ZARA Case Study Solution

Introduction
Zara is a well-renowned name in the field of clothes and accessories, all across the world. It is a popular
fashion designing and manufacturing company, which has been declared as the most efficient market
responding enterprise. Just a few fashion brands keep pace with the latest fashion, Zara is one of the
bests, as it is always up to date with the latest trends in high quality at affordable prices. Mr. Amancio
Ortega, the founder of Inditex, has always received wide appreciation from public, industry people, even
from his competitors for his bold and strategic business decisions. Zara is one the most successful and
well-known brands of Inditex. After ten years of forming Inditex, Mr. Amancio Ortega started a small
store in Spain under the flagship of Inditex called Zorba. Later he changed its name to Zara. Zara began to
become popular and slowly it captured the markets of the United States of America, France, and then
across the globe.

The prominent reason behind Zara’s success is that it keeps up the pace with rapidly changing street
fashion. The brand keeps a close look at the changing trend of everyday fashion. That is why; it is not only
making great profits but also is a most celebrated brand by the buyers in the market (Murphy, 2008).
Even within the Inditex group, Zara has occupied the majority of the market and is a major source of its
revenues. The contribution of Zara in the organization’s profit-making and market capture is estimated to
be 80%.

Read More: Zara Operations Management Assignment On Decision Making Models

It is a Spanish company that is operating for more than a decade. It has proven itself since the start and
earned the trust of the customers, as it keeps maintaining its commitment to provide the best of its service
till the date. The management has taken some daring entrepreneurial decisions that lead to the success
and wide acceptance of the brand. Zara continues to beat the competitors by introducing new designs into
the stores within a week or two. While it takes a cycle of six months for other fashion brands to penetrate
new designs into the market. Many other companies are still not being able to take a decision on this
pattern. This is how it continues to be the favorite brand of the customers, do not wish to compromise
with the latest trend. Mr. Amancio Ortega became the talk of the industry when he shared his viewpoint
on clothes by calling them as a “perishable commodity”. He said that people would love to have clothed
the way they use bread or yogurt just like ‘use and throw’. His clothing range was often called ‘freshly
baked clothes’ that could be used not more than a month or two as per the change in the street fashion. If
someone visits, the store just one week late, finds out that the whole collection is new. Such innovative
and daring decisions that ensure the success in dynamic time can be a result of a deep thoughtful process
that requires an extensive research that involves environmental analysis at both micro and macro level.

Subscribe to our YouTube channel for more related videos

A structured external and internal analysis that can provide data for a rational decision-making process. A
process which can formulate feasible objectives and goals. Though Zara has achieved its objectives long
back and further moved to next step i.e. expansion (Sull and Turconi, 2008). Zara is also recognized as
one of the most eco-friendly companies. Its headquarter is in Spain, which is known for using solar panels
and wind turbines. It is also from one of those rare clothing brands, which produces 100% toxic-free
clothing.
In this study, we aim to analyze the market environment and make some attainable future targets. It is a
very crucial and critical process, as it will facilitate in making the decisions that will lay the basis for future
decisions and actions. Such critical decisions will determine future of the company in terms of success or
failure. From the example of Sainsbury, it is not wrong to say that hastily taken decision can lead to
massive losses. In Sainsbury, they took the decision of changing their complete supply chain, resulting in
series of problems that flung company years back. Zara has always been using the technology in its
manufacturing plants, in the areas where there is a requirement of simplifying the complex processes.
Decisions regarding the extent to which the technology must be used can only be taken through concise
measurements and analyses. Through this study, the focus is to explore such existing areas where the
company can further progress.

2. Mission and Objectives

Inditex group has specific and explicit concepts and plans defined for future. Their mission statement
contains clearly mentioned priorities and processes that are carefully chosen for the organization. The
founder has selected a precise set of strategies to ensure a sustainable, promising, successful career. The
mission statement (under Environmental Policies) for Zara states, “Through Zara’s business model, we
aim to contribute to the sustainable development of society and that of the environment with which we
interact”. While at its every store, the mission statement is specified as below,

"At the store

 We save energy.
 The eco-friendly shop.
 We produce less waste and recycle.
 Our commitment extends to all our staff.
 An environmentally aware team.”

For manufacturing and features, the mission is as below,

"With the product

 We use ecological fabrics.

 Organic cotton.
 We manufacture PVC – free footwear.”

For distribution channel (the transportation of finished goods from the point of production to point of
sale), it is termed as environmentally friendly,

“in transportation, we use biodiesel fuel.”

(http://www.zara.com/webapp/wcs/stores/servlet/category/uk/en/zara-/OurMissionStatement)

The vision statement of Zara is,

ZARA is committed to satisfying the desires of our customers. As a result, we pledge to continuously
innovate our business to improve your experience. We promise to provide new designs made from
quality materials that are affordable.” (zara.com)

Until now, the company has pleasing progress and a good record of achieving its defined goals. As a
group, Inditex is recognized as a more eco-friendly company while comparing with its competitors. It has
also gained the reputation of more responsible and rational company towards the environment and
community welfare concerns. Zara offers its products in 68 countries. All the stores have the complete
range that has been launched in a country with the same style of speedy sale and removing the old
collection. Zara works with the concept of offering a variety of latest trend of good quality in small
quantity for a shorter period of time at lower prices, which instigates the customers to purchase what they
like right away, without waiting for any sort of sale. Flope (2000), a market observer called the collection
launched by Zara “Banana Republic” and its prices “Old Navy”. Its collection is able to satisfy needs of the
customers may they are women, men or kids. Direct supply from Zara, Spain manages the demand and
supply chain. It has developed a fast shipments system that satisfies the existing needs. Presently Zara is
focusing on its environmental friendly program by launching stores, which supports its outlook. Deputy
Chairman of the group has mentioned that as environmental issues are crucial to the global strategy of
Inditex, they affix a strategic target to be implemented in all of its stores by 2020.

3. Situational Analysis
Zara has been leading the fashion market for two decades with a strong brand image amongst customers.
The same pattern of sale that is being set by the company is being followed in all 68 countries. Zara makes
sure to have an effective communication with the customers to understand and depict the changes in
markets and street fashion that help the designers to come up with new designs matching the expectations
of the customers. Mark & Spenser and Sainsbury lacked in managing the demand in this manner. Hence,
they could not match the expectations of the customers, which caused many problems for their brands
(Gluyas, 2004). As in case of Sainsbury in particular, due to introducing sudden changes in supply, caused
resources wastage. A feasible and optimum combination of demand management and supply chain
management should be taken into account to handle the market trends and win over competitors (D.
Walters, 2006).

Zara has attained the main objective of ensuring timely delivery of products to end-user at affordable
prices and complete customer satisfaction. It manages to do so by avoiding the confusion caused by the
involvement of third-party by supplying products directly from Spain. Zara has always believed in
customer satisfaction and has never done any sort of marketing and relied completely on word of mouth.
For a business to be successful, its customer-driven logistics plays a vital role (Waller, 1998). The only
marketing tactic ever being used by Zara is, displaying extremely attractive designs on the windows of
their stores; otherwise, no other regular marketing strategies are ever opted by Zara.
3.1 Environmental Analysis
Zara is Spain based company and is dominantly working there only. In this section its working conditions,
industry surroundings, competitive pressures, and other influencing factors. This section is also
examining the available choices in terms of opportunities and potential threats present in the existing
environment.

3.1.1 Industrial Analysis

Zara understands the importance of conducting an intense environment assessment before opting
for expansion and setting goals or making decisions for future. Hence, PESTLE analysis of Zara is
discussed below.

3.1.2 Political Factor

Its government and political parties that form a political scenario of a country. It is a well-known
fact that government plays a silent yet important role in the functioning of a business, as while
setting policies it may assist an industry. Until now, Zara is in Spain along with a major
distribution center in Europe. To consider expansion in other countries, Zara needs to access the
political support and working of the countries. However, due to predictable economic conditions,
Zara can opt for expanding its business in Europe.

3.1.3 Economical Factor

Since its origin, Zara has made it a point to deal in single currency. Even after several fluctuations
in the world economy in last few years, Zara is successfully getting its market share and is
unaffected by the recession. It is so because Zara is operating in one of the safest currencies than
in dollars. In addition, it always assesses and evaluates the currency rates and economic condition
of that particular country before making an entry there. Spain has a steady market and demands.

3.1.4 Social Environmental Factor

Zara faced a social influence of Spain as it is operating solely there, while it was taken care of by
the other brands of Inditex. Spain has a rich artistic and designing heritage. It is a preferred
destination for tourists as it has the peaceful social environment and many vivid cultural events.
Tourism has enabled Zara in attracting customers and retaining them by its policy of satisfying
customers through quality. Zara’s strategy of frequently changing its collection available at lower
prices promotes its sale in the single visit; this is how the tourists become their customers.
Fortunately, Zara is free from its country’s cultural roots.

3.1.5 Technological Input

Spanish retail companies often update their technology. Competitors of Zara introduce new
technology in the market in their manufacturing and sales process. While Zara took the more
responsible step of introducing its technology development by opening its eco-friendly stores. At
the same, it simplified its manufacturing process by dividing it into small simpler tasks, done by
the machines and finally assembled by the workers.

3.1.6 Legal Factor

Spanish government formulates such rules that assist and promote industrial development in the
country. To safeguard the business transactions in logistics, these rules provide support.

3.1.7 Environmental Issues

 A combination of customers, competitors, and internal company factors together constitute the
business environment. Though the business growth of Zara is favorable, it is time for Zara to take
new initiations and cross-border.

3.2 Internal Analysis

Let us evaluate the strategic implementations of Zara based on the concept of Porter’s Three Generation
Strategies. The concept has three sections i.e. segmentation, cost leadership, and differentiation strategy.
Zara is a perfect example of implementing an optimum combination of all these. The product line of Zara
is divided into three major sections; female, male, and kids. But the extensive characterization of clothes
is not being done, like clothes are not characterized differently for young girls and mid-age women, rather
the focus is on providing latest fashion trends, with a high turnover of 10,000 new designs in a year. Even
though it manufactures products as per market’s daily changing trends, it has developed a system by
which it has a low manufacturing cost enabling it to provide great latest designs at lower prices to the
customers.

4. SWOT Analysis

After a SWOT analysis of the organization, the conclusion was driven that Zara has motivated and
contended staff that works with the alignment with the organization’s goals and objectives. Its major
strengths are, attainable objective setting, vertically incorporated structure and, self-motivated and
committed human capital. The ability to make rational and practical decisions has made it win over its
competitors.

The organization makes no effort in creating or promoting the brand name. Presently, this is one of the
major weaknesses of the company. As it causes a communication gap between the customers and
company. It is following Euro-centric model approach by not carrying out any promotional activity to
attract more customers.

New geographic zones and markets with more customer-focused products and segmenting the whole
product line into more segments with specialized range is a great opportunity available with Zara. The
organization can also avail the opportunity of getting low paid labor but keeping in mind the requirement
of workforce management and company image. The United States of America has a great business
potential for Zara, as it already has its communication and customers there. Threats can be classified as
current markets are already facing oversaturation of many companies, high and frequent fluctuations in
exchange rates, and whole manufacturing can be affected by any natural disaster.

5. Strategic Options
Assembly of different components is done at the headquarters of Zara in Spain; it has outrightly rejected
the concept of cheap outsourcing. The company has a dignified name in the field of quality management
in the industry, but now it must allow its processes to explore new areas. This should be done with utmost
care otherwise company may attract many doubts and queries regarding its quality management and
human power management processes. However, through a sound system, it can excel in globalization
also.

Another available option, the management is following in past years is to grow as an eco-friendly company
and has also developed sales centers in regard to this concept. Eco-efficient and friendly certifications
specifically an esteemed one is LEED (Leadership in Energy and Environmental Design) are being
awarded to the Inditex group. Inditex has also mentioned this in its mission statement and has won a
competitive advantage. While the company is busy in creating new milestones; its competitors are in
process to reach the company’s set benchmarks. Zara is working on the concept of introducing new and
fast fashion that involves penetrating new styles in the markets. It is interesting to know that the
salespersons at the stores are facilitated with the PDAs (Personal Digital Assistant) that helps them to
maintain an effective communication with the designers in Spain, this is what makes it possible for Zara
to give such prompt responses to the market needs. The information and feedback are directly provided to
the designers’ team that also include 300 stylists from its stores. Afterwards, they analyze and recommend
new designs and within less than 10 days customers actually have in physical form what they were
thinking about. Where other companies take around six months to introduce their new range, such fast
response by Zara has won over the competitive advantage. The basic idea behind such quick and direct
communication and fast supply is to stay in touch with the end-user. It facilitates them in understanding
the précised needs of the customers and producing as their actual demands. Zara has created its name
with the customers by addressing their demands at such short notice and also minimized its operating
capital.

However, it is an appropriate time for Zara to come up with long-term and evergreen styles in the market.
The company has not tried any of such styles till date, interestingly there are potential customers willing
to pay for such domain. There is a common segment of the market which is looking for good quality
stylish clothes with such designs that lasts for a longer period of time. To explore new dimensions to
expand, the brand can introduce a range of clothing that stays in fashion for a year or six months and is
available in stores all through the year.

Zara has become an international brand but it is restricted to open new stores in different countries. The
company has already achieved its aim, now it must form new strategies to expand its market, as it has a
wide number of skilled people in favorable countries available. All of its operations are carried out at its
only plant in Spain. To ensure long sustainability it should not ignore the risks of survival in case of
moving with the same strategy. The business should be strategically divided among different
complimenting countries. This will open the scope for new ideas on a new style of the product range.
Exposure to new people and cultures will provide a wider understanding of trends leading to better ideas
and overall development of employees. However, it may cause human resource and other policy-making
related issues, but with the help of skilled human resource team, they can be easily taken care of. This will
expand the target market and designs get a wider coverage. Different countries have different styles,
likings, preferences, hence, one design not being appreciated in one country can be very well received in
another.

Read More: Business Research Assignment on Zara

To ensure better market response it is advisable to strengthen the corporate image of the brand in the
market. The identity of corporate as per Van Rekom (1997), “the set of meanings by which an object
allows itself to be known and through which it allows people to describe, remember and relate to it”. A
good brand image always helps a company in ensuring its sustainability and survival in the market. The
creation of a reliable image of a retailing organization is really supportive in attaining a competitive edge.
(Burghausen and Fan, 2002; Kennedy, 1977). A good corporate image in form of well–established and
well-connected with customers, generates more loyal customers (Balmer and Gray, 2003). Hence, there
should be an emphasis on building strong company image and not ignoring one of the most efficient ways
of getting it done i.e. marketing. Zara is going to expand its domain in future hence, must focus on
building strong relations with the customer through choosing appropriate marketing strategies. Zara
having the edge in the market has umpteen options readily available to it

6. Implementation Issues
Executing above discussed available opportunities is very challenging. Hence, Zara requires a firm
management with skilled individuals as its team. It is known to all that the founder of the company has
already taken and successfully implemented the most daring and best decisions. Now Zara must enter
into new markets with new strategies to attract new potential customers. If it enters into new markets to
get products manufactured at low prices then it would also be requiring a skilled and strong team of
human resource management.

To present company’s perspective in the market to maintain its image, a consistent representation at
regular basis is necessary. The company would also need to focus on workforce diversity; as if it is not
done properly then it may lead to resource wastage with a bad name to brand. Zara does not have many
distribution centers hence, supply management issues may also aggravate if it enters new markets. It
would be difficult to maintain the quality of products as well as processes and developing its eco-friendly
sale centers may also cause an increase in costs.

7. Conclusion and Suggestions

Zara has beaten the competition and is enjoying its leadership in latest fashions. The founder of Zara is
the richest person of Spain. The well-taken strategic decisions have provided a strong and reliable
foundation for the organization. Strategic decision-making and introducing change in strategy are
extensive activities requiring many efforts, but for Zara, it is need of the hour. In order to maintain the
growth rate and excellence of the company, Zara needs to bring new changes in its strategies. A variety of
strategies and some changes in the objectives may renew the company growth cycle. Zara in itself is a
result of strategic thought. However, it is highly recommended to not implement all the decisions taken in
one go. It would be more suitable if Zara introduces some change, afterward wait for some time to analyze
the response and then can decide further steps. Exhaustive evaluation of the circumstances should be
done prior to implementation of any decision. Zara case study assignments are being prepared by
our marketing assignment help experts from top universities which let us to provide you a
reliable assignment help online service.
References

1. Balmer, J.M.T. and Gray, E.R. (2003), “Corporate brands: what are they? What of them?”
European Journal of Marketing , Vol. 37 No. 7/8, pp. 972-97.
2. Burghausen, M. and Fan, Y. (2002), “Corporate branding in the retail sector: a pilot study”,
Corporate Communications: An International Journal , Vol. 7 No. 2, pp. 92-9.
3. David Walters, Effectiveness and efficiency: the role of demand chain management, The
International Journal of Logistics Management, Vol. 17 No. 1, 2006, pp. 75-94, Emerald Group
Publishing Limited.
4. Folpe, J. (2000),“Zara has a Made-to-Order Plan for Success”, Fortune, Sept. 4
5. Gluyas, R. (2004),The Australian, 15 November
6. How Zara Fashions its Supply Chain, Strategic Direction, VO L. 21, NO. 10 2005, pp. 28-31,
Emerald Group Publishing Limited
7. Kennedy, S.H. (1977), “Nurturing corporate images – total communication or ego trip”, European
Journal of Marketing, Vol. 11, pp. 120-64.
From West to East: Unravelling the Secrets of Market Entry into Asia.
Jodie Shaw

https://kadence.com/from-west-to-east-unraveling-the-secrets-of-market-
entry-into-asia

For Western brands, the allure of tapping into Asia’s vibrant and diverse
markets has never been stronger. Rapid urbanisation, the rise of a burgeoning
middle class, and the relentless adoption of digital technologies have
transformed this continent into an economic powerhouse characterised by
boundless opportunities and untapped potential.

And with its staggering population of over 4.7 billion accounting for 39% of the
world’s GDP, Asia stands as an irresistible frontier for Western brands
seeking expansion beyond their borders.

Yet, venturing into these territories is no simple feat. For Western brands,
market entry into Asia can be thrilling and intimidating. With each country
steeped in unique cultures, traditions, and consumer behaviours, it demands
astute observation, nuanced strategies, and careful consideration of the local
landscape.

Decoding the Asian Enigma: Choosing Your Entry

Point
As brands set their sights on the vast expanse of Asia, the question that
looms large is: Where to begin? Selecting the optimal entry point into Asia is a
critical decision that can significantly impact a brand’s success.

The continent’s immense diversity, contrasting cultures, and varying economic

landscapes demand a strategic approach to market entry. A meticulous
analysis of market potential, leveraging data-driven market research, and
understanding the intricacies of each country’s culture are essential
components of this strategic decision.

Factors to Consider When Selecting the Initial Market(s) for Entry

A thorough understanding of the target audience is the foundation of effective

market selection. Factors such as demographics, consumer preferences,
purchasing power, and cultural inclinations vary significantly across Asian
countries. Conducting in-depth market research that considers
macroeconomic indicators and micro-level consumer insights is vital.
Additionally, evaluating the competitive landscape and the presence of rival
brands in each market can inform decisions on where to focus initial efforts.

Analyzing Market Potential

As the saying goes, “Know thy market.” Conducting thorough market research
is the cornerstone of effective decision-making when entering Asia. Analyse
each target country’s economic indicators, consumer trends, and industry
outlooks. Consider the market’s size and growth potential, competitors’
presence, and consumers’ receptiveness to foreign brands. With data-driven
insights, brands can confidently gauge the viability and allure of each market.

Market Research and Analysis Techniques

Effective market research is a blend of art and science. Apart from traditional
research methodologies, digital data analytics and social listening can provide
real-time consumer sentiment and identify emerging trends. Leveraging
partnerships with local market research firms and consulting agencies, like
Kadence International, can yield valuable insights into the nuances of each
market. Such data-driven approaches enable brands to make informed
decisions, mitigating the risks of entering unfamiliar territories.

Pros and Cons of Entering a Single Market Versus Multiple Markets

Simultaneously

Choosing between a single-market entry and a multimarket entry strategy

depends on a brand’s resources, risk appetite, and long-term objectives.
Initially, focusing on a single market allows brands to direct their efforts and
resources to gain a strong foothold. This approach is particularly
advantageous for brands with limited budgets and those seeking to acclimate
to the intricacies of one market at a time. Conversely, a multimarket entry
strategy can provide diversification and faster market penetration if executed
effectively. However, it also demands significant investments in market
research, localisation, and brand adaptation.

Balancing Ambitions with Realistic Market Entry Plans

Entering multiple Asian markets simultaneously can be an ambitious
endeavour, but balancing aspirations with realistic planning is crucial. Brands
must consider their operational capabilities, supply chain readiness, and
adaptability to cultural nuances. Establishing a phased market entry approach
can mitigate risks and allow for learning and adjustment as the brand expands
its presence across different markets.

Navigating the Diversity and Uniqueness of Each Market

One of the defining characteristics of Asia is its incredible diversity, even

within individual markets. Each country encompasses a multitude of regions,
languages, and cultural practices, necessitating a nuanced understanding of
local preferences. What works in one city may not resonate in another, and
brands must craft strategies that account for such regional differences.
Flexibility and adaptability are key traits for brands aiming to thrive in the
diverse landscapes of Asia.

Critical Considerations for Market Entry: Embracing

Cultural Nuances and Regulatory Landscapes
Entering Asia requires more than just a business strategy; it demands a
profound understanding of cultural nuances and the ability to navigate
complex regulatory frameworks. Brands must navigate the intricacies of
diverse markets with cultural sensitivity, recognising that each country holds
unique opportunities and challenges.

Cultural Aspects and Consumer Preferences

Culture shapes consumer behaviours, and adapting marketing strategies to

align with local customs is paramount for success. This includes everything
from product packaging and brand messaging to promotional activities and
customer engagement. What works in one country might not necessarily
translate well to another, making cultural sensitivity an indispensable skill.
Brands must invest time and effort in understanding each target market’s
values, beliefs, and social norms to tailor their approach accordingly.

Localised Marketing Strategies: A Bridge to Consumer Hearts

Central to successful market entry in Asia is the art of localisation. It involves
more than just language translation; it’s about embracing the heart and soul of
each culture. Whether incorporating local festivals and traditions into
marketing campaigns or adjusting product features to cater to specific
preferences, personalised experiences resonate deeply with consumers.

Leveraging Digital Marketing and Social Media Platforms

In Asia, digital connectivity is revolutionising consumer behaviour. E-

commerce platforms, social media channels, and mobile apps have become
central to daily life, providing unparalleled opportunities for brands to engage
with consumers. Social media marketing is particularly powerful, with
influencers and user-generated content significantly shaping brand
perception. Embracing digital channels and leveraging influencer partnerships
can amplify a brand’s reach and foster authentic connections with target
audiences.

Navigating Legal and Regulatory Frameworks

Regulatory compliance is a critical aspect of market entry that cannot be

overlooked. Each Asian country has laws and regulations governing business
operations, advertising, and product distribution. Brands must familiarise
themselves with local trade policies, intellectual property rights, and labelling
requirements. Collaborating with local legal experts or partnering with local
entities can help ensure adherence to the legal framework, safeguarding the
brand’s reputation and minimising potential risks.

Competitor Analysis and the Competitive Landscape

Understanding the competitive landscape is indispensable for devising

effective market entry strategies. Competitor analysis provides insights into
existing players, their strengths, weaknesses, and market positioning. Brands
can identify gaps in the market, unmet consumer needs, and opportunities for
differentiation. By leveraging this knowledge, brands can craft compelling
value propositions that resonate with consumers and set them apart.

The Art of Cultural Localisation: Winning Hearts and

Minds
The journey to winning hearts and minds in Asia necessitates an unwavering
commitment to cultural localisation. Brands that seek to leave a lasting
impression in these diverse markets, language, imagery, cultural values, and
local celebrations serve as the threads that weave together a compelling
brand narrative.

By embracing the unique identities of each Asian market and fostering

genuine connections, Western brands can break barriers, earn loyalty, and
thrive amidst the captivating tapestry of Asia’s rich and multifaceted cultures.

Language Matters: Bridging the Communication Divide

Language serves as the gateway to culture. Acknowledging the linguistic

diversity in Asia is fundamental for effective communication. In countries like
India, Indonesia, and the Philippines, where numerous languages coexist,
tailoring marketing messages to regional dialects can create a sense of
familiarity and accessibility. Additionally, translating content accurately is
imperative, as linguistic errors can harm brand perception. Embrace the
power of local linguists and copywriters to ensure precision and cultural
relevance in all communications.

Visual Storytelling: Embracing Cultural Imagery

A picture speaks a thousand words, and in the realm of cultural localisation,

visuals hold unparalleled significance. Adopting culturally appropriate imagery
that resonates with the target audience can evoke emotions and forge strong
connections. However, a keen awareness of cultural symbolism is crucial to
avoid misinterpretation or offence. Colours, gestures, and facial expressions
can have different meanings in various Asian cultures. Conducting thorough
research and consulting local experts can help navigate this intricate web of
visual cues.

Understanding Cultural Values and Sensitivities

Each Asian market is shaped by unique cultural values, norms, and

sensitivities. Respect for age-old traditions and social structures is vital in
building consumer trust. In countries like Japan and Thailand, where hierarchy
plays a significant role in society, acknowledging and adhering to respectful
communication norms can enhance brand credibility. Conversely, in Indonesia
and the Philippines, collectivist values underline the importance of community
and family ties, making inclusive messaging and community-driven initiatives
impactful.

Festivals and Celebrations: A Window to Culture

Asia’s calendar is adorned with vibrant festivals and celebrations, each

offering a glimpse into the region’s cultural fabric. Brands can seize these
occasions to engage with consumers in meaningful ways. Sponsoring or
participating in local festivities demonstrates a genuine commitment to
embracing the culture and fostering positive brand associations. However,
authenticity is paramount; brands must approach such engagements with
sincerity and a genuine desire to celebrate and understand the significance of
these events.

Adapting Marketing Channels to Local Preferences

Digital penetration is rapidly transforming the Asian consumer landscape.

While online platforms offer immense opportunities for brand exposure, each
market has unique preferences and usage patterns. For example, while Japan
strongly prefers local social media platforms, Indonesia and the Philippines
have embraced Western platforms like Facebook and Instagram.
Understanding these regional preferences empowers brands to tailor their
digital strategies effectively.

Localising Marketing Strategies: A Gateway to

Consumer Hearts
The art of localisation holds the key to forging authentic connections with
consumers, ensuring that brands resonate deeply with their target audiences.
By embracing the diversity that defines each market, brands can craft
strategies that celebrate local values, customs, and traditions.

Localisation extends far beyond language translation.

While linguistic accuracy is vital, successful localisation delves into the

intricacies of each market’s cultural fabric. This involves tailoring product
offerings, packaging, and advertising to reflect local consumers’ tastes,
preferences, and aspirations. From using symbols and colours that hold
cultural significance to crafting narratives that align with historical context,
brands must embrace the essence of each market.

Case Study: Coca-Cola’s “Share a Coke” Campaign

Coca-Cola’s “Share a Coke” campaign, which replaced the brand’s logo with
popular names on its bottles, provides a shining example of successful
localisation. In various Asian countries, the campaign adapted to local cultures
by featuring common names relevant to each market. This personal touch
struck a chord with consumers, fostering a sense of inclusion and familiarity.

Leveraging Digital Marketing and Social Media Platforms

Asia’s digital revolution has catapulted social media and e-commerce

platforms into the forefront of consumer engagement. Brands that effectively
leverage these channels can create compelling localised content that
resonates with audiences. Engaging influencers who embody the values and
aspirations of the target market can significantly amplify a brand’s message.

Case Study: Shopee’s “Shopee 9.9 Super Shopping Day”

Shopee, an e-commerce platform operating across Southeast Asia,

orchestrated a highly successful localised marketing campaign. Their “Shopee
9.9 Super Shopping Day” event offered exclusive deals, games, and
entertainment, perfectly aligned with the region’s love for festivities and online
shopping. The campaign generated massive consumer interest and record-
breaking sales.

Engaging in Cultural Celebrations and Festivals

Festivals hold profound cultural significance in Asia, providing brands with

opportunities to connect with consumers personally. By participating in or
sponsoring local festivals, brands can showcase a genuine appreciation for
the culture and values of each market.

Case Study: Airbnb’s “A Night at the Great Wall of China”

Airbnb’s campaign, offering the chance to spend a night at the Great Wall of
China, exemplifies how brands can creatively engage with cultural icons. By
giving travellers an exclusive experience steeped in Chinese heritage, Airbnb
fostered a strong emotional connection and earned widespread acclaim.

Authentic Storytelling: Connecting with Emotional Resonance

When localising marketing strategies, storytelling is a potent tool for creating

emotional resonance. By crafting narratives that evoke the aspirations and
struggles of the local population, brands can elevate their purpose beyond
mere commercialism.

Case Study: Unilever’s “Project Sunlight”

Unilever’s “Project Sunlight” initiative tapped into Asian consumers’ desire for
social responsibility and sustainability. By showcasing real stories of
individuals making positive impacts in their communities, Unilever reinforced
its commitment to social causes, resonating deeply with consumers’ values.

Distribution and Logistics: Paving the Path to Market

Penetration
Distribution and logistics form the backbone of a successful market entry
strategy in Asia. Understanding the intricacies of each market’s distribution
landscape, overcoming logistics challenges, and devising efficient
warehousing and fulfilment strategies are indispensable for achieving market
penetration and customer satisfaction. A well-executed distribution and
logistics approach unlocks the potential to thrive in the thriving markets of
Asia, transforming market entry visions into tangible realities.

Exploring the Most Efficient Distribution Channels

Asia has many distribution channels, each with unique strengths and
challenges. Understanding the prevailing distribution landscape in each
country is crucial for selecting the most effective channels to reach
consumers.

For instance, the retail sector in India combines traditional mom-and-pop

stores and modern retail chains. In contrast, Indonesia’s vast geography
necessitates leveraging offline and online distribution networks to reach the
archipelago’s dispersed population. Adapting to the local distribution
ecosystem allows brands to optimise their reach and coverage.

Case Study: IKEA’s Distribution Innovation in India

IKEA’s entry into India exemplifies the importance of adapting distribution

strategies to local needs. Recognising the significance of affordability and
accessibility in the Indian market, IKEA invested in localised supply chains,
reducing costs and offering products at competitive prices. Furthermore, the
brand established distribution centres in major cities to cater to the country’s
vast and diverse customer base.

Overcoming Logistics and Supply Chain Challenges

Asia’s diverse terrains, infrastructures, and regulatory complexities present

unique logistics challenges. Brands must meticulously plan their supply chain
operations, considering transportation costs, warehousing, and inventory
management. Engaging experienced logistics partners can help streamline
processes and navigate regional nuances.

Case Study: Zara’s Agile Supply Chain in Asia

Zara, renowned for its fast fashion, implemented an agile supply chain in Asia
to cater to its rapidly evolving consumer demands. By establishing regional
distribution centres and closely monitoring inventory levels, Zara significantly
reduced lead times, ensuring that the latest fashion trends reached Asian
consumers in a timely manner.

Warehousing, Shipping, and Fulfillment Strategies

Warehousing is pivotal in ensuring seamless order fulfilment and timely

product delivery. Brands must strategically position warehouses to minimise
transit times and storage costs while meeting customer demands.
Additionally, collaborating with reliable shipping partners can enhance the
brand’s reputation for on-time delivery and customer satisfaction.

Case Study: Amazon’s Fulfillment Centers in Japan

Amazon’s expansion into Japan relied heavily on building an extensive

network of fulfilment centres across the country. By leveraging sophisticated
fulfilment technology and strategically locating centres, Amazon efficiently met
the expectations of Japan’s demanding e-commerce customers, solidifying its
position as a leading online retailer in the market.

Partnering and Collaborations: Fostering Success

Through Local Expertise
Partnerships and collaborations are integral to the roadmap to success
in Asian markets. Aligning with local entities unlocks cultural insights,
distribution networks, and consumer engagement opportunities that can prove
transformative for Western brands.

By carefully selecting partners, cultivating meaningful relationships, and

embracing cultural sensitivity, brands can tap into the knowledge and
experience of local collaborators.

The Benefits of Forming Partnerships with Local Companies

Collaborating with established local companies can provide Western brands

with a competitive edge and a deeper understanding of the target market.
Local partners possess invaluable insights into consumer behaviours, market
trends, and regulatory frameworks, enabling brands to tailor their strategies
effectively. Such partnerships also facilitate access to well-established
distribution networks and existing customer bases, expediting market entry
and amplifying brand visibility.

Case Study: Starbucks’ Partnership with Tata Group in India

A strategic partnership with the Tata Group, a well-respected Indian

conglomerate, bolstered Starbucks’ entry into the Indian market. Tata’s
extensive local knowledge and network, coupled with Starbucks’ global
expertise in coffee retail, resulted in a successful collaboration that resonated
with Indian consumers.

By incorporating Indian flavours and cultural elements into their offerings,

Starbucks cultivated a unique brand experience tailored to the local palate.

Identifying and Evaluating Potential Partners and Collaborators

 Selecting the right partners is crucial in establishing a successful market
presence in Asia. Brands must thoroughly research potential collaborators,
assessing their reputation, track record, and alignment with the brand’s values
and goals.

Engaging in direct dialogue with prospective partners can provide the

following:

 Insights into their cultural fit.

 Commitment.
 Willingness to invest in mutual success.

Contracts and agreements should be well-defined, outlining roles,

responsibilities, and expectations to ensure a harmonious and productive
partnership.

Case Study: McDonald’s and Local Partnerships in Asia

McDonald’s exemplifies the value of local partnerships in Asian markets. The

fast-food giant often collaborates with local businesses to adapt its menu and
offerings to suit regional tastes and preferences. Such partnerships enhance
the brand’s appeal and foster goodwill and support from local communities.

Negotiation and Contractual Considerations in Partnerships

Negotiating partnerships requires a delicate balance of cultural sensitivity and

business acumen. Western brands must adapt to varying negotiation styles in
each market, respecting hierarchical structures and decision-making
processes. Contracts should outline clear performance indicators, protection
of intellectual property rights, dispute resolution mechanisms, and provisions
for termination if necessary. By fostering open communication and
transparency, brands can build trust and lay the foundation for a successful
partnership.

Case Study: Uniqlo’s Collaboration with Local Designers in Southeast

Asia

Uniqlo’s expansion into Southeast Asia saw the brand collaborating with local
designers to create region-specific collections. By celebrating local design
aesthetics and incorporating culturally relevant elements into their apparel,
Uniqlo cultivated a loyal customer base and gained acceptance as a part of
the region’s fashion landscape.

Navigating Cross-Cultural Communication and Building Relationships

Building solid relationships with local partners requires effective cross-cultural

communication. Understanding and respecting local customs, etiquette, and
communication styles fosters mutual respect and rapport. Regular
interactions, face-to-face meetings, and investing time in getting to know one
another can strengthen the bond between brand representatives and local
collaborators.

Case Study: Airbnb’s Approach to Building Local Relationships

Airbnb’s successful expansion in Asia was founded on building relationships

with local communities. By engaging in community-driven initiatives,
supporting local businesses, and respecting cultural values, Airbnb positioned
itself as a responsible and empathetic brand. This approach enhanced the
brand’s reputation and fostered long-term partnerships with local
stakeholders.

Navigating Legal and Regulatory Landscapes: Ensuring Compliance and

Building a Solid Foundation

As Western brands seek to enter into Asian markets, a comprehensive

understanding of the legal and regulatory frameworks is essential. Each
country presents unique legal requirements, trade policies, and business
regulations that can significantly impact market entry and ongoing operations.

Legal Requirements for Market Entry

Before making their market entry, Western brands must adhere to specific
legal requirements in each Asian country. This includes registering the
business entity, obtaining the necessary permits and licenses, and complying
with tax regulations. Engaging local legal experts and consultants can provide
valuable guidance in navigating the bureaucratic landscape, ensuring a
smooth and lawful market entry process.

Case Study: Google’s Legal Compliance in Vietnam

When Google expanded its operations into Vietnam, the tech giant ensured
strict adherence to local data storage and localisation laws. By establishing
data centres in Vietnam and complying with the country’s cybersecurity
regulations, Google demonstrated a commitment to legal compliance and
building trust with the Vietnamese government and consumers.

Protecting Intellectual Property Rights

Safeguarding intellectual property (IP) rights is of utmost importance in Asian

markets, where counterfeiting and IP infringement can be prevalent. Brands
must conduct thorough IP research and file for trademark and copyright
protections to prevent unauthorised use of their brand assets. Proactive
measures like monitoring and enforcing IP rights can deter potential
infringements and protect the brand’s reputation.

Case Study: Apple’s IP Protection Strategies in China

Apple’s expansion into China saw the company employing a robust IP

protection strategy to combat counterfeit products and imitations. By working
closely with Chinese authorities and partnering with local distributors, Apple
actively tackled IP infringements, fostering consumer trust in the authenticity
of its products.

Mitigating Legal Risks and Ensuring Compliance

Navigating unfamiliar legal landscapes poses inherent risks for Western

brands. Thoroughly researching and understanding local business regulations
and consumer protection laws can mitigate risks and prevent costly legal
disputes.

Engaging in due diligence when selecting local partners and collaborators is

crucial to ensuring that the brand’s values align with those of the partners,
thereby minimising potential legal conflicts.

Case Study: Uber’s Legal Challenges in Asia

Uber’s entry into several Asian markets was met with regulatory hurdles and
opposition from local taxi industries. Facing legal challenges in various
countries, Uber eventually exited some markets, highlighting the importance
of adapting business models to comply with local regulations.
Building a Compliant Business

Building a compliant business in Asia necessitates ongoing vigilance and

adaptability. Regularly reviewing and updating legal documentation, licenses,
and permits ensures that the brand complies with evolving laws and
regulations.

Employing internal compliance teams and maintaining open communication

with local authorities can foster a proactive approach to legal compliance.

Case Study: Nestlé’s Commitment to Responsible Sourcing in

Indonesia

Nestlé’s operations in Indonesia underscore the significance of responsible

business practices. By engaging in sustainable sourcing of raw materials,
Nestlé demonstrated compliance with Indonesia’s environmental and social
regulations, earning recognition for its ethical practices.

Realistic Timing and Expectations: Charting the

Course for Success
It is vital to approach new market entry with realistic timing and expectations.
Asia’s markets are diverse, and building a solid brand presence takes time
and adaptability.

Understanding that market entry is a journey, not a race, empowers brands to

adapt to local realities, seize opportunities, and overcome challenges. By
setting achievable milestones, projecting realistic timelines for breaking even
and achieving profitability, and prudently budgeting for market entry and
growth, Western brands can pave the path to sustainable success in Asia.

Understanding the Timeline for Market Entry

Patience and a long-term perspective are essential when entering Asian

markets. Market research, localisation, regulatory compliance, and
partnership negotiations demand meticulous planning and execution. Western
brands must recognise that building brand awareness and customer trust may
take longer than expected, especially in markets with well-established local
competitors.
Case Study: Walmart’s Gradual Expansion in India

Walmart’s entry into India exemplifies the importance of a gradual and

strategic approach. The retail giant entered India through a joint venture to
navigate local regulations and gain a foothold in the market. Over time,
Walmart increased its ownership stake and expanded its operations,
respecting the dynamics of the Indian retail landscape.

Setting Achievable Milestones

Setting realistic milestones is crucial for measuring progress and aligning

expectations with outcomes. Brands must establish clear objectives for market
entry and growth, considering each country’s varying market conditions and
consumer behaviors. Flexibility is essential, as adjusting strategies based on
real-time feedback and market insights can drive success.

Case Study: Procter & Gamble’s Sustainable Growth in the Philippines

Procter & Gamble (P&G) has achieved sustainable growth in the Philippines
by setting specific and achievable milestones. By focusing on product
innovation, targeted marketing, and localised strategies, P&G successfully
captured a significant market share and established a strong brand presence
in the country.

Budgeting and Financial Considerations

Market entry in Asia requires substantial financial investments. Brands should

allocate budgets for market research, localisation efforts, legal compliance,
distribution networks, and advertising campaigns. Balancing prudent spending
and allocating sufficient resources to gain a competitive edge is essential.

Case Study: Netflix’s Strategic Investment in Japan

Netflix’s entry into Japan involved significant financial commitments to create

a localised content library and effectively compete with local streaming
services. By strategically investing in Japanese content and offering diverse
language options, Netflix captured a substantial share of the Japanese
market.

Projected Timelines for Breaking Even and Achieving Profitability

Entering Asian markets requires a longer-term commitment to realise returns
on investment. Brands should anticipate that profitability may take time,
particularly in markets with unique consumer preferences and high
competition. Preparing stakeholders for a gradual return on investment while
showcasing consistent progress can garner support and confidence.

Case Study: Tesla’s Market Entry Strategy in China

Tesla’s approach to entering the Chinese market demonstrates the

importance of projecting realistic timelines. By building a Gigafactory in China
to manufacture vehicles locally, Tesla aimed to reduce costs and achieve
profitability in the region. This strategic move aligned with the brand’s long-
term vision for success in the competitive Chinese electric vehicle market.

Embracing the Asian Opportunity

Venturing into Asia’s vast and diverse markets is akin to embarking on an
uncharted path, where every step taken offers both challenges and rewards.
As brands contemplate the journey from West to East, they face an array of
cultural, regulatory, and logistical intricacies that demand a thoughtful and
adaptive approach.

With humility, cultural appreciation, and a genuine desire to contribute

positively to the lives of Asian consumers, Western brands can navigate the
complexities of these diverse markets, illuminating a world of possibilities that
transcend borders and foster a truly global impact. The journey from West to
East promises transformative growth and the potential to build bridges that
span continents, making this voyage an adventure worth undertaking.
https://martinroll.com/resources/articles/strategy/the-secret-of-zaras-success-a-culture-
of-customer-co-creation

The Zara brand story

Zara was founded by Amancio Ortega and Rosalía Mera in 1975 as a family business in downtown

Galicia in the northern part of Spain. Its first store featured low-priced lookalike products of popular,

higher-end clothing and fashion. Amancio Ortega named Zara as such because his preferred name

Zorba was already taken. In the next 8 years, Zara’s approach towards fashion and its business

model gradually generated traction with the Spanish consumer. This led to the opening of 9 new

stores in the biggest cities of Spain.

In 1985, Inditex was incorporated as a holding company, which laid the foundations for a distribution

system capable of reacting to shifting market trends extremely quickly. Ortega created a new design,

manufacturing, and distribution process that could reduce lead times and react to new trends in a

quicker way, which he called “instant fashion”. This was driven by heavy investments in information

technology and utilising groups instead of individual designers for the critical “design” element.

In the next decade, Zara began aggressively expanding into global markets, which included

Portugal, New York (USA), Paris (France), Mexico, Greece, Belgium, Sweden, Malta, Cyprus,

Norway and Israel. Today, there is hardly a developed country without a Zara store. Zara now has

2,264 stores strategically located in leading cities across 96 countries. It is no surprise that Zara,

which started off as a small store in Spain, is now the world’s largest fast fashion retailer and is the

flagship brand of Inditex. Its founder, Amancio Ortega, is the sixth richest man in the world according

to Forbes magazine.

Today, Inditex is the world’s largest fashion group with more than 174,000 employees operating

more than 7,400 stores in 202 markets worldwide including 49 online markets. The revenues of

Inditex was USD 23.4 billion in 2019. The other fashion brands in the Inditex portfolio are:

Zara Home: Home goods and decoration objects founded in 2003. Operating in 183 markets, 70 of

them with stores.

Pull & Bear: Casual laid-back clothing and accessories for the young founded in 1991. Operates in

185 markets, 75 of them with stores.

Massimo Dutti: High end clothing and accessories for cosmopolitan men and women acquired in

1995. Operates 186 markets, 74 of them with stores.

Bershka: Blends urban styles and modern fashion for young women and men founded in 1998.

Operates in 185 markets, 74 of them with stores.

Stradivarius: Casual and feminine clothes for young women acquired in 1999. Operates 180

markets, 67 of them with stores.

Oysho: Lingerie, casual outerwear, lounge wear and original accessories founded in 2001.

Operating in 176 markets, 58 of them with stores.

Uterqüe: High-quality fashion accessories at attractive prices founded in 2008. Operating in 158

markets, 17 of them with stores.

Apart from fashion brands, Amancio Ortega has also set up a global real estate investment fund,

Pontegadea Inversiones, which manages corporate offices across 9 countries including United

States (Seattle), Britain (London), France (Paris), Canada, Italy, South Korea. These corporate

properties house large companies including Facebook, Amazon and Apple, and prestigious luxury

and retail brands.

The Zara brand strategy

In 2019, Zara was ranked 29th on global brand consultancy Interbrand’s list of best global brands. Its

core values are found in four simple terms: beauty, clarity, functionality and sustainability.

The secret to Zara’s success has largely being driven by its ability to keep up with rapidly changing

fashion trends and showcase it in its collections with very little delay. From the very beginning, Zara

found a significant gap in the market that few clothing brands had effectively addressed. This was to

keep pace with latest fashion trends, but offer clothing collections that are a combination of high
quality and yet, are affordable. The brand keeps a close watch on how fashion is changing and

evolving every day across the world. Based on latest styles and trends, it creates new designs and

puts them into stores in a week or two. In stark comparison, most other fashion brands would take

close to six months to get new designs and collections into the market.

It is through this strategic ability of introducing new collections based on latest trends in a rapid

manner that enabled Zara to beat other competitors. It quickly became the people’s favourite brand,

especially with those who want to keep up with fashion trends. Founder Amancio Ortega is famously

known for his views on clothes as a perishable commodity. According to him, people should love to

use and wear clothes for a short while and then they should throw them away, just like yogurt, bread

or fish, rather than store them in cupboards.

The media often quotes that the brand produces “freshly baked clothes”, which survive fashion

trends for less than a month or two. Zara concentrates on three areas to effectively “bake” its fresh

fashions:

Shorter lead times (and more fashionable clothes): Shorter lead times allow Zara to ensure that

its stores stock clothes that customers want at that time (e.g. specific spring/ summer or autumn/

winter collections, recent trend that is catching up, sudden popularity of an item worn by a celebrity/

socialite/ actor/ actress, latest collection of a top designer etc.). While many retailers try to forecast

what customers might buy months in the future, Zara moves in step with its customers and offers

them what they want to buy at a given point in time.

Lower quantities (through scarce supply): By reducing the quantity manufactured for a particular

style, Zara not only reduces its exposure to any single product but also creates artificial scarcity.

Similar to the principle that applies to all fashion items (and more specifically luxury), the lesser the

availability, the more desirable an object becomes. Another benefit of producing lower quantities is

that if a style does not generate traction and suffers from poor sales, there is not a high volume to be

disposed of. Zara only has two time-bound sales a year rather than constant markdowns, and it

discounts a very small proportion of its products, approximately half compared to its competitors,

which is a very impressive feat.

More styles: Rather than producing more quantities per style, Zara produces more styles, roughly

12,000 a year. Even if a style sells out very quickly, there are new styles waiting to take up the

space. This means more choices and higher chance of getting it right with the consumer.

Zara only allows its designs to remain on the shop floor for three to four weeks. This practice pushes

consumers to keep visiting the brand’s stores because if they were just a week late, all the clothes of

a particular style or trend would be gone and replaced with a new trend. At the same time, this

constant refreshing of the lines and styles carried by its stores also entices customers to visit its

shops more frequently.

In the following sections, the key components of Zara’s winning formula in the fashion retailing

industry are illustrated.

Customer co-creation: Zara’s principal designer is the customer

Zara’s unrelenting focus on the customer is at the core of the brand’s success and the heights it has

achieved today. There was a fascinating story around how Zara co-creates its products leveraging

its customers’ input. In 2015, a lady named Miko walked into a Zara store in Tokyo and asked the

store assistant for a pink scarf, but the store did not have any pink scarves. The same happened

almost simultaneously for Michelle in Toronto, Elaine in San Francisco, and Giselle in Frankfurt, who

all walked into Zara stores and asked for pink scarves. They all left the stores without any scarves –

an experience many other Zara fans encountered globally in different Zara stores over the next few

days.

7 days later, more than 2,000 Zara stores globally started selling pink scarves. 500,000 pink scarves

were dispatched – to be exact. They sold out in 3 days. How did such lightning fast stocking of pink

scarves happen?

Customer insights are the holy grail of modern business, and the more companies know about their

customers, the better they can innovate and compete. But it can prove challenging to have the right

insights, at the right time, and have access to them consistently over time. One of the secrets to

Zara’s success includes using Radio Frequency Identification Technology (RFID) in its stores. The
brand uses cutting-edge systems to track the location of garments instantly and makes those most in

demand rapidly available to customers. Additionally, it helps to reduce inventory costs, provides

greater flexibility to launch new designs, and allows fulfillment of online orders with stock from stores

nearest to the delivery location thereby reducing delivery costs.

Another secret of Zara’s success is that the brand trains and empowers its store employees and

managers to be particularly sensitive to customer needs and wants, and how customers enact them

on the shop floors. Zara empowers its sales associates and store managers to be at the forefront of

customer research – they intently listen and note down customer comments, ideas for cuts, fabrics

or a new line, and keenly observe new styles that its customers are wearing that have the potential

to be converted into unique Zara styles. In comparison, traditional daily sales reports can hardly

provide such a dynamic updated picture of the market. The Zara empire is built on two basic rules:

“to give customers what they want”, and “get it to them faster than anyone else”.

Due to Zara’s competitive customer research capabilities, its product offerings across its stores

globally reflect unique customer needs and wants in terms of physical, climate or cultural

differences. It offers smaller sizes in Japan, special women’s clothes in Arab countries, and clothes

of different seasonality in South America. These differences in product offerings across countries are

greatly facilitated by the frequent interactions between Zara’s local store managers and its creative

team.

In the fashion world, a trend starts small, but develops fast. Zara employees are trained to listen,

watch and be attentive to even the smallest seismographic signals from their customers, which can

be an initial sign that a new trend is taking shape. Zara knows that the quicker it can respond, the

more likely it is to succeed in supplying the right fashion merchandise at the right time across its

global retail chain. Zara has set up sophisticated technology driven systems, which enable

information to travel quickly from the stores back to its headquarters in Arteixo in Spain, enabling

decision makers to act fast and respond effectively to a developing trend. Its design teams regularly

visit university campuses; nightclubs and other venues to observe what young fashion leaders are

wearing. In its headquarters, the design team uses flat-screen monitors linked by webcam to offices

in Shanghai, Tokyo and New York (the leading cities for fashion trends), which act as trend spotters.
The ‘Trends’ team never goes to fashion shows but tracks bloggers and listens closely to the brand’s

customers.

The fact that Zara’s designers and customers are inextricably linked is a crucial part of the brand

strategy. Specialist teams receive constant feedback on the decisions its customers are making at

every Zara store, which continuously inspires the Zara creative team.

Zara’s super-efficient supply chain

Zara’s highly responsive, vertically integrated supply chain enables the export of garments 24 hours,

365 days of the year, resulting in the shipping of new products to stores twice a week. After products

are designed, they take around 10 to 15 days to reach the stores. All clothing items are processed

through the distribution center in Spain, where new items are inspected, sorted, tagged, and loaded

into trucks. In most cases, clothing items are delivered to stores within 48 hours. This vertical

integration allows Zara to retain control over areas like dyeing and processing and have fabric-

processing capacity available on-demand to provide the correct fabrics for new styles according to

customer preferences. It also eliminates the need for warehouses and helps reduce the impact of

demand fluctuations. Zara produces over 450 million items and launches around 12,000 new

designs annually, so the efficiency of the supply chain is critical to ensure that this constant

refreshment of store level collections goes off smoothly and efficiently.

Here are some of the characteristics of Zara’s supply chain that highlight the reasons behind its

success:

Frequency of customer insights collection: Trend information flows daily into a database at head

office, which is used by designers to create new lines and modify existing ones.

Standardization of product information: Zara warehouses have standardised product information

with common definitions, allowing quick and accurate preparation of designs with clear

manufacturing instructions.
Product information and inventory management: By effectively managing thousands of fabric,

trim and design specifications and their physical inventory, Zara is capable of designing a garment

with available stock of required raw materials.

Procurement strategy: Around two-thirds of fabrics are undyed and are purchased before designs

are finalized so as to obtain savings through demand aggregation.

Manufacturing approach: Zara uses a “make and buy” approach – it produces the more

fashionable and riskier items (which need testing and piloting) in Spain, and outsources production

of more standard designs with more predictable demand to Morocco, Turkey and Asia to reduce

production cost. The more fashionable and riskier items (which are around half of its merchandise)

are manufactured at a dozen company-owned factories in Spain (Galicia), northern Portugal and

Turkey. Clothes with longer shelf life (i.e. the one with more predictable demand patterns), such as

basic T-shirts, are outsourced to low cost suppliers, mainly in Asia. Even when manufacturing in

Europe, Zara manages to keep its costs down by outsourcing the assembly workshops and

leveraging the informal economy of mothers and grandmothers.

Distribution management: Zara’s state-of-the-art distribution facility functions with minimal human

intervention. Optical reading devices sort out and distribute more than 60,000 items of clothing an

hour.

In addition to these supply chain efficiencies, Zara can also modify existing items in as little as two

weeks. Shortening the product life cycle means greater success in meeting consumer preferences. If

a design does not sell well within a week, it is withdrawn from shops, further orders are canceled and

a new design is pursued. Zara closely monitors changes in customer preferences towards fashion. It

has a range of basic designs that are carried over from year to year, but some in-vogue, high

fashion, inspired by latest trends items can stay on the shelves for less than four weeks, which

encourages Zara fans to make repeat visits. An average high-street store in Spain expects

customers to visit thrice a year, but for Zara, the expectation is that customers should visit around 17

times in a year.
This expectation for such a high frequency of repeat visits is evidence of Zara’s confidence that it is

keeping on top of changing consumer needs and preferences and is helping them shape their ideas,

opinions and taste for fashion. In reality, Zara is also helping in giving birth to new trends through its

stores or even helping in extending the longevity of some seasonal styles by offering affordable

lines.

Sustainability at the core of Zara’s operations

Sustainability has been a hot topic in business for the last decade and is now quickly becoming a

must-have hygiene factor for companies that want to resonate with and win the loyalty of its global

customers. For Inditex, this means having a commitment to people and the environment.

Commitment to people: Inditex ensures that its employees have a shared vision of value built on

sustainability through professional development, equality and diversity and volunteering. It also

ensures that its suppliers have fundamental rights at work and by initiating continuous improvement

programs for them. Inditex also spends over USD 50 million annually on social and community

programmes and initiatives. For example, its “for&from” programme which started in 2002 has

enabled the social integration of people with physical and mental disabilities, by providing over 200

stable employment opportunities across 15 stores.

Commitment to environment: Being in a business where it taps on natural resources to create its

products, Inditex makes efforts to ensure that the environmental impact of its business complies with

UNSDGs (United Nations Sustainable Developmental Goals). Inditex has pledged to only sell

sustainable clothes by 2025 and that all cotton, linen and polyester sold will be organic, sustainable

or recycled. The company also runs Join Life, a scheme which helps consumers identify clothes

made with more environmentally friendly materials like organic cotton and recycled polyester.

Additionally, Inditex takes wide-ranging measures to protect biodiversity, reduce its consumption of

water, energy and other resources, avoid waste, and combat climate change. For example, it has

outlined a Global Water Management Strategy, specifically committing to zero discharge of

hazardous chemicals. It has also been expanding its waste reduction programme through which
customers can drop off their used clothing, footwear and accessories at collection points in 2,299

stores in 46 markets today.

Zara’s culture: The word “impossible” does not exist

Zara has a very entrepreneurial culture, and employs lots of young talent who quickly climb through

the ranks of the company. Zara promotes approximately two-thirds of its store managers from within

and generally experiences low turnover. The brand has no fear in giving responsibility to young

people and the culture encourages risk-taking (as long as learning happens) and fast

implementation (the mantra of fashion).

Top management gives its store managers full liberty and control over their store’s operations and

performance with clearly set cost, profit and growth targets with a fixed and variable compensation

scheme. The variable component amounts to up to half of the total compensation – making store

level employees heavily incentive-driven.

In addition, once an employee is selected for promotion, his or her store develops a comprehensive

training program for that individual with the human resources department, which is followed up by

periodic supplemental training – reflecting Zara’s commitment to talent development. The

organizational structure is also flat with only a few managerial layers.

Customers are the most important source of information for Zara, but like any other fashion brand,

Zara also employs trend analysts, customer insights experts, and retains some of the best talents in

the fashion world. The creative team of Zara comprises of over 200 professionals. They all embody

and enact the corporate philosophy that the word “impossible” does not exist in Zara.

For example, while many companies struggle with long lead times in discussions and decision

making, Zara gets around this challenge by getting various business functions to sit together at the

headquarters and also by encouraging a culture (through structures and processes) where people

continuously talk to each other. The sales and marketing teams who receive trend feedback talk

regularly with designers and merchandisers. It is important that there is constant two-way

communication so that sales and marketing teams can talk about new lines to customers and
designers / merchandisers have a strong visibility of customers’ needs and preferences enacted at a

store level. The production scheduling is also closely coordinated so that there is no time wasted on

approvals. The design team structure is very flat and focuses on careful interpretation of catwalk

trends that are suitable for the mass market – the Zara customer. The design and product

development teams, who are based in Spain, work closely to produce 1,000 new styles every month.

Besides being customer centric, another important reason why Zara’s employee strategy is so

successful is the fact that it empowers its staff to make decisions based on data. Zara has no chief

designer. All its designers are given unparalleled independence in approving products and

campaigns, based on daily data feeds indicating which styles are popular.

Due to the unwavering focus on the customer, the entire business model is designed in such a way

that the pattern of needs for the finished goods dictate the terms of the production process to follow,

instead of having the raw materials determine the nature of the production process – something that

is very rare in multinational companies of similar scale.

In sum, the entire brand culture is extremely customer-centric, which has been and continues to be a

significant contributor to Zara’s success.

The Zara brand communication strategy

Zara has used almost a zero advertising and endorsement policy throughout its entire existence,

preferring to invest a percentage of its revenues in opening new stores instead. It spends a meager

0.3 per cent of sales on advertising compared to an average of 3.5 per cent by competitors. The

brand’s founder Amancio has never spoken to the media nor has in any way advertised Zara. This is

indeed the mark of a truly successful brand where customers appreciate and desire the brand, which

is over and above product level benefits but strongly driven by the brand experience.

Instead of advertising, Zara uses its store location and store displays as key elements of its

marketing strategy. By choosing to be in the most prominent locations in a city, Zara ensures very

high customer traffic for its stores. Its window displays, which showcase the most outstanding pieces

in the collection, are also a powerful communication tool designed by a specialized team. A lot of
time and effort is spent designing the window displays to be artistic and attention grabbing.

According to Zara’s philosophy of fast fashion, the window displays are constantly changed. This

strategy goes down to how the employees dress as well – all Zara employees are required to wear

Zara clothes while working in the stores, but these “uniforms” vary across different Zara stores to

reflect socio-economic differences in the regions they were located. This effectively communicates

Zara’s focus on the mass market, yet another detail that reflects its close attention on the customer.

To tap into the emerging e-commerce trend, Zara launched its online boutique in September 2010.

The website was initially available in Spain, the UK, Portugal, Italy, Germany and France, and was

extended to Austria, Ireland, the Netherlands, Belgium and Luxembourg. Over the next 3 years, the

online store became available in the United States, Russia, Canada, Mexico, Romania, and South

Korea. In 2017, Zara’s online store launched in Singapore, Malaysia, Thailand, Vietnam and India.

More recently in March 2018, the brand launched online in Australia and New Zealand. Today, its

online store is available in 66 countries. As of 2019, online sales grew to constitute 14% of Zara’s

total global sales.

As a fast fashion retailer, Zara is definitely aware of the power of e-commerce and has built up a

successful online presence and high-quality customer experience.

Zara’s future brand and business challenges

Charting a new digital strategy in the COVID-19 crisis: With its primarily offline shopping

experience, Zara has been hard hit by global store closures amid the COVID-19 crisis in 2020, with

sales falling 44% year-on-year in Q1 2020 and the company reporting a net loss of USD 482 million.

Inditex has announced that it will be closing between 1,000 to 1,200 stores worldwide, focusing on

smaller ones in Asia and Europe. While online sales have been encouraging – Zara’s online sales

for Q1 2020 grew 50% – it is not enough to mitigate the damage.

Amancio Ortega plans to spend USD 1.1 billion scaling up its digital strategy and online capabilities

by 2022 and a further USD 2 billion in stores to improve integration between online and offline for

faster deliveries and real-time tracking of products. Its goal is for online sales to constitute at least
25% of total sales. To achieve this goal, Zara will need to think of new ways to engage its customers

digitally, not just through its online store, but through online communities and social media.

Mobile commerce: Zara woke up late to the potential of mobile commerce and needs to catch up

fast with competitors. Different forms of market analysis strongly point towards a scenario wherein

spends on mobile commerce will overtake desktop based ecommerce by 2021. On an average,

most brands currently get about 15-20% of their website traffic via mobile devices and this is growing

rapidly. With the deluge of investments planned in the mobile commerce space and Zara’s

competitors already having an advantage on the mobile front, Zara needs to quickly make mobile

shopping not only an effortless experience but also a delightful one.

Price is not an advantage anymore: Offering the latest fashion lines at affordable prices continues

to be a strategic advantage for Zara, but cannot continue to be the only one. Across the world, and

closer to home in Europe, competitors are cutting prices and refining their business models to cut

the competitive advantage that Zara has. Swedish fast fashion retailer H&M, which is placed #30 just

behind Zara on Interbrand’s list, launched an online store in Spain in 2014 to take own Zara in its

home turf. Again in its home market, it now faces increasing competition from brands like Mango,

which cut prices and started focusing on fashion segments in which Zara enjoyed popularity. In

addition to H&M and Mango, other competitors like Gap and Topshop are all fighting for a share of

the fast fashion retail market pie. Also with the rise of e- and m-commerce, the number of indirect

competitors has mushroomed. We now have online fashion aggregators that bring in multiple brands

under one single online platform and cut through borders and price segments. Some examples of

such aggregators who are doing well include Lyst, Farfetch, Spring and Yoox Net-a-Porter.

For Zara to effectively compete and maintain its strategic advantage, the focus needs to shift away

from price but towards quality. Even today the Zara brand enjoys high levels of appeal, which is

evident by the serpentine queues outside its stores when it launches in new markets. There is a

need for Zara to start investing in building a strong brand positioning and aggressively communicate

it. Additionally, Zara needs to adopt, imbibe and leverage social media and digital platforms in its

advertising and communication strategies deeper going forward.

Need for marketing strategy to evolve: As discussed above, Zara does not engage in advertising

and instead uses its store locations as a marketing strategy. However, brand communication is

crucial in attracting new customers to the brand to support its growth. Without advertisements, Zara

relies heavily on word of mouth or social media. This causes the perception of potential customers

towards Zara to be heavily shaped by family and friends, which may not be accurate. In addition,

Zara’s social media platforms such as Facebook and YouTube exists merely as a feed for updates

rather than a platform that consumers can interact with. Its videos on YouTube are also seeing very

low viewership in comparison with its follower count, which is not ideal as videos are a powerful

medium for brands in the fashion industry. This is a gap that Zara needs to plug immediately as the

reach and impact of social media marketing gets stronger. As Zara’s target customer segments start

using more social and digital platforms for communication and for sharing their lives, it is important

for Zara to have a strong presence on such platforms.

Family business planning and succession: With various technological and business disruptions

in the past decade, leadership in the 21st century will be influenced by constant change,

geopolitical volatility, and economic and political uncertainty. For Zara’s first 36 years in business,

the brand has been controlled by its founder Amancio Ortega, who is currently 85 years old. In 2011,

Ortega passed the chairman title on to Pablo Isla, Zara’s Deputy CEO since 2005.

Succession is currently taking place at Inditex and generational transfer will empower the next

generation in one of the wealthiest business families in the world. Pablo Isla, chairman of Inditex

since 2011, steps down in April 2022, and 37-year-old Marta Ortega will take over as chair in the

company that her father Amancio Ortega started with his ex-wife Rosalia in 1975 in Galicia, Spain.

Marta Ortega is the youngest of Amancio Ortega’s three children.

Marta Ortega will become a non-executive chair, and will head the Inditex group, the portfolio of

companies including supervision of strategic operations. She has been with Inditex for over 15

years, starting out working in a Zara store at King’s Road in London, and as an assistant at the

portfolio brand Bershka. In recent years, Marta Ortega has been involved in strategy, brand building

and fashion proposals for the Inditex portfolio of brands.

Marta Ortega will not be involved in daily management of the financial performance to shield her and

the family from too much public exposure. Amancio Ortega has always been known for appearing

less in public and avoiding any media exposure. His photo did not appear in the Inditex annual report

until 2000. Marta Ortega seems to be more open to media interviews and public appearance, and

granted her first interview with Wall Street Journal in August 2021.

Óscar García Maceiras will be appointed CEO of Inditex in April 2022 and will run the daily business.

He joined Inditex in March 2021 and is currently general secretary of Inditex and secretary of the

board.

The sharing of executive powers between the chair and the CEO to enhance corporate governance

has historically been less common in the corporate world in Spain but is often seen in Europe and

elsewhere. Inditex will therefore return to dual leadership in April 2022 with Marta Ortega as chair

and García Maceiras as CEO, the very same structure that ran for six years with Amancio Ortega as

chairman and Pablo Isla as CEO until 2011.

Despite working at Inditex for over 15 years, Marta Ortega Pérez does not hold an office. Her father,

Amancio Ortega, never had an office either and always preferred to work in an open space in the

fashion design department to be close to teams around him.

To effectively manage the above changes, Zara’s next generation leadership needs to step up to

the succession planning challenge by being resilient in staying true to the brand promise to

consistently produce “freshly baked clothes” for its fashion-forward consumers, and by balancing

both short-term (profitability) and long-term goals (growing the business and reaching more

consumers).

More importantly, despite Zara’s global reach and consequent product standardization, it needs to

constantly find new ways to serve local fashion needs and preferences of its consumers across the

globe. This will be a challenge for the brand’s leadership in the next decade.
Conclusion: Take Zara’s cue and listen to your customers

The Zara brand was born with a keen eye on its customer – its ability to understand, predict and

deliver on its customers’ preferences for trendy fashion at affordable prices. In addition to its

effective supply chain, the brand’s ability to have its customers co-create designs is unique and

provides it with a competitive advantage. Most fashion trends often start unexpectedly, originate

from uncommon places and grow out of nowhere. With reference to the pink scarf trend mentioned

above, it could have been that Hollywood actress Scarlett Johansson had worn a pink scarf to a

charity gala the evening before in Los Angeles, or golf star Michelle Wie had showcased a pink scarf

at a celebrity tournament in Asia. The fact that Zara was able to quickly jump on to this trend and

provide hundreds of customers with the pink scarves they desperately wanted to buy.

In a world swamped with Big Data, and yet more collected at an even more rapid pace than before,

brands still need to be careful and observant. Big Data does not provide answers to all business

challenges, and it may be too hyped to be considered as the Holy Grail.

One of the secrets behind Zara’s global success is the culture and the respect for the fact that no

one is a better, authentic trendsetter than the customer himself or herself – and this philosophy

needs to be continually reflected in all its business strategies going forward.

So, why not consult your customers for a start? Zara always does.