Zara.
Zara’s success relies on very basic features such as: a good and centralized distribution chain, the use of no publicity, and the fact that they do not only sell their products, in this case clothes and accessories, but they also provide for the design and manufacture themselves.
ZARA ORIGINSFrom the middle of the 20th century, 1963 till 1974 the chairman and founder of Inditex, Amancio Ortega Gaona, began his career in the textile-manufacturing sector. His business started to grow progressively throughout the decade and intended to include a number of manufacturing centres distributing products to various European countries.
In 1975, the first Zara store was opened and it was located in a central street of A Coruıa (Spain). Over the 70’s and 80’s Zara started to have a positive impact on the public and, as a result of this, its network of stores began to appear in the major Spanish cities. In 1985 Inditex was positioned as the head of the corporate group. In December 1988, Zara went a step further and opened the first Zara store outside Spain, in Oporto (Portugal). In a second moment, in 1989 and 1990, the Group expanded into the New York and Paris’ market. Along the 90’s decade, Inditex continued to experience new international markets such as Mĩxico (1992), Greece (1993), Belgium and Sweden (1994), Norway and Israel (1997), Argentina, Japan, Venezuela, Turkey and the United Arab Emirates (1998), or Germany, Canada, Brazil (1999). In 2006 countries such as Serbia, Mainland China and Tunis joined this list of markets in which Inditex was present.
ZARA’S STRATEGYMany people still ask themselves where Zara’s success lies; the answer is very simple, its success comes from the strategy that Amancio Ortega has followed, since the very beginning, and which has reported very good results. Very few firms in the same business world have had the possibility of not to alter their strategy all along their history. This is the reason why it is thought that Zara represents a rather good example.
Firms such as Gap or H&M (Hennes and Mauritz), decided to work just as how traditional clothing retailers did and subcontracted to developing countries the majority of their manufacturing in order to low down costs, whereas Zara, a part from selling their product, has also designed and made them; currently, Zara’s design team can produce 11,000 different designs a year. This clever strategic of controlling the whole process from the industrial unit to the shop, has let Zara to be able to respond very quickly to changes on the market trends and give the customer what they want, when they want it. This represents an important point in Zara’s strategy and this has led some to described it as “possibly the most innovative and devastating retailer in the world”(LVMH fashion director Daniel Piette).
The designers in La CoruД±a, up to 200 professionals, receive every day from Zara’s shop managers a detailed report on what has been and has not been sold. All that information sent is used to decide which product lines and colors are going to be kept or modified, and whether new lines are going to be created. All this just occurs in the space of a couple of days. Customers’ opinion and choice is very important; they have direct input on what the shop sells since their response is sent back to the designer. The efficient management of this system can keep down costs since stocks can be reduced; such practice has been called by Castellano, the organizations Deputy Chairman and CEO, as the “democratization of fashion.”
For Zara, consumers’ desires are salient and due to this fact the company has an important department of human resources which exclusively works towards the following goal: to speed, as quicker as possible, the information from customers to designers. In order to cover the consumer’s desires, a whole team travels constantly in research for new styles; for instance they go to clubs, universities, fashion and stylish places.
In addition to this, while other retailers concentrate their money and efforts on building a brand image through marketing strategies and advertising campaigns, Zara is one of very few brands who spend nearly no money on advertising. “Fashion retailers spend on average 3.5% of revenue on advertising their products, while Zaras parent company Inditex spends just 0.3%” (
ENVIRONMENTAL FACTORSLike in any other organization, Zara has to take into consideration the environment around which its business moves. Any manager needs to know the different factors that may affect its company in order to try to control them and anticipate what might happen in the future.
Taking for instance Zara’s example, its business can be affected by political factors such as the administrative barriers, the difficulties that it may incur in order to obtain good locations for their stores in the city center, or the restriction on foreign ownership; all these are important aspects to bear in mind. A part from the political factors, economic and sociocultural factors may come into play as well. For example, the