Zara (retailer)

Early history

Amancio Ortega opened the first Zara store in 1975 in downtown A Coruña, Galicia, Spain. Ortega initially named the store Zorba after the classic film Zorba the Greek, but after learning there was a bar with the same name two blocks away, they rearranged the letters molded for the sign to 'Zara.' It is believed the extra 'a' came from an additional set of letters that had been made for the company. The first store featured low-priced lookalike products of popular, higher-end clothing fashions. Ortega opened additional stores throughout Spain. During the 1980s, Ortega changed the design, manufacturing, and distribution process to reduce lead times and react to new trends in a quicker way, which he called "instant fashions". The improvements included the use of information technologies and using groups of designers instead of individuals.

Expansion

In 1988, the company started its international expansion through Porto, Portugal. In 1989, it entered the United States, and then France in 1990. During the 1990s, Zara expanded to Mexico (1992), Greece, Belgium and Sweden (1993). In the early 2000s, Zara opened its first stores in Japan and Singapore (2002), Russia and Malaysia (2003), China, Morocco, Estonia, Hungary and Romania (2004), the Philippines, Costa Rica and Indonesia (2005), South Korea (2008), India (2010), and South Africa and Australia (2011).

In September 2010, Zara launched its online boutique. The website began in Spain, the UK, Portugal, Italy, Germany and France. In November that same year, Zara Online extended the service to five more countries: Austria, Ireland, the Netherlands, Belgium and Luxembourg. Online stores began operating in the United States in 2011, Russia and Canada in 2013, and Mexico, Romania, and South Korea in 2014.

Zara introduced the use of RFID technology in its stores in 2014. The RFID chips are located in the security tags which are removed from clothing when it is purchased and can be reused. The chip allows the company to quickly take inventory by detecting radio signals from the RFID tags. When an item is sold, the stockroom is immediately notified so that the item can be replaced. An item that is not on the shelf can easily be found with the RFID tag.

In 2015, Zara was ranked 30 on Interbrand's list of best global brands.

Products

Zara stores have men's clothing and women's clothing, as well as children's clothing (Zara Kids). Zara's products are supplied based on consumer trends. Its highly responsive supply chain ships new products to stores twice a week. After products are designed, they take ten to fifteen days to reach the stores. All of the clothing is processed through the distribution center in Spain. New items are inspected, sorted, tagged, and loaded into trucks. In most cases, the clothing is delivered within 48 hours. Zara produces over 450 million items per year.

Manufacturing and distribution

Reportedly, Zara needs just one week to develop a new product and get it to stores, compared to the six-month industry average, and launches around 12,000 new designs each year. Zara has a policy of zero advertising; the company preferred to invest a percentage of revenues in opening new stores instead.

Zara set up its own factory in La Coruña (a city known for its textile industry) in 1980, and upgraded to reverse milk-run-type production and distribution facilities in 1990. This approach, designed by Toyota Motor Corp., was called the just-in-time (JIT) system. It enabled the company to establish a business model that allows self-containment throughout the stages of materials, manufacture, product completion and distribution to stores worldwide within just a few days.

Most of the products Zara sells are manufactured in proximity countries like Spain, Portugal, Turkey and Morocco. While some competitors outsource all production to Asia, Zara manufactures its most fashionable items—half of all its merchandise—at a dozen company-owned factories in Spain and Portugal and Turkey, particularly in Galicia and northern Portugal and Turkey. Clothes with a longer shelf life, such as basic T-shirts, are outsourced to low-cost suppliers, mainly in Asia.

The company can design a new product and have finished goods in its stores in four to five weeks; it can modify existing items in as little as two weeks. Shortening the product life cycle means greater success in meeting consumer preferences. If a design does not sell well within a week, it is withdrawn from shops, further orders are canceled and a new design is pursued. Zara monitors customers' fashion changes. Zara has a range of basic designs that are carried over from year to year, but some fashion forward designs can stay on the shelves less than four weeks, which encourages Zara fans to make repeat visits. An average high-street store in Spain expects customers to visit three times a year. That goes up to 17 times for Zara.

Non-toxic clothing

In 2011, Greenpeace started a dialog with Zara to ban harmful toxins from the clothing production. Greenpeace published its "Toxic threads: the big fashion stitch-up" report in November 2012 as part of its Detox Campaign identifying companies that use harmful toxins in their manufacturing processes. Nine days after the report was published, Zara committed to eradicating all releases of hazardous chemicals throughout its entire supply chain and products by 2020. Zara became the biggest retailer in the world to raise awareness for the Detox Campaign, and switched to a fully toxic-free production.

Controversy

In 2007, Zara withdrew a handbag from their shelves after a customer noticed a swastika on the bag's design. The bag came from an external supplier and Zara said the symbol was not visible when the handbag was chosen. Zara spokesman Susan Suett said that if they had noticed the handbag featured the symbol, they would not have sourced it. Once informed of the swastika symbol, they immediately withdrew the item from their shelves.

In 2009, there was an email rumor claiming that Zara "has been openly anti-Semitic for a long time" and contained a picture of the handbag that featured a swastika symbol in 2007. The Anti-Defamation League addressed the email and said Zara is not anti-semitic and the incident involving the bag was remedied by removing the bag from their shelves. The handbag was produced by an India-based supplier and the swastika is a religious symbol for Hindus and Buddhists that represents the sun, strength, and good luck.

In August 2011, a Brazilian television show accused the company of using suppliers who were running sweatshops for their outsourced production. The Regional Superintendency of Labour and Employment of São Paulo, Brazil, closed a factory that produced Zara's clothing for its poor labour conditions. Zara’s representatives said that the accusations of slave labour made against the retailer represent a breach of the code of conduct for workshops of Inditex. The company also states that all factories responsible for unauthorized outsourcing have been asked to regularize immediately the situation of the workers involved.

In August 2014, Zara received criticism for selling a toddler T-shirt for closely resembling uniforms worn by Jewish concentration camp inmates. The T-shirt was striped and featured a yellow star similar to the Star of David. Zara said that the design of the shirt was inspired by "the sheriff's stars from the classic western films." After being on sale for a few short hours, Zara immediately removed the shirt and apologized. Zara received heavy criticism for selling the T-shirt in Israel because Israel does not have sheriffs. Additionally, the word "Sheriff" is outlined in transparent letters on the bright yellow star. The Anti-Defamation League responded to the shirt saying it was offensive but welcomed Zara's recognition of the potential imagery and removing the shirt from sale.

In July 2016, complaints were made against Zara that they had been stealing designs from multiple independent designers for their products. One of the designers, Tuesday Bassen, who previously worked with brands like Urban Outfitters and Nike, got in touch with Zara, and received a response from Zara that claimed that Bassen's designs were not distinctive enough, and that they received only a handful of complaints given the large volume of traffic they receive on their site. When the news was eventually picked up by media outlets, and Inditex, Zara's owning company, was asked to comment on the issue, Inditex replied that the items in question have been suspended from sale, and that they are in contact with Bassen's lawyer to clarify and address the issue.

Stores

There are over 2,100 Zara stores located across 88 countries. Zara usually selects the best located and most expensive real estate locations in the world to open its flagship stores. Zara has flagship stores on Fifth Avenue in New York, Oxford Street in London, Calle Serrano in Madrid, Via del Corso in Rome, Champs-Élysées in Paris, Corso Vittorio Emanuele in Milan, Nevsky Prospect in Saint Petersburg, GUM in Vladivostok, Shibuya and Ginza in Tokyo, Myeongdong in Seoul, and others.