Introduction
Pablo Isla Alvarez had joined Inditex as CEO in 2005. The corporation managed the Zara fashion brand that was famous for delivering high fashionable products to meet dynamic customer demands. Isla had focused on refining investment priorities, and improving operational efficiencies.
Inditex: History and Structure
The first Zara store was founded in 1975 in Spain by Amancio Ortega Gaona, a Spanish entrepreneur. As the store expanded and other outlets started opening, Zara expanded outside Spain under the company name Inditex. It later became public in 2005 and appointed Isla as its CEO. By 2008, the company had acquired eight brands with 4264 stores. It had hired 89,112 employees (80% of them were women) and accumulated a net worth of €10 billion. Its main headquarters were in A.Coruna, Spain, but country-level offices were operated autonomously as long as the company’s code of conduct was followed (Ton, Corsi and Dessain).
This brand was the pioneer of fast fashion and by 2008, the largest Inditex brand. It was composed of men, women, and children production lines, each independently managed by the DTs. Zara cultivated a culture of fast decision making, continued improvement, and the retention of the best employees at the stores and headquarters. To ensure corporate control, the company implemented similar brand presentation globally. Managers were regularly interchanged and held frequent meetings to discuss corporate strategies.
Supply chain
The main selling seasons were autumn/winter and spring/summer. The brand committed its production to various suppliers after the designs were presented and verified by the logistics department. Every store received about 25,000 units and store managers were allowed to make orders which were delivered to Europe within 24 hrs and Asia and America in 40 hrs (Ton, Corsi and Dessain). Isla made some improvements to logistics and merchandise planning by reducing transportation costs and revamping the children’s merchandise logistics section. Also, time-consuming jobs were shifted from store employees to other sections.
Zara Stores
Stores were located in prime locations and varied in size and layout. They were well decorated to provide freedom and quite a comfort (Ton, Corsi and Dessain). It had 70 employees and three section managers. The section managers recruited staff, coordinated with merchandisers to enhance store layouts, and managed store logistics and customer service. Only experienced and committed employees were employed leading to a low employee turnover. Salary and commissions were higher compared to other retail stores, and promotion came from within the store. Sales people had to have high affinity for fashion and constantly motivated to achieve more.
The target population for Zara was young and fashion conscious people interested in spending more on clothes. Sales people were ordered not to bother customers and staffing was done using monthly payroll budgets. Clients with issues were told to raise them with the headquarters. Sales associate duties included managing in-store logistics by processing deliveries, managing product flow between the backroom and selling floor, managing the display and fitting room areas, and conducting physical audits.
Next step
Isla had found many things to change and improve efficiency by improving labor productivity through encouraging store managers, standardizing store processes, and processing deliveries by outsourcing to third parties.
Work Cited
Ton, Zeynep, Elena Corsi, and Vincent Dessain. Zara: Managing Stores For Fast Fashion. 1st ed. Havard Business School, 2010. Print.
