How Zara became the undisputed king of fast fashion?
Zara is one of the biggest international apparel brands. Zara invites customers from around 93 markets to its organization of 2000+ stores in upscale markets on the planet’s biggest urban communities. With these stores, Zara generates 18 billion Euros annually.
The brand has been fruitful in keeping up its central goal to give quick and reasonable designs in the world of fashion. Zara’s way to deal with configuration is firmly connected to its clients. This story is about how Zara became the undisputed king of Fast fashion.
Fashion is the imitation of a given example and satisfies the demand for social adaptation. . . . The more an article becomes subject to rapid changes of fashion, the greater the demand for cheap products of its kind. — Georg Simmel, “Fashion” (1904)
History of Zara: The Long Story Cut Short
Amancio Ortega launched the first Zara store in 1975 in Central Street in downtown A Coruna, Galicia, Spain. The main Store included low-value look-a-like designs of famous and better-quality dress styles. The store ended up being a triumph and Ortega Began opening more Zara stores throughout Spain.
During the 1980s, Ortega began changing the plan, assembling and dissemination cycle to diminish lead times and respond to new patterns in a snappier manner in what they called “Moment Fashions”.
In 1980 the company started its international expansion through Porto, Portugal in the 1990s, with Mexico in 1992. Since then Ortega has continued to grow and create brands such as Pull & Bear, Bershka , and Oysho . It has acquired groups like Massimo Dutti and Stradivarius . Even though these brands have been contributors to their parent group Inditex’s success, Zara is still the principal growth driver.
Zara’s Customer-driven Value Chain
Unlike other Inditex chains, Zara has focused on manufacturing fashion-sensitive products internally. The latest designs were continuously in production as per changing customer’s preferences. Many competitors were producing just a few thousand SKUs whereas Zara was producing several hundred of thousands of SKUs in a year. These SKUs varied as per color, size, and fabric.
Zara’s designs are not dependent on design maestros. Instead, its designers carefully observe the catwalk trends and try to implement them for the mass market. The design team continuously creates variations in a particular season. Thereafter expanding on successful designs.
Fast Supply Chain:
Zara’s flexible supply chain allows it to dispatch new ranges to shops two times per week from its central distribution center that is an approximately 400,000-square-meter facility located in Arteixo, Spain. This kind of business system called vertical integration eliminated the need for local warehouses. The strategy here was to reduce the “bullwhip effect”. Let’s see what the bullwhip effect is:
The bullwhip effect is a distribution channel phenomenon in which demand forecasts yield supply chain inefficiencies. It refers to increasing swings in inventory in response to shifts in consumer demand as one moves further up the supply chain. Wikipedia
It was a matter of a few weeks and a new design was on the shelf for the customers. Isn’t cool? These designs of clothes and accessories were quickly moved to fancy stores in prime locations but at a cheap price. This strategy has attracted a lot of fashion yet money conscious customers.
We want our customers to understand that if they like something, they must buy it now because it won’t be in the shops the following week. It is all about creating a climate of scarcity and opportunity. Luis Blanc, one of the former Inditex’s international directors
Zara’s Retailing Strategy
Zara instead of focusing on improving its manufacturing efficiency focused on improving its retail strategy. This retailing strategy was about following fashion trends quickly even it means there is an unmet demand. As was previously discussed, this also helped Zara in creating a FOMO for its products. The two components of its retailing strategy were dependent on its upstream operations: Merchandizing and Stores.
Read: The Torchbearers of Sustainable Fashion
Merchandising is the promotion of goods and/or services that are available for retail sale. It includes the determination of quantities, setting prices for goods and services, creating display designs, developing marketing strategies, and establishing discounts or coupons. Investopedia
- Zara placed emphasis on the freshness of its designs. It wanted to create a sense of exclusivity. It never focused on creating bulk items of one design. Zara had confidence in its fast supply chain of twice a week shipment to the store with the latest designs. Thre quarter of its merchandise gets replaced in just a month. How about that?
The success of your business is based in principle on the idea of offering the latest fashions at low prices, in turn creating a formula for cutting costs: an integrated business in which it is manufactured, distributed, and sold. Amancio Ortega
Fun Fact : An average customer visits a Zara store 17 times in a year where the number is 3-4 times for its competitors.
- Zara understood the importance of store locations very well. Zara prices are not expensive but its store location and design made its products look expensive. The brand wanted its customers to have a premium feel at a reasonable price.
We invest in prime locations. We place great care in the presentation of our storefronts. That is how we project our image. We want our clients to enter a beautiful store, where they are offered the latest fashions. Luis Blanc, one of the former Inditex’s international directors
Zara has stores in most upscale markets and shopping centers in the world. You name it and they have a store there. Champs Elysées in Paris, Regent Street in London, and Fifth Avenue in New York to name a few. As per its latest annual report the value of these properties is valued at almost 8 billion Euros. But the way these stores are managed is a strategy to learn for all retailers.
- We all love grand stores with a lot of variety. Zara has emphasized on creating a grand image of its stores. Imagine a big store at a posh location. How much impressed you would be. The average size of Zara stores has continuously increased over the years. In 2001 the average store size was 910 sq.m whereas in 2018 the size has more than doubled.
Zara’s average store size has increased by 50%: from 1,452m2 in 2012 to 2,184m2 in 2018. That growth has been driven by new store openings – larger flagship stores – as well as the fact that many of the new openings have entailed the absorption of one or more older, smaller units in the same catchment area. Inditex Annual Report
- Zara has tried to standardize the in-store experience with its store window displays and interior presentations. As the season progresses, Zara consistently evolves its interior themes, color schemes, and product placements. All these ideas come from the central team in Spain and regional teams implement with necessary region-based adaptations. So much so that the uniforms of the staff were selected twice in a season by a store manager from the latest collection.
Anti-Marketing Approach of Zara
Zara has able to maintain profitability ~13% whereas its major competitor like H&M is at 6% . This has been possible not only because of its efficient supply chain we discussed above but also because of its no advertising or limited advertising policy.
This is what makes Zara really one of a kind. The organization just spends about 0.3% of deals on promoting and does not have a lot of advertising to discuss. The usual trend in the industry is to spend 3.5% on advertising. Zara never shows its clothes at expensive fashion shows also. It first shows its designs at stores directly. But why does not Zara believe in advertising? There are primarily two reasons:
- First, as we discussed it saves Zara a lot of money. So much so that it has now one of the highest profitability.
- Second, it brings exclusivity and prevents overexposure of a design. Customers feel like if they purchase a shirt at Zara, five others won’t have that equivalent shirt at work or school.
Read: Viral Marketing over the Long-Haul ft. Burger King
Zara is a perfect case study to learn the perfect operations strategy, perfect marketing strategy, perfect pricing strategy, and whatnot. It’s all strategies are so perfect. It is also a perfect example to understand how a traditional brand is evolving itself with time to stay relevant.
As per its annual report , In 2018, Zara launched its global online store, marking a milestone in its commitment to having all of its brands available online worldwide by 2020. Zara continued to earn global accolades for its collections and initiatives, its integrated shopping experience, and its commitment to sustainability, with over 90 million garments put on sale under the Join Life label.
Zara is just not a brand of fast fashion. Its much more than that now. And that’s why it’s actually the true king of fast fashion.
Interested in reading our Advanced Strategy Stories . Check out our collection.
Also check out our most loved stories below
IKEA- The new master of Glocalization in India?
IKEA is a global giant. But for India the brand modified its business strategies. The adaptation strategy by a global brand is called Glocalization
Why do some companies succeed consistently while others fail?
What is Adjacency Expansion strategy? How Nike has used it over the decades to outperform its competition and venture into segments other than shoes?
Nike doesn’t sell shoes. It sells an idea!!
Nike has built one of the most powerful brands in the world through its benefit based marketing strategy. What is this strategy and how Nike has used it?
Domino’s is not a pizza delivery company. What is it then?
How one step towards digital transformation completely changed the brand perception of Domino’s from a pizza delivery company to a technology company?
Why does Tesla’s Zero Dollar Budget Marketing work?
Touted as the most valuable car company in the world, Tesla firmly sticks to its zero dollar marketing. Then what is Tesla’s marketing strategy?
Microsoft – How to Be Cool by Making Others Cool
Microsoft CEO Satya Nadella said, “You join here, not to be cool, but to make others cool.” We decode the strategy powered by this statement.
A marketing aggregator, business story teller, freelancer. I'm pursuing my PGPM, and is a 2nd year marketing student at MDI.
Revolutionizing Supply Chain Planning with AI: The Future Unleashed
Is AI the death knell for traditional supply chain management?
Merchant-focused Business & Growth Strategy of Shopify
Business, Growth & Acquisition Strategy of Salesforce
Hybrid Business Strategy of IBM
Strategy Ingredients that make Natural Ice Cream a King
Investing in Consumer Staples: Profiting from Caution
Storytelling: The best strategy for brands
How Acquisitions Drive the Business Strategy of New York Times
Rely on Annual Planning at Your Peril
How does Vinted make money by selling Pre-Owned clothes?
N26 Business Model: Changing banking for the better
Sprinklr Business Model: Managing Unified Customer Experience
How does OpenTable make money | Business model
How does Paytm make money | Business Model
How does DoorDash make money | Business Model
Write a comment cancel reply.
Save my name, email, and website in this browser for the next time I comment.
- Advanced Strategies
- Brand Marketing
- Digital Marketing
- Luxury Business
- Startup Strategies
- 1 Minute Strategy Stories
- Business Or Revenue Model
- Forward Thinking Strategies
- Publish & Promote Your Article
- Write Article
- TSS Programs
- Fight Against Covid
- Terms and condition
- Refund/Cancellation Policy
- Master Sessions
- Live Courses
- Playbook & Guides
Type above and press Enter to search. Press Esc to cancel.
To read this content please select one of the options below:
Please note you do not have access to teaching notes, luxury fashion retailers' localised marketing strategies in practice – evidence from china.
International Marketing Review
ISSN : 0265-1335
Article publication date: 22 September 2021
Issue publication date: 15 April 2022
From an international retailing perspective, this empirical study aims to examine luxury fashion retailers' changing marketing strategies in China.
Using case studies of 14 luxury fashion retailers, qualitative data were collected via 31 semi-structured executive interviews.
Both standardised global and localised multinational marketing strategies were found to have initially been employed by luxury fashion retailers entering into China. Subsequently, localised multinational strategies became increasingly important for their post-entry operations and business development, particularly in terms of their product strategies. More specifically, as well as the introduction of Chinese brand names, product design has been adapted according to Chinese market conditions, and product portfolios have been adapted to satisfy regional differences. However, localised product sourcing in China is far less common.
As the findings are generated from China, they may not explain luxury fashion retailers' marketing strategies in other markets. Despite the relatively small sample size, the 14 luxury fashion retailer case studies originate from across a wide range of countries, retail formats and ownership structures and are therefore considered to be varied enough to represent the market.
The study offers practitioners insights into the success that can be generated by the manipulation of marketing strategies, particularly product strategies, within the world's second biggest luxury market.
This paper extends the current international retailing literature by examining and comparing the motives and practices of luxury fashion retailers and the increasing localisation of their marketing strategies in China as they move from initial market entry into their post-entry operations.
- Retailer internationalisation
- Luxury fashion marketing
Bai, H. , McColl, J. and Moore, C. (2022), "Luxury fashion retailers' localised marketing strategies in practice – evidence from China", International Marketing Review , Vol. 39 No. 2, pp. 352-370. https://doi.org/10.1108/IMR-02-2021-0079
Emerald Publishing Limited
Copyright © 2021, Emerald Publishing Limited
We’re listening — tell us what you think, something didn’t work….
Report bugs here
All feedback is valuable
Please share your general feedback
Join us on our journey
Platform update page.
Visit emeraldpublishing.com/platformupdate to discover the latest news and updates
Questions & More Information
Answers to the most commonly asked questions here
The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
News & Analysis
- Professional Exclusives
- The News in Brief
- Global Markets
- Fashion Week
- Workplace & Talent
- Financial Markets
- Case Studies
- Online Courses
- Special Editions
- The State of Fashion
- Read Careers Advice
- BoF Professional
- BoF Careers
- BoF Insights
- Our Journalism
- Work With Us
- Read daily fashion news
- Download special reports
- Sign up for essential email briefings
- Follow topics of interest
- Receive event invitations
- Create job alerts
Case Study | Decoding Gucci’s Merchandising Success
- Chantal Fernandez ,
- Hannah Crump
At the start of the Marco Bizzarri and Alessandro Michele era at Gucci in 2015, industry analysts wondered if the brand would break from the aesthetic of the ultra-sexy Tom Ford Gucci era, which had been continued by Ford’s successors long after he had left the business in 2004. But the brand’s new leaders recognised that culture had changed radically in the intervening decades: sexuality and gender were increasingly fluid, and the internet had turned niche interests into mass market trends with much shorter lifespans.
Michele’s fantastical design lexicon came at exactly the right time, providing a rich world of escapism for the luxury shopper that was a near-instant hit and has managed to continue to captivate shoppers.
Key to Gucci's success is a simultaneous creative and merchandising strategy that has shrewdly brought equal attention to short-term fads and staple products which, under Michele and Chief Merchandising Officer Jacopo Venturini 's control, feel part and parcel of the same universe.
While the approach led to dramatically fast growth in the first years, sales have started to slow down in 2019, decreasing 2 percent year-over-year in North America in the second quarter of 2019. During the same period, the sales growth rate in the Asia Pacific region also slowed to 23 percent versus 47 percent the prior year.
In our latest in-depth case study, BoF examines Gucci’s powerful merchandising strategy and explores how it has driven record-breaking growth, while also addressing the challenges Gucci faces now as the mega-brand starts to lose its “cool” factor and slow down in growth.
Click below to read the case study now.
Hannah Crump is Associate Director of Strategy at The Business of Fashion. She is based in London and manages long-form content, including Case Studies and Reports.
- Marco Bizzarri
- Alessandro Michele
- Jacopo Venturini
- Milan, Italy
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions
Post Chloé, Gabriela Hearst Charts Her Own Path
After three-years at the French luxury label, the designer is recommitting to her own label. In an interview with BoF, the designer revealed ambitions for building her 8-year-old namesake brand into the slow-and-steady, sustainable fashion brand of the future.
How to Build a Luxury Outerwear Business
Even as high-end demand slows, outerwear continues to be one of fashion’s most dynamic categories. Executives from Fusalp, Yves Salomon, C.P. Company, Mackage and Selfridges reveal their strategies.
‘Fashion Can Change Africa’: The Pioneering Designers Chasing a World of Opportunity
Global interest in African-made goods has grown in recent years but designers on the continent continue to face production challenges.
The Best of BoF 2023: The Year Luxury Outgrew Fashion
With global demand in flux, brands ramped up their presence at concert tours, Formula One races, tennis championships and more. New creative directors debuted at Louis Vuitton, Gucci, Burberry and Tom Ford.
Subscribe to the BoF Daily Digest
The essential daily round-up of fashion news, analysis, and breaking news alerts.
- BoF Insights (Opens in new window)
- Skip to content
- Skip to search IOPscience
- Skip to Journals list
- Accessibility help
- Accessibility Help
Click here to close this panel.
The mindmapping for marketing strategy: Case study of fashion industry
Chyntia Ika Ratnapuri 1 , Selvi Aprilia 1 , Dian Kurnia Ningrum 1 , Ivan Diryana Sudirman 1 and Doni Purnama Alamsyah 1
Published under licence by IOP Publishing Ltd IOP Conference Series: Earth and Environmental Science , Volume 794 , 4th International Conference on Eco Engineering Development 2020 10-11 November 2020, Banten, Indonesia Citation Chyntia Ika Ratnapuri et al 2021 IOP Conf. Ser.: Earth Environ. Sci. 794 012082 DOI 10.1088/1755-1315/794/1/012082
1845 Total downloads
Share this article
1 Bina Nusantara University, Indonesia
Buy this article in print
The research objective is to build a marketing strategy based on mind mapping carried out in the fashion industry. The research was conducted by using the action research method on incubator business in University with the fashion business that has been start, while the qualitative analysis was based on a survey on mind mapping. The results of the study show that mind mapping can be a source of ideas for the formation of marketing strategies in the fashion industry, namely segmenting, targeting and positioning. The source of ideas in mind mapping makes it easier for entrepreneurs to create a value proposition canvas for the sustainability of the products created by the company. The research findings are especially useful in the fashion industry, where they serve as suggestions for implementing mind mapping for new or on-going companies with the goal of improving the company's product.
Export citation and abstract BibTeX RIS
Content from this work may be used under the terms of the Creative Commons Attribution 3.0 licence . Any further distribution of this work must maintain attribution to the author(s) and the title of the work, journal citation and DOI.
Gucci, Digital Advertising & Strategy Case Study
With modern times come modern ways of doing things. The world of advertising is unlike the billboards and all-encompassing TV ads. Now, advertising is defined by its personalized touch in reaching segmented audiences that can resonate with a brand more than anyone else. And Gucci is no exception to that approach.
G & Co. is a world leading fashion & luxury marketing & advertising agency enabling luxury and fashion brands to enhance customer experiences, drive digital transformation, and build a competitive edge
Gucci parent company Kering Group—the owner of Bottega Veneta, Yves Saint Laurent, Balenciaga, Brioni, Stella McCartney, and other fashion houses—has seen enviable growth in the last few years, reporting in 2017 its first three quarter revenues up over 26% on a reported basis compared to 2016. But Gucci has been the forefront and the crown jewel of the Kering group. With Gucci’s earnings composing Kering’s 39% of corporate revenues and posting a 44.5% growth in 2017, it’s safe to say the Italian luxury fashion brand is enjoying a period of prosperity.
What’s contributing to that growth?
According to Kering chairman and CEO Francois-Henri Pinault, half of Gucci’s sales come from millennials, a generation consisting of 35-year olds and younger. That has been a challenging demographic to reach for luxury brands. What this shows from Gucci is that the attractiveness of the brand’s couture resonates with younger demographics than for the proverbial older generation.
And while the couture does explain why the brand seems to bode well with a younger consumer, it would be imprudent not to look at Gucci’s advertising strategy. In seeking and attracting the millennial consumer’s attention and dollars, we can accredit Gucci’s success to its well-executed advertising and marketing strategies , which had gone concurrently with a digital rollout. In recent years, Gucci has integrated both a strong digital approach with its in-store dominance for an omnichannel strategy that will be definitive for luxury brands’ success in the coming years.
Gucci’s omnichannel strategy is a signal that it is going all-in for the demographic that’s visibly championed the luxury brand. Because 98% of today’s luxury consumers can be found online, it will be more important than ever before to tie the success of a luxury brand like Gucci to its eCommerce strategy, social media approach, marketing strategy , and mobile functionalities with its offline capabilities. The result of that means one holistic user experience that is both unique and compelling to modern consumers no matter where they choose to interact with a brand. Sure enough, Gucci’s digital strategy has become holistic in reach and followed in a surge of new luxury converts in addition to longtime patrons.
It would be criminal to count only Gucci’s digital strategy as the sole reason for its success in recent years. Of course, while helpful, Gucci’s digital approach is only a fraction of the brand’s prosperous growth in revenue and label recognition. Indeed, at the forefront of Gucci’s advertising and marketing strategy is the team that’s directly responsible for the luxury brand’s success: Marco Bizzarri and Alessandro Michele, the CEO and creative director of Gucci, respectively.
The pair has spearheaded the brand’s various fortifying strengths over the last few years; Bizzarri in business and Michele in the creative center. Since late 2014, when Bizzarri’s helm as the Gucci chief executive began, the question over who would fill the creative director position loomed over him and the brand’s future.
Bizzarri would ultimately go with the 12-year Gucci veteran in Alessandro Michele, who had been with the company since working under Tom Ford and had been an associate designer to the now-former creative director, Frida Giannini. Bizzarri made the decision after determining he needed someone that could deliver on his vision of creating a culture of “respect and joy, fostering creativity,” adding, “intuition and instinct are more important than rationality.” For the luxury space, where emotion and experiences eclipse rationality, there could not have been a better choice to lead the new direction than Alessandro Michele.
The two set their roles and responsibilities, Bizzarri taking care of the business side, and Michele to lead the brand’s creative development. Bizzarri does not discuss sales or budgets with Michele, which gives him the creative freedom to express the brand how he believes is best. As to why Bizzarri had done this, the Gucci CEO stated, “You cannot put limits or constraints on creativity.” From there on, the two began a period of covetable growth, and creativity was now the central focus of the Gucci brand.
Leading Gu cci into th e digital age
The first thing both Bizzarri and Michele agreed on was to take Gucci to a new stage in the brand’s history. No longer would Gucci be beholden to its past success and continue on the same track. One thing was of high importance: innovating the way forward.
The biggest challenge in having been presented with this new opportunity as the new CEO of a luxury brand and a new creative director’s appointment was to stand still, says Bizzarri. But that was not the answer. “We have to empower talents, we cannot always tell people what to do, and there’s no limits to growth if you are exposed to innovation.”
First to happen as part of this new, innovative approach to Gucci’s marketing strategy was the shift of the face of the brand. The iconic celebrities of Gucci’s past, such as Elizabeth Taylor, Grace Kelly, Jackie Kennedy, would now be succeeded by the modern-day style icons that would resonate with the increasingly younger luxury demographic: Harry Styles, Rihanna, Lady Gaga, Beyoncé, and Salma Hayek.
And though the Bizzarri-Michele team phased out Gucci’s storied successes in search for new ones better framed for today’s generation of luxury consumers, the resurrection of the GG logo preceded its prominent placing on its new handbags and accessories, with it also restoring the Dionysus buckle for part of its new shoes and bag lines. As a result, six out of seven of Gucci’s best-selling and high-margin accessories have been created by Michele .
The GG logo comeback doesn’t stop there. With free rein, Michele asked graffiti artist GucciGhost to collaborate with the brand for its fall collection. It’s difficult to imagine any other luxury brand would give this much creative freedom as part of its way forward, much less allowing its logo to be redressed. “But such is the way with Gucci, and it demonstrates the embrace of the changing times and need to appeal to today’s luxury consumer,” says Manuel Gonzalez, head of the luxury digital agency G & Co. “As an advertising agency, we commend Gucci’s willingness to adapt and allow consumers to enjoy the brand as they do. It’s user-generated content and collaborations with some of the biggest icons of today’s world that can excite younger consumers.”
Of course, the digitally savvy Kering group knows Gucci’s advertising strategy goes further by investing in its digital innovation and infrastructure. As an early adopter of eCommerce, the Italian luxury brand knows far too well that the millennial demographic that has surged their market share is always online—again, with 98% of affluent consumers stating they use the internet on a daily basis. This segment of the market desires an authentic experience in a digital medium and, as a result, expects a sincere relation with brands online, especially with luxury brands; if consumers are spending considerable amounts of money on luxury wares, the experience should be just as luxurious.
It’s precisely that rationale that has seen Gucci invest heavily in its online strategy and infrastructure. Gucci had redesigned their eCommerce site for the first time in 13 years to signal their intention to meet new consumer expectations. New additions to the site included a find in-store option feature, an excellent product information, gift wrapping features, an expanded customer service through phone and e-mail, and a generous shipping and return policy that has since been recently augmented to consider the pandemic-induced disruptions.
Of course, these leaps in Gucci’s digital transformation are helped in part because of their early adoption of the online world. And while the rest of the luxury world has lost valuable time catching up with the shifting trends in a more digitally-centric world, Gucci has been able to rally loyal customers and uphold its lustrous image through its proactive implementation of its digital strategy while retaining the quintessential aura of exclusivity luxury brands have.
At the same time, Gucci has benefited enormously from the hip hop culture that has promoted the luxury brand for years. From Kanye West dubbing the new phrase to turn “What’s good?” to “What’s Gucci?” to the 2017 rap hit Gucci Gang visibly flaunting the brand, it’s clear the Kering subsidiary is an admirable luxury house.
Not surprisingly, this dominance over hip hop culture has also spurred Gucci’s popularity with younger consumers even more than before. In the first half of 2018, Gucci broke record sales, most of which came from consumers under 35. “What this means for Gucci is that its combination of an excellent online experience, admirable consumer affinity, and embrace for innovation has led to the kind of growth that surely translates to success in the years ahead,” says Juan Manuel Gonzalez, founder of UI/UX and luxury marketing agency G & Co.
Omnicha nnel Strat egy Development
As big as an emphasis as Gucci has put on their online strategy, there’s certainly no denying the luxury brand is reshaping its image for the new age. As of 2017, Gucci had remodeled over a quarter of its boutiques to integrate the in-store shopping experience with its cutting edge digital platform.
On the more corporate side, Gucci added a 37,000 square foot manufacturing facility in Italy named the Gucci ArtLab to meet the growing demand and produce leather goods in a more sustainable manner—all while staying true to its promise of banning the use of fur in its products. As part of Michele’s long-term creative vision, the Gucci ArtLab serves to house innovative and artistic expression to nurture the brand’s embrace of bold ideas, much like the ones that have elevated Gucci to where it is today.
It’s impressive, to say the least, the kind of success the Bizzarri-Michele team has demonstrated. Gucci’s hands-off management approach and understanding that the creative side is never to be capped, along with the digital transformation that’s captured the attention of the growing millennial segment in luxury , has led to the sort of admirable expansion of the Gucci brand name that seems to only herald greater growth ahead. We’re excited to see what more there is to come from Gucci’s advertising strategy.
Exploring the story of Gucci’s rise to the top, the teamwork of Bizzarri and Michele, adventurous creative projects, and smart use of digital technology appear as key elements. As Gucci cleverly fits into current cultural trends and smoothly becomes a part of the digital world, it shares a story filled with useful tips and insights for luxury brands trying to find their way at the crossroads of tradition, innovation, and the digital world.
Their detailed plan, where creativity and planned digital growth join forces, shows a fascinating way forward for brands, carefully balancing respected tradition and lively modern ways. While respecting its rich history, Gucci boldly steps into the digital future, lighting the way for others to bravely follow. From their energetic move to digital to embracing and blending modern cultural changes, their strategies are a beautiful mix of bravery and elegance.
At G & Co., we see not only the bold moves and victories in Gucci's adventures but also notice the detailed plans and special decisions that have launched their successful journey. Building stories for luxury brands, where the excitement of creativity and the accuracy of using data and strategies are super important, needs a strong understanding and skill - an area where we firmly place our expertise.
For those fascinated by luxury and fashion marketing, G & Co. acts as a strong partner. We create unique marketing and advertising plans , carefully lining them up with the dream-like essence of your picky target markets. By combining a past marked by data-driven results with a flexible approach to local and international landscapes, we bring to the table a vital mix of creative energy and strategic wisdom , necessary for winning in this always-changing industry.
Working with G & Co. goes beyond normal agency relationships; it's like teaming up with an expert in the tricky details of the industry, one who is totally committed to delivering real, countable results in a world where the dazzling and data-driven live together.
We invite you to start a journey where your brand’s history and future are turned into a story that connects, captures attention, and converts.
Submit an inquiry to G & Co. on our contact page or click on the blue "Click to Contact Us" button on the bottom right corner of your screen for your convenience. We look forward to hearing from you.
How muc h does Gucci spend o n digital marketing and advertising ?
The most recent annual figures for Gucci’s advertising spend is roughly $567 million, an estimated 11% of Gucci’s revenue.
What did Gucci do f or a digi tal transformation?
Gucci’s digital transformation is unique in that it was one of the first brands to embrace eCommerce in the early 2000s. Thanks to Kering’s early conviction that the online medium would ultimately become necessary, and the bold leadership at Gucci, the luxury brand has gone further to encompass features such as a “find in-store” feature, descriptive product information, gift wrapping features, and customer service through phone and email—all components of a strong online strategy that is certain to give Gucci the edge over its competition.
What is Gu cci’s digital strategy?
Gucci’s digital strategy recognizes who their target audience is, knowing where they spend their time and meeting them where they are to engage them.
Given that Gucci’s social media exposure includes inviting artists like GucciGhost to recreate their patterns as part of their advertising strategy, we can only assume that the luxury brand’s efforts to reach out to their younger audience are certainly working.
Kering, the parent company to Gucci, has shifted its communication budget to 40% digital, up from 20% just four years ago. This can only mean that Gucci sees greater returns for investing in its digital marketing strategy . As a luxury marketing agency, we commend this approach and are confident it will mean even more growth in Gucci’s long-term vision.
What is Gucci’s cu stomer ex perience (CX)?
No matter the medium, Gucci has taken an approach of “brand first, channel second” for its customer experience. That philosophy is essentially what has propelled the brand to invest in its omnichannel strategy to more fully engage shoppers either in-person or online. The consistency with which Gucci has tried and excellently carried out is part of the reason why it has stood out for consumers and only accelerated the brand’s digital presence.
Who is Gucci’s tar get market/custo mer?
Half of Gucci’s sales are attributed to consumers 35 years old and younger, meaning their target market is the millennial and Generation Z consumers who are typically more online savvy than most other consumers. Gucci’s target customers are those who value self-expression and want a brand that values creativity and innovation.
Wh at is luxury bra nd digital marketing , how is it different?
Because of the brand positioning, a luxury brand’s digital strategy will have to look different than any other brand’s in terms of how it engages with customers, showcases its products, and communicates its value.
Instead of the push promotion strategy, luxury brands need to pull consumer interest through relevant and engaging content. How a luxury brand chooses to pull that interest is for them to choose.
Have a question about luxury digital marketing? Shoot us an email at [email protected] .
Why is U I/UX impo rtant for luxury brand eCommerce stores?
A good user interface (UI) and user experience (UX) is essential for any eCommerce store in that it helps browsers easily navigate a website for the sole purpose of making their customer journey easier to finish. Most importantly, an eCommerce store is a window into a brand’s image; the first impression a browser makes when coming across a shop can easily determine whether or not they will continue browsing and ultimately purchase something.
Why is eCommerce important f or any luxury business?
In the rapidly changing world we live in, it’s important now more than ever for brands to adapt to evolving consumer needs. And that includes meeting them where they are. As an advertising agency and eCommerce shop, we know the value in a consumer-centric strategy to help luxury brands excel for the future.
How is eCommerce different for luxury and non luxury brands?
It’s not enough for luxury brands to have a branded site just to check the box off on eCommerce. Consumers today want an experience that matches the quality of a luxury product they purchase. That’s why luxury brands place a great emphasis on tailoring their approach to play on consumer sentiment and meet the mark of exclusivity.
- [VIDEO] The State of Digital Experience in Retail 2024
- The New Consumer Landscape and Work-From-Home Impact | The Retail & Consumer Index
- Retail Trends and Predictions for the U.S. Holiday Season | The Retail & Consumer Index
- Top Retail Market Research Agencies to Work With - January 2024
- eCommerce UX: Essential Design Strategies and Principles
- What is Competitive Intelligence and How Retailers Can Leverage It for a Competitive Advantage
- A Guide to Incorporating Competitive Intelligence in Your eCommerce Strategy
- How to Develop a Competitive Retail Customer Experience Strategy
- What is Retail Analytics + a List of Top 9 Analytics Software Solutions
- How To Perform a Retail Competitor Analysis (With Benefits)
- Top Digital Transformation Agencies & Consulting Firms to Work With - January 2024
- Top Best Retail Consulting Firms to Work With - January 2024
- Top Product Design Agencies to Work With - January 2024
- Top Fashion & Luxury Creative & Media Agencies to Work With - January 2024
- Top Fashion & Luxury Marketing & Advertising Agencies to Work With - January 2024
- Retail Industry Analysis: State of Retail, Outlook, Market Growth
- Top Mobile App Agencies to Work With - January 2024
- Top Shopify Plus Agencies to Work With - January 2024
- Top Digital Product Agencies to Work With - January 2024
- Warby Parker—an Advertising and Marketing Strategy Case Study
- UI/UX Design Deliverables from an eCommerce Agency
- User Experience - UX Resource 2023
- Top 10 Best Performing Brands in 2021 - G & Co. Innovation Index®
- Top Global Retail, Fashion, and Luxury Industry Index 2023: The State of Brands' Digital Performance & Strategy
- LVMH, Digital Advertising & Strategy Case Study
- Guide to Luxury Marketing Strategy: A Luxury Marketing Agency’s Take on What Brands Should Know
- Retail and Apparel Benchmark Index 2022: The State of Consumer Brands' Customer Experience
- Luxury eCommerce: Reshaping through Digital in 2023
- Hermès, an eCommerce Case Study
- Guide to Luxury Digital Strategy: A Luxury Digital Agency’s Take on What High-End Brands Should Know
- Louis Vuitton, an eCommerce Case Study
- Luxury Brands in 2023: Digital Marketing and Customer Experience (CX)
- Guide to Luxury Digital Agencies: What to Look for in a Digital Partner
- Louis Vuitton, a Digital Advertising & Strategy Case Study
- Kering, a Luxury Digital Advertising & Strategy Case Study
- Guide to DTC Marketing Strategy: A DTC Marketing Agency’s Take on What Brands Need to Know
- Gucci, an eCommerce Case Study
- Guide to DTC Digital Agencies: What to Look for in a Digital Partner
- Activewear & Athleisure Industry Index 2021: The State of Activewear Brands' Digital Performance & Strategy
- G & Co. IQ Mapping - Benchmarking Brand & Customer Experiences through Data & Strategy
- Five Industries Poised to Win the 2021 Holiday Shopping Season & Beyond
- DTC Digital Marketing: from a DTC Digital Agency
- Fashion and Apparel, and Luxury Brands in 2021: eCommerce and Direct-to-Consumer (DTC) Strategy and Insight
- Fashion & Apparel Industry Index 2021: The State of Fashion Brands' Digital Performance & Strategy
- What is DTC Marketing?: A Beginner's Guide to Direct-to-Consumer (DTC)
- Fashion & Apparel Brands in 2021: Direct to Consumer (DTC) and User Experience (UX) - Industry Insights & Strategy
- Customer Experience in 2021: What to Learn from the Best Performing Brands in the Fashion, Retail, and Apparel Industry
- Fashion, Apparel, & Luxury: Key Themes for the Industry in 2021 - Digital Insight and Strategy
- Chanel, an eCommerce Case Study
- Customer Experience - CX Survey 2021
- GO TO ACADEMY
- BLOG ARTICLES
- PODCAST EPISODES
- MORE RESOURCES
- PREMIUM CONTENT
Levi's Case Study: Transforming the Apparel Industry
- Written by 440 Industries
- Case Study , Levi's
- June 16, 2023
Picture this: a legendary brand, synonymous with denim and an integral part of fashion history . Yes, we're talking about Levi Strauss & Co., the subject of our fascinating levi's case study.
But even legends need to adapt in order to thrive in today's fast-paced world. In this comprehensive levi's case study, you'll discover how the iconic apparel company has successfully reinvented itself through strategic leadership changes, innovative product development, and savvy marketing campaigns.
Dive into the transformation of their women's denim line and learn about groundbreaking technologies such as Deepika’s Lookbook - an augmented reality wardrobe application that is revolutionizing customer engagement. Explore how Levi’s diversified its offerings beyond the iconic 501 jeans model by introducing new fits and advertising efforts for non-501 models.
We'll also delve into global expansion strategies including production facilities around the world and a focus on menswear with Dockers catering to casual wear market demands. And finally, witness how investing in employee growth and talent development contributes significantly to Levi’s ongoing success story.
Ready for a captivating journey through one of fashion's most storied brands? Let us begin!
Table of Contents:
Levi's new strategy and leadership: a fresh approach to success, cost-cutting measures leading to innovation investments, successes from eureka innovation lab, targeted promotions for increased sales conversions, social media campaigns with human touchpoints, virtual try-on feature improving customer engagement, innovative technology integration into fashion retail, advertising efforts for non-501 jeans models, global expansion and production facilities: a world of opportunities, investing in employee growth and talent development, what is levi's main message, what is the strategy of levi's brand, what was the problem of levi strauss & company.
Let's take a trip back in time, shall we?
In the late 1990s, Levi Strauss , once a market leader in the apparel industry, faced a decline due to its own success.
But then, a new CEO stepped in with an ambitious plan.
- Developing a new strategy for growth and innovation
- Allocating funds for investment in Levi's Eureka Innovation Lab
- Focusing on employee growth and development
- Replacing nine out of eleven direct reports - talk about shaking things up.
The importance of leadership change cannot be overstated here. This shift not only revitalized the company but also positioned it as an innovative force within the fashion and lifestyle space today.
So, what exactly did Levi's do to turn things around? Well, for starters, they recognized the need for change and took bold steps to implement it. Levi's invested in their Eureka Innovation Lab, a move that enabled them to craft unique offerings and technologies that set them apart from other firms.
But beyond that, they also recognized the importance of their people. Levi's also focused on their employees, recognizing that they were the key to the company's success. By providing opportunities for growth and development, they were able to build a strong, motivated team that was committed to the company's vision.
And of course, the leadership change was a crucial factor. By bringing in new blood and fresh ideas, Levi's was able to break free from the old ways of doing things and chart a new course for the future.
Levi's has managed to regain its position as a major player in the apparel industry, competing with top brands such as Calvin Klein, due to their willingness to embrace change and take risks. And it's all thanks to their willingness to embrace change and take risks.
So, what can we learn from Levi's case study? Simply put, that innovation and leadership are key to success in any industry. By staying ahead of the curve and taking bold steps to implement change, companies can position themselves as leaders and stay relevant in an ever-changing market.
And that's a lesson that we can all take to heart.
Levi's faced a decline in the late 1990s, but their new CEO implemented a fresh approach to success by investing in innovation, focusing on employee growth and development, and replacing direct reports. Their willingness to embrace change and take risks has positioned them as leaders in the apparel industry once again, teaching us that innovation and leadership are key to success.
Revamping Women's Denim Line: A Game-Changer for Levi's
Levi's realized they needed to make a change when their market share in women's clothing was suffering. To turn things around, the company adopted a more data-driven and financially disciplined approach, which allowed them to invest in their Eureka Innovation Lab.
So, what happened next?
The cost-cutting measures implemented by Levi's were crucial in driving cash flow improvements and freeing up funds for innovation investments. This financial discipline enabled the brand to focus on creating groundbreaking products that would resonate with female consumers.
The investment paid off as the Eureka Innovation Lab played an essential role in revamping Levi's women's denim line. New styles were introduced catering specifically to different body types and preferences of female customers. A shift towards using sustainable materials made the brand more eco-friendly. Innovative marketing campaigns helped create buzz around new product launches. And guess what? It worked. The revamped women's denim line gained traction among consumers, and Levi's saw a significant increase in sales.
Now that's what we call a denim revolution.
Discover how Levi's revolutionized the fashion industry with their innovative denim line by reading this insightful article from 440 Industries. Check out this insightful article from 440 Industries.
In conclusion, revamping the women's denim line was a game-changer for Levi's, proving that with strategic cost-cutting measures and innovative investments, even an iconic brand can reinvent itself successfully.
Multi-Channel Marketing Campaign Strategies: Boost Your Sales and Engagement
To make the most of your marketing efforts, you need to embrace multi-channel strategies. Why? Because it allows you to reach a wider audience and increase sales conversions.
Step #1: Identify your target audience and their preferences.
Step #2: Create tailored promotions that resonate with them.
Step #3: Distribute these promotions across multiple channels like email, social media, and even SMS messaging.
Social media is a goldmine for engaging customers on a personal level. To create successful campaigns:
- Add human touchpoints by showcasing real people using your products or sharing testimonials from satisfied customers.
- Promote user-generated content (UGC) - encourage followers to share their experiences with your brand using specific hashtags or mentions.
- Incorporate influencers into your strategy - partner up with relevant personalities who can authentically promote your products while reaching new audiences.
To maximize the effectiveness of your marketing campaign, ensure that you are consistent and personalize each channel. By combining targeted promotions with engaging social media content, you'll be on your way to boosting sales conversions and building lasting relationships with your customers.
Embrace multi-channel strategies to make the most of your marketing efforts. It allows you to reach a wider audience and increase sales conversions. Target your audience and create tailored promotions that resonate with them. Distribute these promotions across multiple channels like email, social media, and even SMS messaging. Social media is a goldmine for engaging customers on a personal level. Add human touchpoints, promote user-generated content (UGC), and incorporate influencers into your strategy. Staying regular and tailored to the customer is essential for a successful multi-channel marketing strategy. Combine targeted promotions with engaging social media content to boost sales conversions and build lasting relationships with your customers.
To boost sales conversions and engage with customers on a personal level, Levi's recommends embracing multi-channel marketing strategies. This involves targeting your audience, creating tailored promotions that resonate with them, distributing these promotions across multiple channels like email and social media, adding human touchpoints to social media campaigns by showcasing real people using your products or sharing testimonials from satisfied customers, promoting user-generated content (UGC), and incorporating influencers into your strategy. Consistency and personalization are key to success in this approach.
Deepika's Lookbook - Augmented Reality Wardrobe Application
With Deepika's Lookbook, you no longer have to wonder if that trendy pair of jeans will suit your style or not - simply try them on virtually using the augmented reality wardrobe application. That's where Deepika's Lookbook comes in. This innovative augmented reality wardrobe application was proposed by a team of creative students to solve this very dilemma.
The Concept: By using advanced technology, the app allows users to virtually try on different outfits from their favorite brand collections before making a purchase decision. The aim is to make the shopping process more interactive and tailored for each customer, thus boosting their overall experience.
No more guessing games. With the virtual try-on feature, customers can have an immersive experience where they can see how various garments would fit them in real-time without ever stepping foot inside a physical store or dressing room.
Incorporating augmented reality (AR) into fashion retail is no small feat, but its potential benefits are immense. Beyond just improving customer satisfaction rates, AR integration has been shown to boost sales and revenue for brands that adopt this cutting-edge technology.
So, are you ready to revolutionize your shopping experience with Deepika's Lookbook? Stay tuned as we keep you updated on the latest developments in augmented reality wardrobe applications.
Diversifying Product Offerings Beyond the Iconic 501 Jeans Model
Alright, let's dive into the denim world.
Levi Strauss realized that relying solely on their iconic 501 jeans model wasn't enough to keep up with the ever-changing fashion trends and customer preferences.
The solution? Introducing Red Tab fits.
However, the non-501 options initially underperformed in the marketplace due to consumer perception being strongly tied to Levi Strauss' classic 501 jeans model.
Advertising must be leveraged to ensure that changes in product offerings are communicated effectively to the target audience, otherwise they may fail to gain traction.
Levi Strauss' advertising campaigns for their non-501 jeans models were successful in shifting consumer perception and increasing sales. By highlighting the diversity and chicness of their novel items, they managed to gain the attention of those who are conscious about fashion and be a prominent player in the clothing industry with companies like Calvin Klein.
So go ahead, explore those new denim styles. Levi Strauss has proven that taking risks and diversifying your product offerings can pay off in a big way.
Levi Strauss, the iconic apparel industry brand, realized that focusing solely on menswear wasn't enough to maintain their status as a market leader. They conducted a case study and found a solution - expanding globally and diversifying their product offerings.
This global expansion strategy not only allowed them to cater better to local markets but also helped increase efficiency by reducing shipping times for customers worldwide.
So, what can we learn from Levi's case study on global expansion?
- Don't be scared to branch out and provide services that appeal to diverse groups - it could possibly create new possibilities for development.
- Think big. Expanding globally can help you reach a wider audience and increase brand awareness in untapped markets.
- Investing in local production and customer service capabilities can both increase efficiency and provide a superior customer experience.
In short, don't hesitate to explore new horizons - who knows where they might lead? If Levi Strauss, a brand that has been around for over 150 years, can do it, so can you.
Looking at the apparel industry, Levi's has been a market leader for decades, but they faced stiff competition from other brands like Calvin Klein. By diversifying their product offerings and expanding globally, they were able to stay ahead of the game and maintain their position as a market leader.
Let's talk about a crucial aspect of Levi Strauss' turnaround strategy: employee growth and talent development.
Levi Strauss realized that the skills and dedication of their workforce are directly tied to their success. To address this, they created flexible benefits packages designed to reduce costs associated with workforce management.
These tailor-made programs allow employees to choose from various perks such as health insurance options, retirement plans, and even gym memberships.
- Flexible Benefits Packages for Employees
- Talent Development Contributing to Company Success
This focus on employee growth has been instrumental in repositioning Levi Strauss as a market leader within the apparel industry today.
To achieve this goal, Levi Strauss has implemented several initiatives such as training programs, mentorship opportunities, and career advancement paths tailored to individual needs. These initiatives pave the way for further skill enhancement among its employees.
Moreover, providing resources such as mental health support, financial planning assistance, and work-life balance tools empowers them not only professionally but also personally.
So, what's the takeaway here?
Investing in your employee's growth and development can lead to a more engaged, skilled workforce that ultimately drives company success. In Levi Strauss' case, this approach has played a significant role in their impressive turnaround story.
FAQs in Relation to Levi's Case Study
Levi's primary message revolves around its commitment to creating high-quality, durable denim products that embody timeless style and sustainability. They focus on promoting a sense of individuality and self-expression through their iconic designs while maintaining responsible business practices. Learn more about Levi's mission here .
The strategy of Levi's brand is its continuous evolution as an iconic fashion label known for quality denim products and sustainable practices while adapting to changing market demands and consumer preferences. Through innovation, diversification, global expansion, and talent development strategies, they aim at remaining relevant in today's competitive landscape. Explore more about their growth strategy here .
Levi Strauss & Company faced challenges in the past, including declining market share, competition from fast- fashion brands , and a lack of focus on women's clothing. To address these issues, they revamped their strategy by investing in innovation, diversifying product offerings, expanding globally, and developing talent. Learn more about Levi's turnaround here.
In conclusion, Levi's successful revamp strategy involved new leadership, investment in innovation, addressing the women's clothing market share, multi-channel marketing efforts, diversifying product offerings, and expanding operations globally. Their augmented reality wardrobe application, Deepika's Lookbook, allowed customers to virtually try on clothes, while their talent development programs contributed to the business's success.
Levi's case study is a testament to how businesses can adapt and thrive by implementing strategic changes that resonate with their target audience. If you're looking for expert guidance in fashion industry consulting or brand management strategies for your business, contact 440 Industries today!
Was This Article Helpful?
You're never to cool to learn new things, here are sources for further research.
Please note: 440 Industries is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.
Retail marketing, fashion entrepreneurship, fashion finance.
MORE ARTICLES FROM OUR BLOG
Diesel Case Study: Fashion Industry's Sustainable Revolution
Explore the Diesel Case Study: fashion industry's sustainable shift through cleaner engines, innovative campaigns, and Smart Rebels focus.
The OTB Group Case Study: Core Values and Growth Strategies
Discover The OTB Group Case Study, highlighting core values, growth strategies, sustainability efforts, and digital innovation in the fashion world.
Jil Sander Case Study: Fashion Legacy & Adaptations
Explore the Jill Sander Case Study, delving into her minimalist fashion legacy and how creative directors Lucie and Luke Meier adapt to market changes.
Marni Case Study: Bold Fashion and Diverse Collaborations
Explore the Marni Case Study, highlighting bold fashion, diverse collaborations, and innovative digital expansion in this captivating analysis.
Copyright © 440 industries 2023.
- Fashion Startup
- Fashion Industry
- Fashion Sustainability
- Content Marketing
- Markets in Fashion
- Customers in Fashion
- Sustainable Businesses
- Case Studies
- Brand Strategy
- Marketing Plan
- Social Media Strategy
Kids Schoolwear Brand in UK to inherit Digitalization
How we increased sales for an online Women Wear to 800% in just 6 months
Fashion Blogging Case Study: How We Helped a Multi-brand E-Commerce Store Multiply Sales & Traffic from Google
Amazon Marketplace Case Study – How we grew the Sales of an Organic Beauty Brand and went from Zero to $44k in 6 Months
How we helped a kids wear multi-brand store make its social media content more engaging with the same content?
Case Study – How we Refreshed and Promoted a Beauty Brand to Drive Sales
Marketing Case Study – How we Built an Audience for Launch of a Streetwear Label around KPOP?
How we gathered 14,000 emails in 2 Weeks for Launch of a Streetwear Label?
How we used Influencer Marketing to Increase Traffic of a Fashion Marketplace by more than 600%?
Have a project.
Blog Journal Fashion eCommerce Careers
Instagram Fashion Marketing Agency
MBA Knowledge Base
Business • Management • Technology
Home » Management Case Studies » Case Study of Zara: A Better Fashion Business Model
Case Study of Zara: A Better Fashion Business Model
Zara is one of the most well known brands in the world and is also one of the largest international fashion companies. They are the third largest brand in the garment industry and are a unit of Inditex . It their flagship range of chain stores and are headquartered in Spain. Zara opened its first outlet in Spain in 1975. The headquarters of the company is based in Galicia. There are more than 2600 stores across 73 countries in the world. The Zara clothing line accounts for a huge bulk of its parent group’s revenues. There are other clothing brands owned by Inditex such as Kiddy ´s Class (children’s fashion), Pull and Bear (youth casual clothes), Massimo Dutti (quality and conventional fashion), Bershka (avant-garde clothing), Stradivarius (trendy garments for young woman), Oysho (undergarment chain) and Zara Home (household textiles). Inditex owns all Zara outlets except for places where they are not allowed ownership of stores (that’s where Franchises step in).
Zara is renowned for coming up with products on a short timescale instead of taking forever. They are known for taking around 2 weeks to develop products and have been known to come up with around 10,000 new designs every year (which is an industry record). They have bucked the trend by making productions in Europe instead of shifting their entire production to Third World or Developing countries. However some of their clothes are manufactured in parts of Asia due to the fact that they have a longer shelf life. They make most of their own products inside Spain or other European Countries as they own a large number of factories in both Spain and Portugal. They also don’t have to depend on anyone else as they can get everything done by themselves.
Zara is unique in the way that it does not spend money on marketing and instead concentrates on opening new stores instead. Their brave experiments have led them to be labeled as one of the most innovative retailers in the world.
Zara started out with low priced products which were pale imitations of high end fashion products. This move led to Zara being a smashing success and allowed them to expand by opening more stores in Spain. The company management also managed to reduce the time it took to create new designs and came up with the term “instant fashions” which allowed them to capitalize on new trends really fast. Zara is known to use teams of designers instead of individuals.
Zara has to face a lot of competition from H&M, Gap and Benetton internationally. Fortunately Zara is considered to be more fashionable than the rest of the brands despite the fact that its price is less than Benetton and Gap. H&M is still cheaper than Zara but is equally fashionable as Zara. Gap and Benetton are less fashionable and more pricy.
Zara’s ‘Fast Fashion’ Business Model
Zara’s business model is basically based on the principle that it can sell “medium quality fashion clothing at affordable prices”. Basically vertical integration and the ability to come up with a quick-response is a key factor to Zara’s successful business model otherwise they would be no where without it. The process for Zara has been designed in such a way that it has the various functions within the business system such as designing, sourcing and manufacturing, distribution and retailing. They do all of these themselves and that is one reason why their growth is at a good rate. However what goes up must come down and Zara is not immune to the problems in the world. The way they operate can also prove to be their undoing due to the model they are currently utilizing. The fact that they have their own distribution center and manufacturing unit is a very weak point. This can be discussed further in this document.
The management at Zara have come up four fundamental success factors: short cycle time for creation of product, small quantity per product (and not too much of the same stock), extensive variety of product every season (so that users can choose easily) as well as a huge investment in information and communication technology to allow them to stay on track .
Zara knows what its customers want by tracking their preferences on a year round basis. They have their own team of designers who have been recruited fresh out of fashion school. It is not a tough job to tell them what they want based on the input they receive. They make around a limited quantity of clothes based on the 11000 various items designed by its in-house staff. Zara does not make any losses as they only order a limited quantity of each item which they believe is stylish and will be more restricted season wise. For example if they have miniskirts in design they will only be available for a short time due to the short summer period in Europe. Other clothes which can work the year around and for which the trend does not change are outsourced to Asia as the cost won’t be so high. The outsourcing operation is very handy mainly because these clothes have a longer shelf life. It does not take a long time for the clothes to be prepared as it merely takes around 4 weeks total for the whole process: from design to the finished product in the stores.
The fact that Zara knows what sort of trends are there in the market and are quick enough to change their strategy to match the trends in the fashion industry gives them a huge advantage. They are able to modify their timetable easily to adjust for a change in the trends in the market. Normally it takes around 8 to 12 months for any normal retailer to forecast trends and come up with a style and send it for production. They are unable to match what Zara does and they end up losing big time. Even if a style fails to sell much, Zara can easily sell the clothes on a discount. The fact that they quantity of clothes manufactured was so low that they lose much. Their low volume strategy has helped them have a very low number of discount sales every year as compared to a high rate for the rest of the industry.
However this leads to higher costs which is a disadvantage but then they don’t have to worry about having higher inventories. This method allows for a low inventory and high profit margins. They don’t save any money here with costs but then they get the maximum out of their clothing line. A problem they face is the fact that since Zara controls everything it is not easy for them to expand or relocate as they have to stay put in one place or the whole operation will suffer and the goods will cost more to distribute.
Zara’s business model is wonderful in the sense that it has a very fashion forward line as they know which trends to cash in on. They seem to have the midas touch of turning everything into gold. Their policy is to have a mostly young and fashion conscious staff so that they will also be able to double as trend setters. If for instance a certain item in a store sells well then the management decides to sell the same item in other locations as well. The key is that most of the items are in short supply and people presume that there is a shortage of items which ends up making consumers want to buy more.
A key factor in Zara’s success is the fact that it has sourced its products from the right places. They have based their procurement offices in a couple of fashionable cities in the world. This allows them to witness the trends first hand and then to quickly come up with a solution of their own. They don’t buy all the raw products on their own as they use one of their parent group’s procurement units to do all it’s purchasing. One clever move on their part is that they buy most of their fabric in grey so that there is greater flexibility. It doesn’t take long for the fabric to be prepared.
The main distribution artery is in Spain where they have their biggest distribution center. They also have some smaller distribution centers in countries such as Argentina, Brazil and Mexico. The problem with the distribution center is that it is purely based in Spain and does not have the capacity for a heavy load. It is a huge distribution center and occupies around 500,000 square feet in total. They only have the capability of processing around 60,000 folded garments in an hour. They need to find a new distribution center or increase their operations so that they can save more time. However the biggest advantage for them is the fact that they have vertical integration which allows them to manufacture and distribute their own stuff without having to be at the mercy of any supplier. It is not tough to move any of their products as they have their own railway network which allows them to move goods easily to its distribution center. Once the goods are ready they are shipped out immediately though the shipping schedule is only twice a week. European stores get their goods early (around 24-36 hours) while other destinations get them within 2 days. This system has allowed them to achieve a very high level of accuracy in its shipments. The other good thing is that the outlets don’t take long to display the new outfits once they reach their destination and this allows them to show new stock to their customers. The clothes are also coded according to their color so that the staff knows where to place them. This makes it easier for the customers to go around color matching the items they want to buy.
Problems with Zara’s Business Model
Zara is facing a large number of issues which can cause them a number of problems in the future. Despite the fact that Zara has a consistent business system which gives them a competitive advantage it is always in the danger of tanking badly. Zara’s biggest advantage is the fact that its economies of scale are really good and that they have been able to ramp up their distribution system. The continued growth is good for them in every way. They have been helped a lot by their expansion in the international market . However their growth in the international market will be curtailed due to the reason that Zara has a very centralized logistics model. It is understandable that Zara has to expand its distribution centers and to increase its capacity. Zara has its main distribution center in Spain and it won’t be easy going trying to expand when their base is only in Spain.
This will affect their plans to go international and to target more regions. They can’t simply survive with a European presence alone. It is true that they do have a presence in other countries but then it is not as much as it should be. They have a huge presence in Spain but quite limited when it comes to other countries. They can easily target the North American region where they don’t have much of a presence compared to the huge size of the region. The problem is that there are a lot of outlets there and a lot of competition coupled with the need for plus sized clothing, high cost of operations and a very mature market. Zara needs to come up with a strategy so they can compete very aggressively over there. They can also target South America but the problem is that it is not a very stable region and any geopolitical problems can lead to profits being low. A good market would be the ever reliable Middle East where Zara already has a small presence. However with talks of revolution in the air and other geo political problems it can be a risky bet. There are a few countries in the region which will lead it to be profitable but then the market is small compared to other regions. They can easily opt for countries such as the South East Asian markets and South Asia which have a lot of potential.
- Zara's Lean Operation: Source of Competitive Advantage
- Case Study of Zara : Application of Business Intelligence in Retail Industry
- Case Study: Zara's Entry into Indian Retail Fashion Market
- Case Study of Dupont: Marketing of "Disappearing" Products
- Case Study: An Assessment of Wal-Mart's Global Expansion Strategy
- Competitive Analysis of DELL using Porter's Five Forces Model
- Case study: Tata Motor's Acquisition of Jaguar and Land Rover
- Case Study: The International Growth of Zara
- SWOT Analysis of IKEA
- Starbucks Porter's Five Forces Analysis
2 thoughts on “ Case Study of Zara: A Better Fashion Business Model ”
Dear Abey, Many thanks for your continuing efforts to help learners. I’ve just come across your website and really amazed at the wealth and variety of topics which are covered in your business cases. Very helpful, indeed. God bless you for all the kind things you are doing. Alex
Thank you for this valuable insight. Quite informative. Helped me a lot.
Leave a Reply Cancel reply
Your email address will not be published. Required fields are marked *