Zara is the well-known face of one the world’s most innovative retail groups. It is part of Inditex which is one of the world’s largest fashion and clothing companies. Inditex has over 5500 stores in 82 countries. Its leading brand is Zara and its other store formats include Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho and Uterqüe. Inditex has grown quickly. Its founder, Amancio Ortega, opened the first Zara store in Coruña, Spain in 1975. The group’s 2011 turnover was 13.8 B Euro ($18B) with profits of 1.9B ($2.5B). It employs some 110,000 people. The group’s success and its unique business model are based on innovation and flexibility. The philosophy of the company is to get many new fashions to market very fast. How does it do this and what lessons can we learn about agile innovation?
You need a lot of ideas from a lot of different places.
The Zara design team consists of 350 people and they are charged with generating and delivering 18,000 new product designs a year i.e. 360 a week, over 70 every working day. Loreto Garcia, a designer explains, ‘We get our ideas from books, magazines, twitter and blogs but above all from feedback from our shops. Our customers tell us what they like and don’t like. We attend shows and talks about fashion to get ideas. It is a continuous process.’
Move rapidly from design to market
From initial idea origination to the shop shelf takes less than four weeks for Zara; they move far faster than their competitors. They want to create waves and be ahead of the wave. What is more they put their products into 5500 stores from Brisbane to Lisbon at just about the same time. They make very few adaptations for local markets. Their products are global and sell on all five continents giving great economies of scale.
Innovate all aspects of the business.
Innovation at Zara does not apply only to products. They have used creative approaches to streamline and optimise manufacturing, supply chain management, data tracking, inventory management, store layout and staff operations.
Prototype and Model Quickly
Designs and ideas are tested quickly. At Zara’s headquarters in Arteixo La Coruna, Spain there are 25 full-size shop windows with differing displays and lighting. This enables designers to see what retail shop store windows will look like under different conditions – e.g. day and night, sunshine and rain.
Store staff use wireless communications to relay information every day back to Spanish HQ about sales and inventories. Fast information about what is selling and what is not enables the group to respond to the public mood and to quickly supply more of the most popular designs to where they are needed. But even the top selling fashions are discontinued after four weeks. Zara deliberately kills them in an act of creative destruction. It must continue to innovate. This policy also means that customers must visit the stores often to ensure that they do not miss out on the hottest items.
Traditional fashion companies have hierarchical management structures with many big egos getting involved in every decision. Zara has a flat structure with designers empowered to make fast decisions.
All of these competitive advantages have led Zara to an enviable position where it does not need to advertise. Word of mouth and its popular websites provide the key communication needed to its avid customers. Innovation, speed and agility are what keep the company ahead of the pack.