Zara has gained an advantage over its market competitors by providing fashionable clothes faster and at a lower price. This has been attributed to the way Zara’s supply chain is organized. Firstly, the staff at Zara shops gathers the information about the demanded clothes from customers and instantly reports it to the main office in La Coruna, Spain. Then, the demand reports are communicated to designers that instantly contact all 23 factories, which start to produce the needed items. In addition, the fabric factories are located close to the main Spanish headquarters, and this saves shipping costs and time for Zara and reduces the time for new clothes to appear in stores. Hence, the supply chain in Zara creates an opportunity to make deliveries to the store every few days instead of every two-three months like its competitors like Gap or H&M.
Due to a flexible and efficient supply chain, Zara creates value for its customers that outscores its competitors. As such, Zara’s customers are always in demand for new fashionable clothes that are relevant. Zara is meeting this demand by providing customers with around 10,000 new designs and 40,000 new Stock Keeping Units (SKUs) each year. In addition, an efficient supply chain allows Zara to create scarcity in the stores because the warehouses rarely have extra items left for sale. At Zara, the number of items that end up marked down is about half the industry average (Aftab, et. al., 2018). In conclusion, providing timely and frequent delivery of new clothes designs to the stores is essential for Zara to create value for its customers. In addition, by making its items scarce, Zara can add exclusive value to its clothes.
References
Aftab, M. A., Yuanjian, Q., Kabir, N., & Barua, Z. (2018). Super responsive supply chain: The case of Spanish fast fashion retailer Inditex-Zara. International Journal of Business and Management, 13(5), 212.