Case Study
Keep control
The success of using internal production and in-house resources have ensured that Zara have disrupted the market. International brands have been caught out by Zara’s ability to follow and deliver products which are trending. In a world where fast moving consumerism is being driven by the power of the internet, their model has a sure-fire competitive advantage.
The more creative and development control you have over your product and service, the more you can ensure that you will be able to evolve the offering to suit customer demands. Most importantly, it allows you to control production costs effectively and keep a firm handle on your expenses.
Getting it out to market
Zara moves fast to get its products out of the warehouses and across its outlets. It strives to deliver its ranges as quickly and effectively as possible. Its distribution strategy has a couple of indirect benefits outside of the first mover advantage:
• The high turnover of stock at its stores means that discounts on products are kept to a minimum. Of Inditex’s stock, only 18% of its clothing fails to sell and needs to be discounted. The industry average is nearly double that of Zara’s with approximately 35% of stock discounted.
• It increases customer footfall to their stores as they know that the store will have new products every couple of weeks.
• By getting products out quickly it will allow you to address the strengths and weaknesses of your offering. In online circles this stage is known as ‘Beta testing’. Zara use this idea on a grand scale, getting product lines out to market quickly, testing their strengths and weaknesses before taking them back to the designers to be improved, modified or removed from their offering.
• The Beta stage only works if there are strong market research metrics in place. Without these it is difficult to know if the product / service is performing well or will be a success.
Find your competitive advantage
Zara knew early on in its company’s history that to be successful in their industry they need to stick to what they do best. Identifying your company’s strength and bringing it to the fore of your offering is paramount. They have kept control of their offering at each stage of the development and distribution stage. The more control you possess over your offering, the more you will be able to guarantee its quality. Provided you continue to do your market research then you too will be the disruption your market needs.
56 entrepreneurcountry
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