Zara Business Model

The Zara boutique is buzzing on Calle Real in the rainy northern Spanish city of La Coruna. Customers are buying out the newly designed red tank tops and black blazers, but they’re pining for beige and bright purple ones, too. Most fashion companies would need months to retool and restock. Not Zara. Every Saturday the store manager pulls out a Casio handheld computer and types in orders for new clothes. They arrive on Monday.

Zara is the Dell Computer Inc. of the fashion industry. The Spanish star is using the Web to churn out sophisticated fashion at budget prices, turning the industry’s traditional fashion cycle completely on its well-coiffed head. now, a new design can go from pattern to store in two weeks, rather than six months. Founded two decades ago in a remote, impoverished area of the Iberian peninsula, Zara’s privately held parent, Inditex, has become a flourishing $2 billion company with 924 stores in 31 countries.

Traditionally, fashion collections are designed only four times a year. And major retailers outsource most of their production to low-cost subcontractors in far-off developing countries such as China. Zara ignores the old logic. For quick turnaround, it makes some two-thirds of its clothes in a company-owned facility in Spain, restocks stores around the globe twice a week, and continually redesigns its clothes — an astonishing 12,000 different designs a year.

Here’s how Zara does it : A store manager sends in a new idea to La Coruna headquarters. The 200 plus designers decide if it’s appealing, then come up with specs. The design is scanned into a computer and zapped to production computers in manufacturing, which cut the material needed to be assembled into clothes by outside workshops. The manufacturing plant is futuristic, too, stuffed with huge clothes-cutting machines that are run by a handful of technicians in a laboratory-style computer control center.

Eventually, Zara will begin using the Web to sell clothes since finding new store sites is becoming more difficult. In America, e-tailing could boost its low profile. ‘’Americans have less reluctance to buy online than here in Southern Europe,’’ says Inditex CEO José Maria Castellano. Thanks to Zara, Americans could begin to associate Spain with Internet innovation as well as stylish tank tops.

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