Zara is by far the largest, most profitable and most internationalized fashion retail chain. Zara’s success is based on a business system that depends on vertical integration, in-house production, quick response, one centralized distribution centre and low advertising cost. It can be summarized as follows:
Design: The goal of the information system at Zara is to discover the best design trends. Designers estimate what sells well by collecting vital information such as daily sales numbers. The real-time information helps designers to decide about fabric, cut and colors when modifying existing clothes or designing new ones. IT has shortened the time from design conception to the arrival of clothes at the distribution centers and finally to the stores to be placed on racks.
Zara use IS to track customer preferences and sales. Store managers lead the intelligence gathering effort. This helps to determine what ends up on each store’s racks. Personal Digital assistants (PDAs) or handheld PCs are used to gather customer input. Staffs talk to customers to gain feedback on their preferences and issues. The valuable data gathered helps the firm to plan styles and issue re-buy orders based on feedback. Zara uses software like C-Design and Corel Draw. C-Design and Corel Draw Graphics Suite allows Zara to create and market its collections quickly and efficiently.
Distribution: Zara has its own centralized distribution system. It keeps almost half of its production in-house and uses smart technologies to have a competitive advantage. Instead of relying on outsourcing, the company manages all design, logistics, warehousing and distribution functions itself. It uses latest technologies to keep up with latest trends. The company manufactures and distributes products in small batches. Using the computerized system, the company has reduced its design to distribution process to just 10 to 15 days.
The IT implementation of the operation research requires establishing dynamic access to compute several large live databases (store inventory, sales, and warehouse inventory) under very strict time constraints. This helps Zara to change about three-quarters of the merchandise on display every three to four weeks and customer’s average time between visits to its stores is more than its competitors at 17 times a year.
Pricing is market-based. Zara uses information systems for customer profiling, to analyze the purchase patterns and direct targeting. The company quickly respond to fluctuating customer demands in fashion trends.