zara clothing business plan

In the 1980s Zara disrupts the fashion industry by radically reconfiguring the supply chain and creating the fast-fashion category. It is able to almost instantly react to fashion trends by vertically integrating its supply chain.

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Zara is a global fashion retailer whose success stems from its ability to reduce lead times and react to trends almost instantaneously. Zara is owned by Inditex, the world’s biggest fashion group.

The company was not afraid to go against conventional wisdom, vertically integrate its supply chain, and move its production to Europe (near-shoring), while many players  in the fashion industry chose to outsource production to lower-cost factories in Asia.

Zara disrupted the fashion industry by shortening the time to market to less than three weeks from inspiration to retail. Zara created a new category of affordable fast fashion. This model allowed the company to become a heavyweight in the highly competitive fashion industry: as of 2018, Zara was active online and in 96 countries, managed 2,238 physical stores and €18.9 billion annual revenue.

Zara Business Model

Radically Reconfigure Activities for Speed

Zara decides to produce more than half its fashion items locally and in its own facilities to achieve speed. At the time, most large fashion players rely on outsourcing production to Asia for cost reasons. This activity differentiation allows Zara to effectively react with lightning speed to fashion trends.

Develop Time-Critical Value Proposition

Zara’s value proposition focuses on keeping up with fast-changing fashion trends. Its activity configuration allows it to spot trends and launch new pieces in less than three weeks. Competitors show two collections per year and take over nine months to get items to stores. Zara ships only a few items in each style to its stores, so inventory is always scarce. This leads to constantly changing collections and customers tend to “buy it when they see it,” because the clothes won’t be around for long.

Embrace a New Cost Structure

Higher labor cost was the price to pay for flexibility, full control, and the required speed in its design and production processes. Zara reserves 85% of its factory capacity for in-season adjustments and over 50% of its clothes are designed and manufactured mid-season.

Trends, Data, and Communication

Zara trains its retail employees to relay customers’ preferences and real-time sales data to designers through effective communication systems. The latest designs and production forecasts are adjusted accordingly. Because Zara manufactures only a limited supply of items, it doesn’t have to deal with excess inventory or constant markdowns.

Pricing Power

Each store has a limited inventory of items in each style that are replenished based on demand. New styles based on latest trends arrive constantly. As a consequence Zara rarely discounts clothes, contrary to most fashion houses.

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Zara business model.

Zara Business Model Canvas - Zara Business Model

Zara is by all means a household name in the world of fashion. The company attracts polarized views within the fashion industry, with some calling the Zara business model revolutionary and others seeing it as exploitative and unauthentic. Despite this, the company is certainly successful, with the company being branded with a value of nearly $13 billion in 2022 . 

Let’s take a look at the Zara business model , the history of the company, and most importantly, how it makes money.

A brief history of Zara

Year, name change, type of company, business model, number of stores, employees, valuation, number of products sold, famous for little advertising, criticisms, effects on the industry

The company known as Zara was started in 1975 by Amancio Ortega and Rosalía Mera. It was initially named Zorba, but the name was quickly changed since it shared the same name with a local bar. The first store was opened in Galicia, an autonomous community located in the northern part of Spain. They specialized in the sale of cheap imitations of popular, high-end fashion trends.

The company opened several more stores throughout Spain in the 1980s, but did not achieve truly massive growth after Amancio Ortega developed the concept of “fast fashion”. He then changed the design, manufacturing, and distribution procedure to reflect this new business model and achieved a significant reduction in the production process, and responded to changes in a high-end fashion more quickly.

Zara Global Distribution Center - Zara Business Model

These changes were mostly centered on the core tenets of the fast fashion philosophy. These included:

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Who Owns Zara

Zara is owned by Industria de Diseño Textil, S.A. (Inditex), a Spanish multinational clothing company that has its headquarters in Arteixo, Galicia, in Spain. Inditex is the largest fast-fashion group in the world, with a market capitalization of $73.7 billion in 2020 . Zara makes up its largest subsidiary with 2,007 stores in 96 countries, which contribute about 70% of the total sales volume of the Inditex Group. 

Zara’s Mission Statement

Zara’s mission statement is simply to “ give customers what they want, and get it to them faster than anyone else. ”

This perfectly represents the key value propositions of; being able to provide cheap, near-replicas of high-end fashion trends and deliver them quickly, with a 15-day lead time between the initiation and completion of the entire production process of a single item.

How Zara makes money

Let’s take a look at how Zara makes money.

Revenue from Retail Sales

Zara is said to sell over 450 million products a year, and a significant portion of these sales come from its retail stores. The company has thousands of retail outlets in nearly 100 countries. These physical locations provide male, female, and children’s clothing and accessories, as well as a range of other products such as beauty products, shoes, and perfumes.

Revenue from Online Sales

Online sales also make a significant contribution to the total sales volume of Zara. E-commerce sales for the year 2022 were said to have contributed $8.6 billion to the total sales revenues. This represents a continuation of a steady uptrend in its online sales revenue with $6.1 billion generated in 2021, $4.8 billion in 2020, and $2.9 billion in 2019. The company has plans to further increase its online presence and still projects significant room for growth.

Zara’s Business Model Canvas

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Zara’s Customer Segments

Zara  customer segments consist of:

Zara’s Value Propositions

Zara  value propositions consist of:

Zara’s Channels

Zara  channels consist of:

Zara’s Customer Relationships

Zara  customer relationships consist of:

Zara’s Revenue Streams

Zara  revenue streams consist of:

Zara’s Key Resources

Zara  key resources consist of:

Zara’s Key Activities

Zara  key activities consist of:

Zara’s Key Partners

Zara  key partners consist of:

Zara’s Cost Structure

Zara cost structure consists of:

Zara’s Competitors

Here are some of the top competitors to the Zara business model.

Zara’s SWOT Analysis

Let’s take a look at swot analysis of Zara business model.

Zara’s Strengths

Zara’s Weaknesses

Zara’s Opportunities

Zara’s Threats

Fast fashion was one of the most significant revolutions in the fashion industry in the last century. Zara has been at the very forefront of this movement for almost five decades and has shown strong growth as well as the potential for further development. Though the company enjoys a large market share in Europe, it still has room to compete for a wider global customer base, as well as utilize the ever-expanding opportunities offered by E-commerce.

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zara clothing business plan

There are 2007 Zara stores in 96 countries.

The  Business model of Zara  consists of vertical integration and logistics trade-offs. These two strategies play a significant role in the success and global recognition that Zara receives. Vertical integrations help the company to control all of its verticals like design, manufacture, shipment, distribution, etc.

In spite of being a fast-fashion brand, it holds a position of superiority over its contemporaries due to the efficiency  of the business model of Zara. This unparalleled and unprecedented business model is one of the primary reasons for the success rate of Zara.

Revenue Model of Zara

The Spanish fast-fashion store Zara generated online net sales of around US$2 billion in 2018. For 2019, revenue of up to US$2.5 billion is projected. Zara revenue generation is based upon its selling of more than 450 million products per year, i.e, it works on economy of scale. Zara has 1700 stores in more than 86 countries around the world

Zara Business Model

In recent years, the concept of fast fashion has emerged as an important trend. Fast fashion ensures that the clothes being manufactured follow the ongoing trends and follow the customer’s demands. Zara is a Spanish company that retails in clothing and accessories. Zara specializes in fast fashion, and products constituting clothing, accessories, shoes, swimwear, beauty, and perfumes.

The Spanish fast-fashion store Zara generated online net sales of around US$2 billion in 2018. For 2019, revenue of up to US$2.5 billion is projected. Zara revenue generation is based upon its selling of more than 450 million products per year, i.e, it works on economy of scale. Zara has 1700 stores in more than 86 countries around the world.

Total sales of the company are around the US $13 billion that makes it one of the top 3 largest fast fashion brands in the world. Key strategies that help the company generate good revenues are-

Early History

Founded by  Amancio Ortega  in 1975, Zara is a flagship clothing chain store that is part of Inditex group, the world’s largest apparel retailer. Amancio Ortega opened the first Zara store in 1975 in central A Coruña, Galicia, Spain where the company is still based. Ortega initially named the store  Zorba  after the classic 1964 film  Zorba the Greek , but after learning there was a bar with the same name two blocks away, the letters were remolded for the sign to say “Zara”. It is believed the extra  a came from an additional set of letters that had been made for the company.  The first store featured low-priced lookalike products of popular, higher-end clothing fashions. Ortega opened additional stores throughout Spain. During the 1980s, Ortega changed the design, manufacturing, and distribution process to reduce lead times and react to new trends in a quicker way, which he called “instant fashions”. The improvements included the use of information technology and groups of designers instead of individuals.

SWOT Analysis

Zara is mainly based on a concept called fast fashion. It is similar to the idea of FMCG i.e., Fast moving Consumer Goods. Fast fashion is used to target an audience which majorly comprises young adults and middle-aged people. The cycle of fast fashion ends early as the fabric of the cloth withers. Various brands like Forever 21, H&M have incorporated this idea into their business model.

Secret' Zara clothing symbols 'reveal whether you need to size up or down' - Daily Star

Strengths in the SWOT Analysis of Zara

2. Global reach : Zara have a well established brand name worldwide

3. Their supply chain management is extremely low cost as well as most of their processes like operations, manufacturing are all vertically integrated

4. Brand valuation : Strong online presence through their own website and other ecommerce platforms makes Zara a popular brand name

5. Affordable prices : Clothes are produced at a competitive price with the most innovative and fashionable designs.

6. Fashionable clothing : Zara offers extremely trendy, well designed and fast delivery of new products. Apart from clothes, Zara also offers handbags, shows etc.

Weaknesses in the SWOT Analysis of Zara

2. High competition for Zara means limited market share and high brand switching

3. Zara is perceived to be an expensive brand

4. Insufficient product information : Zara is not very active in the online space though it is available through online channels with partners.

Opportunities in the SWOT Analysis of Zara

2. They can also enter into segments and expand those areas where they haven’t.

3. Online channels : Online marketing and ecommerce is gaining importance which can be tapped by Zara.

PRIVATE - ZARA CASE STUDY - Page 4 - Created with

Threats in the SWOT Analysis of Zara

2. COVID-19 pandemic : Economic downturn can also be a threat to their target segment

3. Imitations : Fake imitations can decline the sale of Zara products and hurt business

Zara prides itself on remaining on top of the latest trends and radiating an upscale vibe, but its production process is the real show-stealer. These industry-leading procedures elevate it from a mere clothing store to a market leader in fast fashion executed well. Zara excels at guaranteeing that everything goes as planned, as it has more control over its production and business network than most of its competitors.

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Business Planning Assignment ZARA

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This initial statement is a plan to disclose the intention of beginning a Zara Store in within a new market. Zara is an international retail company that deals in clothing and accessories. The company is based in Spain and was founded in 1975. Currently it has several stores in different parts of the world especially Europe and the Middle East where majority of its stores are located. Zara being a successful company within the area of clothing and accessories, it can easily develop a new product and make impressive sales in short time. There are number of brands and the company sales in its stores including the famous pull and bear, and Massimo Dutti . Each year, the company launches new designs of cloths to keep up with the trend in the fashion industry and to deliver the needs and wants of its customers. The designs are based on both local and worldwide fashion trends. Because the company has established a well known brand in the fashion industry worldwide, opening another store in any new market will not be a big issue for the company. It is for this reason that the company should open a new store in Melbourne Australia to expand its market. Currently, the customers within this particular target market are offered with a variety of attire to choose from, many local and international brands are already available in the market. Considering the fact that Melbourne is such a diverse place, it would be nice to give the dwellers a taste of indigenous fashion and clothing material from other parts of the world .


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Zara - Marketing Plan

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Marketing Analysis for Zara

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Zara Business Plan

Zara international case study.

Zara International was a retail shop originated in La Coruna, Spain in 1975. It was clothing and accessories shop and imitated the latest fashion trends and sold them at a lower cost. It became Zara International after entering Portugal in 1988 and then the United States and France in the 1990s. The distributor for this brand is Inditex and is considered the most successful retail chain in the world. Zara has a business strategy that is very different from the retailers nowadays. If a customer orders a product Zara’s distribution centers can have the items in the store within 24 to 48 hours of receiving the order, depending upon the country. The business plan that Zara’s executives made was very innovative and played a great part in the

Zara Fast Fashion: Executive Summary

Quick response of Zara leads it to be successful in the fashion clothing industry. Zara adopts international strategy for its operation. With vertical integration, it benefits Zara in cost aspect, however, it involves some risks. Due to our anaylysis on Zara’s operations, some of the recommendations are made to facilitate its further improvements.

Operations Management : Zara 's Business Model

Zara uses vertical integration, in a vertical integration several stages of production and distribution of a commodity are influenced by a single company.

Supply Chain And Logistics Management Of Fashion Related Retailer Company

Zara was first came into existence and well established in the year 1975 and it is under the control of Spanish owner Amanico Ortega Gaona. Firstly the store which is local based manufacturing company was dealing with Zara products which include outlets especially for orders which are cancelled related to lingerie and women wear. These relationships slowly lead to develop into strong relationship between retailer and producer of the products (Ferdows et al, 2003). The Company Zara was in collaboration with parent company called Inditex, both these companies mainly focused on customer demand and supply products as per needs of customers and able to establish supply chain

Zara: Fast Fashion Essay examples

No business in this type of industry has total control over the market price and there are no barriers to entry and exit. Because of its monopolistically competitive playing grounds, Zara’s conduct is to increase its market power by producing demand for its heterogeneous products. Through differentiation and cost leadership, Zara attempts to increase market demand by offering new items weekly while keeping a low inventory, thus making its products unique and attractive to consumers. Because of its backward vertical integration model, Zara creates a strong synergy throughout its production process. Zara has sustained a competitive advantage globally by expanding into new markets and becoming more efficient. In a monopolistically competitive industry, Zara is expected to make profits in the short run but will break even in the long run because demand will decrease as average total costs increase. This means in the long run, a monopolistically competitive firm, such as Zara, will make zero economic profit (AmosWEB, 2001).

Zara Is A High End Street Store

Zara has been expanding into new territories since its initial expansion into Portugal in the 1989. Throughout its international development, Zara has kept its central distribution center in Arteixo, Spain, where the satellite distribution centers are sourced from the centralized center in Spain. All of Zara’s products go through this distribution center, and this strategy has its costs and benefits. The distribution center in Arteixo allows Zara to manage its inventory all in one place, and “the warehouse [is] a place to move merchandise rather than to store it”. This allows Zara to be efficient and respond quickly to customer demands, given that “none [of the merchandise] ever stayed at the distribution center more than three days”. Through this warehouse, Zara has ease of access of providing for Spain and its neighboring countries; however, when

Zara case study Essay

There vertical integration allows small batches of produce to be distributed and tested out allow them to save more money and cut inventory backlogs. Zara maintains a low cost by avoiding outsourcing (where possible) and producing all its merchandise and produce in home soil in Spain. Also Zara own many fabric dying, cutting and processing equipment that provided Zara added control and flexibility to adopt new trends on demand. Effectively Zara is able to design and manufacture products as well as deliver them in less than two weeks in contrast to competitors such as Benetton and H&M which require at least between five weeks and 4 months lead time to fill orders from its retail operations. One major unique characteristic was that Zara own its in house production which gives Zara the flexibility of quantity, variety, and the frequency of the designs they produce.

Zara Case Write-Up Essay

The business idea of Zara is to link customer demand to manufacturing, and to link manufacturing to distribution. And based on this general idea, Zara has several essential elements for its business model. First, speed and decision making, which means that in the external level, Zara need to respond very quickly to demands of target customers, and always keep in style. While for the inside, Zara treasure intelligence and judgment of common employees who enjoy a great deal of autonomy. Second, its marketing, merchandising and advertising strategy. Zara does not spend on virtually advertising, while it spends heavily on stores, and no selling online because of

The Capital Structure Of The Company

Zara is a brand widely known across the globe for its unique fashionable cloths .It is a part of inditex which is known as one of the world’s largest distribution group in the world and the owner of the company is Spanish businessman named Amancio Ortega .This company was formed in 1963 as a fashion retailer for women clothes but the company became a success after the addition of a new brand named Zara in 1975 .Today Zara is amongst one of the largest international company producing the fashionable clothes. After the success of the inditex as a successful brand (ZARA) maker, inditex was able to expanded itself with more successful brands across the world in different countries at the end of the 1980.from 1976 to 1983 Zara turned out to be a successful retailing brand and introduced itself with nine new outlets to the biggest cities of the Spain with its first headquarter in Goa. Year 1984 turned out to be the witnesses of first logistics headquarter of Zara covering a large area of 10,000 square metres. New York

Zara Supply Chain Analysis

Zara is one of the leading company that introduced the idea of fast fashion within the apparel industry. Within a short span of few decades their key selling points are the speed and responsiveness for which there unmatched design, manufacturing and distribution systems existed. Precision in terms of timely order generation from all its stores and then production to timely delivery back to all stores has become possible ensuring satisfied profitable customers. Thus we can safely say that its competitive edge is its supply chain.

Zara And Its Major Rivals

The world 's largest clothing retailer has been able to cope with the financial crisis better than most of its rivals, helped in part by the expansion of shops in fast, growing commercial centres and also by offering affordable fashion at a fraction of the cost of designer fashions. This case provides information on Zara and its major rivals in the industry to highlight the challenges and opportunities facing companies who are competing on a global basis. Zara is the biggest player in the clothing retail sector and leads the way in sales and consumer growth whilst being recognised

Zara Corporate Strategy

In comparison to competitors, Zara’s business strategy, in regards to strategic partnerships and cost of production, provide for a strategic competitive advantage. Zara, unlike its competitors such as Gap, Benetton, and H&M, does not use Asian outsourcing. Eighty percent of Zara’s materials are manufactured in Europe, with 50% made in Zara controlled facilities in the Galicia region of Spain near headquarters. Most of Zara’s competitors have 100% outsourcing to cheap Asian countries. Though the cost of production in Spain is 17-20% more expensive than Asia, Zara does have a competitive advantage over its competitors in regards to operations. The local strategic partnerships that Zara maintains with manufacturers in Europe allow for a product throughput time of 3-4 weeks from conception to distribution. To make this happen, the company designs and cuts its fabric in-house and it acquires fabrics in only four colours to keep costs low. The proximity of these suppliers gives Zara great flexibility in adapting their product lines based on up to date market trends and consumer behaviour. It also decreases costs of holding inventory. Zara’s competitors, through outsourcing to Asian countries such as China, sacrifice the benefits of proximity for low labour and production costs.

Fast Fashion Industry: Growth of Zara and Inditex Essay

An interesting fact is their supply chain for the majority of their product is located close to their distribution centers. Their distribution centers are located in Spain and the designer ware is produced in Morocco, Portugal, and Turkey (“Case 3-4. Continued Growth for Zara and Inditex,” 2013). This ensures that new designs are produced and shipped quickly to their stores. This plan is reasonably different from their competition.

Essay on Zara Fast Fashion Case Study Solution

Inditex’s efficiency is the result of a more profitable investment strategy. By owning all the stores and manufacturing sites it is able to achieve control over all production processes and costs. The high number of stores may be also traced back to the increasing value of the property because Zara only buys stores in strategic areas (shopping malls, shopping arcades, pedestrian districts etc.) where competition boosts rents. Therefore total assets of Zara increase as well.

Until now, every garment that is product in Zara’s factories around the world has to travel back to Spain in order to go through quality controls, and is then send to its distributors. But the continuous flows of goods from all the productions sites to Spain and from Spain to the markets of sell, as well as the relative communication flows necessary to such a business model will inevitably slow down as Zara will have to deal with a constantly growing number of customers. Thus, the highly centralized information system of Zara seems not to be easily applicable in Asia, in addition to being time and money consuming.

Related Topics

Zara Business Model

In recent years, the concept of fast fashion has emerged as an important trend. Fast fashion ensures that the clothes being manufactured follow the ongoing trends and follow the customer’s demands. Zara is a Spanish company that retails in clothing and accessories. Zara specializes in fast fashion, and products constituting clothing, accessories, shoes, swimwear, beauty, and perfumes.

A Brief History 

Amancio Ortega, a Spanish businessman opened the first Zara store in 1975 in Galicia, Spain. The first store presented low-priced lookalike products of high-end clothing fashion brands. After this, more stores were opened in Spain. During the 1980s, Ortega changed the design and distribution model to reduce lead times and react to new trends in a quicker way, which he called “instant fashions.” He incorporated the use of information technologies and using groups of designers instead of individuals.

Further Growth

Further growth of Zara can be explained below.

Business Model of Zara

A business model is a description of how a company or an organisation makes money. It’s an explanation of how the company delivers value to the customers at an appropriate cost. A business model is an exploration of what costs and expenses involved in making a product. Business models are necessary for both new and already existing businesses. They help budding companies attract investment, recruit talent, and motivate management, and create a niche.

The Business model of Inditex or Zara is perfectly structured, and there isn’t a single business operation that is solely responsible for the success of this brand. The business model of Zara can be seen below:

Zara uses ideas like vertical integration, business strategy, efficient supply chain management, etc. that turn to be instrumental in the development of Zara. Because of its model, Zara has become one of the most successful clothing brands in the world.

Value Proposition

Zara is mainly based on a concept called fast fashion. It is similar to the idea of FMCG i.e., Fast moving Consumer Goods. Fast fashion is used to target an audience which majorly comprises young adults and middle-aged people. The cycle of fast fashion ends early as the fabric of the cloth withers. Various brands like Forever 21, H&M have incorporated this idea into their business model.

The primary objective of Zara is to contribute to the sustainable development of society. It also contributes to the conservation of the environment. It ironically does not mention clothing and instead, incorporates the three principles on which Zara is based. Due to the company’s success in setting-up businesses in countries like the USA and China, it has been quite successful in providing products at a price range which many find acceptable. Zara focuses on integrating fronts like designing, manufacturing, distributing, and supplying adequate raw material. The strategy of Zara can be seen from the chart below.

Vertical Integration

Vertical integration makes the Business model of Zara stand out. Via this, Zara manages the design, production, distribution, management, shipment, promotion, and sales all on its own. After being vertically integrated the brand can hold a lot of control over every aspect of it. This technique makes the design, manufacturing, and transportation efficient.

Tradeoffs in Logistics

Zara manufactures mostly in Europe, which becomes a costly affair. But it also has the benefit of logistical trade off, Zara makes most of its revenue through sales in Europe. According to data, Europe contributes approximately 66%, Asia provides about 20%, and America contributes about 14% of the total sales. Hence, by incurring maximum sales from Europe itself, Zara can circumnavigate the cost of vertical integration. Other companies cannot orchestrate this circumnavigation due to their substantial reliability over cheap labor from Asia.

Close contact between manufacturing and management units

To keep control over the design and manufacturing fronts, Zara keeps these two verticals close to the management centres. It uses only higher-quality clothing, high-quality equipment, and skilled employees

Quick product replacement cycle

Zara can continuously change designs according to the changing trends as all the products are manufactured in Europe. The product replacement strategy of Zara is its master strategy. This replacement cycle helps the brand to stay in touch with the ongoing trends, and in adapting to the demands of the customer. Moreover, this cycle encourages customers to purchase clothes periodically according to the trends.

This product cycle consists of the following step-

Less cost on advertisement

Zara does not resort to advertising as one of its strategies. This model works well for the brand as it helps in maintaining the authenticity, luxury, and uniqueness of the brand. The price range of Zara’s products is much lower than that of luxury brands, but the lack of advertisement helps to maintain its luxury impression.

Various factors contribute significantly to the success of the Business model of Zara. Some of these factors are listed below-

Key Partners

These are the key partners of Zara:

Key Activities

These are the key activities of Zara:

Customer Relationship

Zara works according to the demand of the customer.

If I had to condense the foundations for Zara’s success, I would say it comes down to agility and flexibility,” Neil Saunders CEO of the firm.”

The customer relationship of Zara is:

Customer Segments

The customer segment of Zara is as follows:

Key Resources

The key resources of Zara are:

Key Channels

Zara produces about 12,000 styles per year (compared to the retail average of 3,000). It means that fresh fashion trends reach the stores immediately. The key channels of Zara are:

Cost-Structure of Zara

The expenditure of Zara goes on:

Competitive strategy of Zara

It maintains a position of superiority over its contemporaries because it gives importance to the management of customer and potential client relationships. Zara also maintains a close relationship with its suppliers.

Marketing strategy of Zara

Zara has raised a loyal customer who visits about six times per year, as compared to other retailers in the contemporary market. Loyal customers for retailers are responsible for 80% of the sales. These brand loyalists are also less price-sensitive.

Revenue Model of Zara

The Spanish fast-fashion store Zara generated online net sales of around US$2 billion in 2018. For 2019, revenue of up to US$2.5 billion is projected. Zara revenue generation is based upon its selling of more than 450 million products per year, i.e, it works on economy of scale. Zara has 1700 stores in more than 86 countries around the world.

Total sales of the company are around the US $13 billion that makes it one of the top 3 largest fast fashion brands in the world. Key strategies that help the company generate good revenues are-

Zara’s model of Fast fashion has worked well for it. Its model of vertical integration and logistics trade-offs have played a significant role in the success and global recognition of Zara. Zara is able to allow smooth and fluid communication between different verticals. Zara’s other strategies like location specificity of stores, synchronization, and coordination among various policies also help Zara is getting more recognition.

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A Quick Glance At Zara Business Model

Zara is a brand part of the retail empire Inditex. Zara is the leading brand in what has been defined as “fast fashion.” With almost €20 billion in sales in 2021 (comprising Zara Home) and an integrated retail format with quick sales cycles. Zara follows an integrated retail format where customers are free to move from physical to digital experience.

The origin story and business model transformation

Born in a small town in Spain (Villamanín), Amancio started as a delivery boy in A Coruña, a city and the municipality of Galicia, Spain. 

As a delivery boy, he got the chance to learn the fundamentals of the garment retail business .

And over the years, he learned that by better organizing the manufacturing and delivery of garments, he could sell those materials at a more competitive price.  

He first applied this model to its first brand during the mid-70s. 

This retail model would work so well that Amancio would expand all over Spain and internationally. 

As its first brand , Zara expanded exponentially over the years; he consolidated his empire under the umbrella of a holding company, Inditex (it took decades and many failed attempts).

Today Inditex comprises eight core brands following similar retail formats, of which Zara is the largest and most prominent, and Amancio Ortega, its founder, is among the wealthiest men on earth.

With almost €20 billion in revenues in 2021, Zara had undergone a business model transformation process, which started with one thing in mind: giving more options to its customers. 

Indeed, while starting in 2012, Zara consolidated its stores under a flagship model , it also invested massively in integrating the experience of its customers to make them seamlessly jump from physical to digital without any friction.

The flagship retail model consolidates existing physical stores to have a single location in an exclusive city area.

Therefore, on average, in 2018, Zara expanded its retail space by 50%. 

Instead of locking customers’ experience to those physical stores (where Zara had invested billions), the company, in parallel, invested in technologies that enhanced the digital experience.

In short, if today you go to Zara and with your phone can directly scan products to see their availability and order them online in other Zara locations, this is thanks to a deliberate process of transformation of its retail format. 

Customers are not locked in a single experience but are allowed to browse the shop and choose whatever format fits them the most. 

This is the power of business model transformation, starting with a single focus: enhanced customer experience!


Zara is the core asset of the Inditex Fashion Empire


Inditex is among the largest fashion retailers in the world with eight retail formats:

The Zara retail format follows an integrated offline-online store network which generated almost €20 billion in 2021 and accounted for over 70% of the group’s revenues.

The key element that has made Zara’s store successful over the years is its ability to anticipate and react to customer demands.


Zara flagship store retail model

Over the last years, Zara has been implementing an integrated retail format leveraging physical flagship stores located in exclusive central locations worldwide.

As reported on Inditex annual reports, the new flagship store opening, starting in 2018, Zara flagship stores were, on average, 59% larger than the first wave of stores opened in 2012 (from 1,452 m2 in 2012 to 2,184 m2 in 2018).

Primarily driven by new store openings, larger flagship stores, and consolidation of smaller stores within a larger flagship store.

RFID technology and Integrated experiences


RFID  stands for “radio-frequency identification” and is widely used in retail to track customers’ journeys across several physical and digital touchpoints between the customer and the brand .


Starting in 2007, championed by Zara Home and Zara started a process of digitalization to build a stronger relationship with customers to prevent them from being tied to the physical stores.

This process ended with the transition to an integrated store model .

To complete this process, Zara had to undergo several initiatives to create a trackable experience from the supply chain to the retail experience.

Some of the services implemented to enrich the customer experience were:

Key takeaways

The key elements of Zara’s business model are:

In short, Zara’s quick delivery, fast inventory , and seamless customer experience, enabling customers to jump to its physical store and shop online, helped it further consolidate throughout the last decade of digital transformation.

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