Zara, key success factor and issues

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Zara, the famous chain of apparel, was created in 1975 by Amancio Ortega. It is part of the group Inditex wich includes Massimo Dutti, Bershka, Stradivarius, Oysho, Pull and Bear.
Zara is asuccessful company. How did they manage to this success? What are the issues Zara have to face and which solutions does Zara have?
Key success factors:
- Design
o 3 product lines (women, men and children)o Current season and continuing in-season development
o Based on customers desires
Zara’s product development teams are constantly researching the market by traveling to universities,nightclubs around the world to find new trends. Moreover, they use their young and international staff to interpret the desire of the moment.
- Sourcing and manufacturing
o Comditel : a 100% ownedsubsidiary of Inditex
o Just in time system, heavily automated
o Employees in small group which are specialized by product type
o Zara’s manufacturing complex : control the production and finishthe manufacturing tasks
- Distribution
o Own centralized distribution system : huge warehouse
o Clothes do not stay more than 3 days
o Shipments are made twice a week to each store
 By road(trucks)
 By air
Zara’s centralized distribution facility gives the chain a competitive advantage. Indeed, this is cost effective because of the close proximities of the distributioncenter in Arteixo and their different factories in La Coruna.
- Retailing
o Merchandising : rapidly changing product lines (reasonable quality for reasonable price, but still fashion)
o Low advertisingbudget (0 to 3% of revenues) but huge brand awareness worldwide
o Prime locations (visible/premier shopping streets)
o Climate of scarcity and opportunity (clothes do not stay during a long time inthe store)
o Zara’s top management gives high responsibilities to store manager. Like this they motivate their employees.
The climate increases the frequency and rapidity with which...
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