Chapter 3 - ThisisZara:,...

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Previous Chapter Next Chapter This is “Zara: Fast Fashion from Savvy Systems”, chapter 3 from the book Getting the Most Out of Information Systems (v. 1.4). For details on it (including licensing), click here . For more information on the source of this book, or why it is available for free, please see the project's home page . You can browse or download additional books there. To download a .zip file containing this book to use offline, simply click here . Has this book helped you? Consider passing it on: Help Creative Commons Creative Commons supports free culture from music to education. Their licenses helped make this book available to you. Help a Public School DonorsChoose.org helps people like you help teachers fund their classroom projects, from art supplies to books to calculators. Table of Contents Chapter 3 Zara: Fast Fashion from Savvy Systems 3.1 Introduction LEARNING OBJECTIVE 1. Understand how Zara’s parent company Inditex leveraged a technology‐enabled strategy to become the world’s largest fashion retailer. The poor, ship-building town of La Coruña in northern Spain seems an unlikely home to a tech- charged innovator in the decidedly ungeeky fashion industry, but that’s where you’ll find “The Cube,” the gleaming, futuristic central command of the Inditex Corporation (Industrias de Diseño
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Figure 3.1 Zara’s operations are concentrated in Spain, but they have stores around the world like these in Manhattan and Shanghai. Source: Used with permission from Inditex. Textil), parent of game-changing clothes giant, Zara. The blend of technology-enabled strategy that Zara has unleashed seems to break all of the rules in the fashion industry. The firm shuns advertising and rarely runs sales. Also, in an industry where nearly every major player outsources manufacturing to low-cost countries, Zara is highly vertically integrated, keeping huge swaths of its production process in-house. These counterintuitive moves are part of a recipe for success that’s beating the pants off the competition, and it has turned the founder of Inditex, Amancio Ortega, into Spain’s wealthiest man and the world’s richest fashion executive. The firm tripled in size between 1996 and 2000, and then its revenue skyrocketed from $2.43 billion in 2001 to $18.3 billion in 2011. In August 2008, sales edged ahead of Gap, making Inditex the world’s largest fashion retailer.J. Hall, “Zara Is Now Bigger Than Gap,” Telegraph , August 18, 2008. Table 3.1 "Gap versus Inditex at a Glance" compares the two fashion retailers. While Inditex supports eight brands, Zara is unquestionably the firm’s crown jewel and growth engine, accounting for roughly two-thirds of sales.R. Murphy, “Expansion Boosts Inditex Net,” Women’s Wear Daily , April 1, 2008. Table 3.1 Gap versus Inditex at a Glance Gap Inditex Revenue $14.5 billion $18.3 billion Net Income $833 million $2.56 billion Number of Stores 3,248 5,527 Number of Countries 31 82 Biggest Brand Gap Zara Number of Other Brands 4 7 Based in San Francisco, USA Arteixo (near La Coruña), Spain First Store Opened 1969 1975
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