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Study on Zara’s Success

Author: JiHongYu
Tutor: SunNing
School: Dongbei University of Finance
Course: International Trade
Keywords: Zara fast fashion internationalization localization marketing
CLC: F416.86
Type: Master's thesis
Year: 2011
Downloads: 1151
Quote: 0
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Abstract


World-famous apparel brands have gradually found their way into China market since the late 1980s. At present, about 60 high-end fashion brands and more than 500 world famous fashion brands co-exist in China market. In flourishing cities, namely Beijing and Shanghai, high-end fashion market has been occupied by international brands, and they have penetrated into the mid-end and low-end market rapidly. In the mass market, international second and third line brands have entered China market increasingly fast and more. In the recent years, the four international fast fashion retailers, Zara, H&M, C&A and Gap, enter China market in succession. Low price position has posed great pressure on local brands in China. The dilemma China has encountered is the sharp contrast that foreign brands keep coming inward while Chinese brands have difficulty going outward. Among the foreign brands, Zara is a typical case in point.Zara outweighed Gap in 2006 and is the presently largest fashion retailer in the world fashion market. Rise in 1975, in mere 35 years, Zara has grown from a family shop into the top retailer globally, and from a Spanish brand into a primary brand in the world, Zara will give Chinese apparel enterprises much experience.Zara is considered as "DELL" and "Swatch" in the fashion industry; Harvard comment has said that it is the most valuable brand worthy of researching; a supervisor of a luxury fashion brand held that Zara is the most "destructive" brand for its quick reaction to new fashion trend.Zara’s success is not occasional:its success lies in that it reverses the tradition in apparel industry, the quick supply system, and foremost, creatively imitation. When other apparel enterprises abandoned vertical production mode, Zara just choose the opposite:from purchasing material, design, distribution to promotion, headquarter highly involved in every part of the process. Unlike other apparel enterprises to outsource the production stage to reduce the production cost, Zara insist on "made in Europe"; in distribution stage, Zara spares a good money to dig an underground tunnel of 20 kilograms around the headquarter in Span so that they can transport the products on the underground conveyer to the logistic center to distribute the products to all the branch stores around the world. As for the individual stores, each shop manager has been equipped with a PDA machine so as to report to headquarter the feedback of the market for reference of next stage production. Besides, Zara has a powerful design team whose given name is "flyers" in the air. This team consists of more than 400 young designers and fashion buyers, and they often appear kinds of fashion show and fly to Spain for designs. What the designers do is to react quickly to the fashion trend instead of predicting it. In this way, they will have a good control of market demand. Normally for high-end fashion brands, they will release the fashion information six months in advance; Zara’s designers will seize the opportunities to feedback all fashion information to the "head" of Zara, and then they will category the information, modify the styles and then re-construct new designs. Just because Zara often imitate from the top brands, it will pay a great sum of money in lawsuits on plagiarism. But Zara is too beneficial to stop. Also, it is the reason why Zara can win customers’trust and loyalty. There are more than forty to fifty thousand pieces of designs will be conceived, but only one third will be put into production. Excellent design ability is where other apparel enterprises can compete. Swiftness is the expertise that Zara can win:it can efficiently finish a product circle in only 15 days, comparing with 6-9 months in domestic market in China; with a strategy of "less quantity" "more styles" and "low price", Zara’s inventory is almost zero contributing to high circulation speed and utility efficiency.Zara has made a miracle among the apparel industry in the world. Chinese apparel enterprises can not catch up with Zara’s pace in a short term because of Zara’s excellent performance in design, logistics and promotion.This thesis mainly focuses on its successful marketing strategies and implementation of internationalization strategies, and experience & lessons to Chinese apparel companies. There are mainly six parts in the paper, the first part focuses on the background of apparel industry development and the significance of study. In the second chapter, there is an analysis on the global apparel sector, including China and the other areas of the world. The third part focuses on the elements that have contributed to Zara’s success, from perspectives of design, production, distribution channels, marketing skills and use of modern information system. In the fourth chapter, SWOT mode is introduced to analyze Zara’s strength and weakness, opportunities and threats.In the fifth chapter, it is about the assessment of Zara’s internalization strategy. And in the end, combining with Zara’s internalization strategy, its localization strategy in China is analyzed and basing on that, Zara’s significance to Chinese enterprises is put forward to provide China with some experience.

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CLC: > Economic > Industrial economy > The world's industrial economy > Industrial sector economy > Light industry,handicrafts > Garment industry
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