Zara’s success is often attributed to speed, but speed is only valuable when it responds to demand. Its more important capability is the rapid movement of customer and store evidence through design, buying, production and distribution. The result is a retail system that treats observed behaviour as an operating input rather than waiting for a long seasonal cycle to confirm what shoppers wanted.
This article examines customer co-creation in that practical sense: not customers formally designing every garment, but a business learning continuously from what people request, try, buy and decline.
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. 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 The 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 been 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 the 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 the 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.
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 about 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.
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.
Zara’s super-efficient supply chain
Zara’s highly responsive, vertically integrated supply chain enables the export of garments 24 hours, 365 days a 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.
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.
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 their global customers. For Inditex, this means committing people and the environment.
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.
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 meagre 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.
According to Zara’s philosophy of fast fashion, the window displays are constantly changing. 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 to the customer.
Zara’s future brand and business challenges
Amancio Ortega plans to spend USD 1.1 billion scaling up its digital strategy and online capabilities next year 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 spending on mobile commerce will overtake desktop-based ecommerce later this year.
On 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.
What ecommerce retailers can learn from Zara
Zara’s lesson is not that every retailer should imitate fast fashion. It is that customer evidence should travel quickly enough to change the next commercial decision. At catalogue level, this may affect design, buying, availability and fulfilment. At customer level, it should affect which products an individual is shown next.
SwiftERM applies that individual layer. It uses first-party behavioural and transaction data to rank the products each identifiable customer is most likely to buy next and determine when that selection should be sent. For fashion retailers, the ranking can respond to changing evidence about brand, style, colour, size, material, price and occasion without assuming that a fixed segment represents the person.
The retailer keeps its existing email delivery platform. SwiftERM supplies autonomous individual product selection and timing, allowing customer evidence to influence communication with the same immediacy that responsive retail operations bring to the wider assortment.
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