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ZARA: Apparel Manufacturing and Retail

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ZARA: Apparel Manufacturing and Retail Zara is a chain of fashion stores owned by Inditex, Spain’s largest apparel manufacturer and retailer. In 2015, Inditex reported sales of about 21 billion eu ... ros from more than 7,000 retail outlets in about 88 countries. In an industry where customer demand if fickle, Zara has grown rapidly with a strategy to be highly responsive to changing trends with affordable prices. Whereas design-to-sales cycle times in the apparel industry have traditionally averaged more than six months, Zara has achieved cycle times of four to six weeks. This speed allows Zara to introduce new designs every week and to change 75 percent of its merchandise display every three to four weeks. Thus, Zara’s products on display match customer preferences much more closely than do those of the competition. The result is that Zara sells most of its products at full price and has about half the markdowns in its stores compared with the competition. Zara manufacturers its apparel using a combination of flexible and quick sources in Europe (mostly Portugal and Spain) and low-cost sources in Asia. This contrasts with most apparel manufactures, who have moved most of their manufacturing to Asia. About 40 percent of the manufacturing capacity is owned by Inditex, with the rest outsourced. Products with highly uncertain demand are sourced out of Europe, whereas products that are more predictable are sourced from its Asian locations [Show More]

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