{"id":633789,"date":"2017-12-15T00:00:00","date_gmt":"2017-12-14T23:00:00","guid":{"rendered":"https:\/\/www.ie.edu\/insights\/latest-news\/articles\/zara-technology-and-user-experience-as-drivers-of-business\/"},"modified":"2019-02-06T12:48:09","modified_gmt":"2019-02-06T11:48:09","slug":"zara-technology-and-user-experience-as-drivers-of-business","status":"publish","type":"articles","link":"https:\/\/www.ie.edu\/insights\/articles\/zara-technology-and-user-experience-as-drivers-of-business\/","title":{"rendered":"Zara: Technology and User Experience as Drivers of Business"},"featured_media":636364,"template":"","meta":{"_has_post_settings":[]},"schools":[],"areas":[16,21,24,26],"subjects":[],"class_list":["post-633789","articles","type-articles","status-publish","has-post-thumbnail","hentry","areas-competitiveness-growth","areas-innovation","areas-strategy","areas-technology"],"custom-fields":{"wpcf-article-leadin":["Zara is the leader in its market, thanks to a pioneering technological strategy. By adapting to new tools\u2014including big data\u2014the Spanish clothing retailer has managed to outpace its direct competitors. Despite being one of the last fashion companies to take up e-commerce, Zara has achieved a universal shopping experience that encompasses both its brick-and-mortar locations and its online stores. Other companies have tried to emulate this experience, but never with the same results."],"wpcf-article-body":["Zara\u2019s success is based on a rather unusual premise: its founder, Amancio Ortega, has managed to become one of the world\u2019s richest people without monopolizing a sector. The clothing retailer\u2019s business model leans heavily on technological<\/a> innovation<\/a> and user experience. The firm has doubled in size in just ten years, shattering the forecasts of analysts who thought the firm could never achieve such a feat without overhauling its business plan to centralize its processes.\r\n\r\nAs the flagship brand of the Inditex group, Zara is synonymous with clothing and fashion. The aim of Ortega\u2019s company is to give society what it wants as quickly as possible. Zara therefore changes its collections every two weeks. To put this strategy<\/a> into perspective, look no further than Mango or Gap: these competitors renew their collections about six times a year. Although most fashion experts consider Zara\u2019s model to be unsustainable\u2014due to its supposed high cost\u2014the company has managed to grow steadily year after year, leaving its competitors in the dust.\r\n\r\nAnother key element of Zara\u2019s business model is how it manages its stores and manufactures its garments. The same strategy<\/a> is applied for all locations across the globe, from Argentina to Australia. Zara produces its clothing in limited runs\u2014no more than 8,000 pieces for any particular design. This system allows the company to change its collections quickly. If a particular design sells well, the company manufactures more garments in similar styles, but never exactly the same as the one that originally flew off the shelves. Moreover, thanks to Zara\u2019s sister brands\u2014Bershka, Pull&Bear, etc.\u2014the Inditex group is able to cover all age ranges and styles and maintain an even bigger presence in the textile industry.\r\n
Zara\u2019s business model leans heavily on technological innovation and user experience, allowing the firm to double in size in just ten years.<\/blockquote>\r\nJust like a tech firm<\/strong>\r\n\r\nIf Zara\u2019s approach is all about manufacturing clothes, how did it become such a clear market leader? And why are its competitors unable to catch up? These questions must be answered from multiple angles. There is no single explanation, just an answer that, a priori, is difficult to imagine. We must come to realize that Inditex is actually a large tech<\/a> firm. For more than 30 years, Amancio Ortega has been making investments on a scale not seen anywhere else in the fashion industry. In this sense, the company has a five-year lead over all of its competitors. Among other advantages, it has logistical mechanisms that would be nearly impossible for any other firm to copy.\r\n\r\nArteixo, in the Spanish region of Galicia, is the company\u2019s operations hub. This small town is the nerve center for the vast majority of Inditex\u2019s decisions and processes\u2014including tech-related matters, for which the company has built a specific facility. From this headquarters, technology<\/a> allows Zara\u2019s executives to monitor each store\u2019s ambient temperature, energy consumption, and much more. Indeed, this is one of the keys to Zara\u2019s success: big data. Thanks to data analysis, the company even knows the average weight of residents in each store\u2019s neighborhood. The company uses these figures to determine what sizes of each garment to ship to each establishment. In short, Zara has the predictive capacity to determine what sorts of products will be easiest to sell.\r\n\r\nThe immediate result of this good technology<\/a> use is savings in inventory\u2014a major expense for many fashion companies. The company\u2019s investment in big data also allows it to personalize the customer experience. In Madrid, for example, Zara has two stores with barely any overlap in terms of the clothes they sell. The business-oriented location on Paseo de la Castellana is amply stocked with suits and shirts, while the Gran Via store focuses on knitwear for women between the ages of 20 and 40. Data analysis provides the rationale for these strategies<\/a>. Zara understands the peculiar demand of each neighborhood and knows how to satisfy it. The company is in close contact with the customer\u2019s needs and offers a practically personalized user experience.\r\n
The immediate result of this good technology use is savings in inventory\u2014a major expense for many fashion companies.<\/blockquote>\r\nA nearly physical online experience<\/strong>\r\n\r\nIt took Zara longer than most other fashion retailers to enter the online channel. Once it overcame this barrier, however, it designed an unparalleled model. Inditex does not view the Internet as a separate channel from its physical stores; it is equally important. Inditex offers its customers the same services through both e-commerce and its traditional establishments. For example, even if a garment is out of stock, the customer can still purchase it and either have it delivered or pick it up at the store. Other firms have tried\u2014without the same success\u2014to copy this omnichannel model.\r\n\r\nOne of the major challenges that Zara will have to face in the future\u2014besides competing with more e-commerce vendors\u2014is energy sustainability. Statistics clearly show that the textile industry is the second biggest source of pollution worldwide. Technology<\/a> and big data are now allies: they can find key areas for energy savings and identify recycled materials that offer the same characteristics as new ones. Zara is investing considerable resources in this endeavor. The company is working with universities in Galicia and companies in Switzerland to become more environmental friendly, as this factor will only become more crucial over the coming years.\r\n\r\n \r\n\r\n\u00a9 IE Insights.\r\n\r\n "],"wpcf-article-extract-enable":["1"],"wpcf-article-extract":["By Marta Garc\u00eda Aller<\/strong>. Zara is the leader in its market, thanks to a pioneering technological strategy. By adapting to new..."],"wpcf-article-summary-enable":["1"],"wpcf-article-summary":["The Spanish clothing retailer Zara became a market leader thanks to a business model that leans heavily on technological innovation and user experience. One of the keys to Zara\u2019s success is big data. For example, the company uses neighborhood-level average weight statistics to determine which garment sizes to ship to each store. Each location carries a different selection: stores in business districts are stocked with officewear, while stores in popular leisure areas tend to focus on clothes for younger women. Data analysis allows Zara to personalize the customer experience and minimize its inventory. The company has also developed an unparalleled e-commerce model. The next challenge in Zara\u2019s sights is energy sustainability."]},"_links":{"self":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/articles\/633789","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/articles"}],"about":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/types\/articles"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/media\/636364"}],"wp:attachment":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/media?parent=633789"}],"wp:term":[{"taxonomy":"schools","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/schools?post=633789"},{"taxonomy":"areas","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/areas?post=633789"},{"taxonomy":"subjects","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/subjects?post=633789"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}