Currently the 11th richest human, Amancio Ortega is also the founder of Zara - the fashion enterprise which is appreciated by almost everyone who knows of fashion. Let's travel back in time to 1950 so we can first view the history of how Zara was made, and then how Zara made history.
As his first job, 14-year-old Ortega used to deliver fabric for a local clothing retail store in the coastal city of La Coruna - Spain. Being an immensely hard-working employee, he rose through the ranks, and in about 10 years, he took up the title of 'Senior Manager'. In his free time, he would develop his own designs which were a close copy of the ones being sold at high-end stores. He recreated those popular designs using the less expensive materials leftover from retail stores and made them new by adding his own modifications and improvements. By doing so, he was able to provide clothes that didn't lack on the trends or quality but also didn't cost a fortune to own.
He later became confident enough to quit his job as the senior manager and started his own company where he supplied to retail stores across the city. He hired women into his sewing co-operatives. Even while doing all of this, he was still just a supplier and didn't have a brand of his own, and that is when he decided to open up his own shop, Zara. After becoming a hit in his city and then slowly across all of Spain, Zara expanded into Portugal, New York and then the rest of the world. The brand currently has over 2250 shops to their name. But the real question is, how did the brand go from 'selling designer copies' to 'the biggest fashion retailer in the world'?
Historically, fashion has taken years to go from the runway at Paris / New York etc fashion week to the streets of the rest of the world. This was because people living in these fashion Capitals would slowly start buying and wearing the runway fashion. Eventually, if people felt brave enough, they would travel to different cities across the world and wear brand new clothes that nobody else living in those non-fashion cities have heard of. Eventually, people in these new cities would start buying into these new looks and that was how trends used to spread across the world. This process usually took a couple of years, if not more. But now, thanks to Social Media and the internet which allows communication across the world in a split of a second, people deem a trend 'old' before the clothes even hit the runway.
Keeping up with the ever-changing demands of the fashion industry, Zara has the skill which helps them sell the clothes in London at the same time as they are on the runway in New York. It's said that they can have the clothes coming from paper sketches to their customer's wardrobe in just 4 weeks. Other brands, however, can take up to 6 months for the same task!
Back in the 1970s, while Expanding into Spain, Ortega pushed the idea of 'Instant Fashion', now known as 'Fast Fashion'. This was the strategy by which Zara could react incredibly quickly to new trends entering and leaving the extremely volatile Fashion Market. Using this, they were able to put new lines on the shelves in a fraction of the normal time.
To make this dream a reality, one of the strategies adopted by them is the famous 'Toyota JUST IN TIME' (JIT) technique.
JIT is a unique strategy that, if planned and applied correctly, has numerous rewards which aren’t limited to cost-cutting. It is especially fruitful for those industries which have a rapidly changing customer taste (e.g., Technology and fashion). Instead of Manufacturing products, storing them, and then pulling them out of storage when the time comes, JIT suggests you skip out on the storage part altogether. The products go straight from the factories to the shelves. It may sound a bit risky, but that is where the combined brains of management and planning masterminds come into use. If tasks such as the ordering of supplies and settling transportation from manufacturers to retailers are timed perfectly and, the execution of this strategy is priceless.
Apart from JIT, Zara has plenty of other tactics which helps them stay ahead in the game. Even today, most clothing retailers’ function on a ‘seasonal model’ with huge production runs, and then towards the end of each season, they host a massive sale on the clothes they weren't able to sell in an attempt to clear the stock before the product of the new 'season' arrive. On the other hand, Zara could afford to develop and sell fresh fashion all year round, and each set would only be produced for a brief period, thus ensuring there was no need for discounted rates and 'everything must go' sales. They didn’t need to clear excess stock because they simply didn’t have any.
But how does this positively impact their sales numbers if they don't offer discounts?
As mentioned previously, all of these techniques makes it immensely easier for Zara to react to the new and rapidly changing customer tastes and trends. This also helps create a sense of urgency in shoppers’ minds, because if they don't buy that jacket ASAP, it might be gone by the dawn of tomorrow! It also excites the customers and encourages them to visit Zara stores more often as they know they will be viewing an entirely new collection every time they walk in. By offering these limited clothes, Zara also ensures their clients that their clothes will be unique to them and they won't be a part of the seasonal 'mass produced' designs like everyone else.
In conclusion, Zara's moto 'Fast Fashion' has become a revolution in the industry and changed the way business is done. Using customer psychology and combining it with production method which saves them money and time, they are able to provide their shoppers with the freshest fashion every month. Being the biggest retailers in an even bigger fashion industry, Zara has altered the way business is done and seen. Kudos!