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AMITY BUSINESS SCHOOL NOIDA

SUPPLY CHAIN MANAGEMENT

SUBMITTED TO: SUBMITTED

BY:

DR. RUSHINA SINGHI UNNATIE

SRIVASTAVA
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MBA (GEN) -C01

TABLE OF CONTENT

S. NO PARTICULARS PAGE NO.

1 ABSTRACT 3
2 LITERATURE REVIEW 4
3 FASHION INDUSTRY OVERVIEW 5
4 COMPANY PROFILE 6

5 SUPPLY CHAIN MANAGEMENT AT 14

ZARA
6 OVERCOMING CHALLENGES 18
7 CONCLUSION 20

8 BIBLIOGRAPHY 21

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ABSTRACT
The aim of this report is to talk about the supply chain processes used by Zara, a well-known
Spanish clothing retailer.

The study begins by addressing the company and its competitors, the value of supply chain
management, and eventually Zara's supply chain management, which expands into vertical
integration and just-in-time manufacturing.

Finally, the many lessons learnt from Zara's supply chain management, as well as the factors that
have contributed to their performance have been collected.
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LITERATURE REVIEW
Fashion brands have proven to be among the most innovative and profitable segment among-
multinational retailers in recent times. Conversely, on the other hand, the clothing industry is a
highly competitive sector. This can be attributed to the reason that the worldwide apparel market
has evolved significantly over the last few decades. According to Mazaira, the industry became
extremely competitive as a result of the “democratization phase of fashion.” Although fashion
was once considered a luxury consumption commodity, mostly synonymous with haute couture
brands such as Gucci and Dior, it is now mass manufactured in the same way that anything else
is. According to Mazaira et al. (2003), the key explanation for rising aspirations of retail brands
is the widening of the customer base. Fashion brands, as per them, must optimize speed while
maintaining low costs. Walters (2006), on the other hand, blames fast fashion stores for this
artificiality. According to him, quick fashion retailers "have shaped customer demands for
volume, variety, and style at low prices and have made it important to make improvements to
accelerate the manufacturing cycle."

Regardless about who is considered, today's customers are more selective and trendy than ever
before. As a result, the retail industry is marked not only by uncontrollable influences such as
temperature and seasonal changes, but also by an ever-changing appetite of consumers who
always want to be in style. This is reinforced by the concept of fashion, which defines the
fashion world as volatile: Fashion is a generic phrase that usually refers to any commodity or
industry that contains an aspect of design that is likely to be temporary. This makes it impossible
for firms to make accurate predictions. They must create adaptable marketing strategies that
enable them to respond rapidly to evolving trends.

As a result, casual fashion stores like Custo Barcelona and Caramelo sprout up like mushrooms.
More proven fast fashion stores, such as Sweden's Hennes & Mauritz (H&M), Spain's Mango,
and Italy's Benetton, are also expanding at breakneck pace. Tokatli observes that “a large number
of ‘fast fashion' companies are now rushing to maximise the amount of their outlets while
optimizing the speed, synchronisation, and agility of their supply chains” (Tokatli, 2008).
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FASHION INDUSTRY OVERVIEW

2020 was the year when something happened in the apparel industry. As the coronavirus disease
outbreak sent shockwaves across the world, the industry had its worst year on record, with nearly
three-quarters of publicly traded firms losing revenue. Consumer behavior changed, supply
chains were interrupted, and the year drew to a close with several areas suffering a second round
of infections. A chaotic and troubling year has left us all searching for silver linings — both in
life and in industry — knowing full well that we'll have to capitalize on them in the coming year.

Evidently, as per a McKinsey Global Fashion Index report, fashion retailers' economic profit will
drop by 90 percent in 2020, after a 4 percent spike in 2019. Given the current volatility, our
projections for market results next year are split into two groups.

The first, more promising “Earlier Recovery” possibility estimates that global fashion revenue
will dip by 0 to 5% in 2021 relative to 2019. This will be contingent on virus control in several
geographic regions and a reasonably quick return to economic growth. By the third quarter of
2022, the sector will have risen to 2019 rate of operation.

The second case, called “Later Recovery,” will see revenue growth fall by 10 to 15% in 2020
relative to 2019. In this situation, amid extensive prevention efforts, the virus will begin to cause
havoc, and apparel sales would only return to 2019 rates in the final quarter of 2023.

In 2021, there will be continued prospects in both value and premium sectors, with the former
benefiting from customers selling down in volatile times while the latter benefiting from a robust
turnaround in markets such as China. Despite their position, stronger players would have a
chance to take market share from their competitors and, in some situations, absorb their
competitors at a discount. In this extremely volatile and intensely competitive business climate,
players would need to think carefully (but quickly) about their next steps. Not all silver lining
that came from the recession will result in a growing market, and those that do will not survive
indefinitely.

GROWTH DRIVERS IN THE FASHION INDUSTRY

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The future development of the fashion industry is dependent on a number of factors, including:

1. World GDP – The performance of the GDP will decide people's purchasing power as well as
the state of other sectors in which the clothing industry is dependent.

2. Policy – When many countries enter a crisis, their import and export policies are transitioning.
Since the bulk of clothing and accessories are sold to other countries, these policies would have a
direct effect on market performance.

3. Logistics growth – The apparel industry depends heavily on logistics. The higher the logistics,
the sooner the commodity reaches the consumer, and the lower the prices, the better it is for the
commodity.

4. The expansion of supermarket chains – Most businesses don't get a dedicated storefront. To
market their merchandise, they rely heavily on multi-branded retail stores all over the world. As
a result, the success and profitability of supermarket chains will continue to boost the state of the
apparel sector.

5. IT Production – The pace of the operation, from obtaining the raw material to the ultimate
delivery of the goods, is highly dependent on the technologies used in the method. For example,
RFID, clipped tags, faster printers, improved contact networks, and so on. The more equipment
that is accessible and used, the more open the fashion world is to customer requirements.

6. Others – There are a variety of capabilities (human or computer) that have a significant impact
on the fashion world such as forecasting.
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COMPANY PROFILE
It all started in 1963, when Ortega founded Inditex, a dress-making warehouse. Decade later, he
opened Zorba, a small shop in La Coruna, Spain, with a meager budget of 30 Euros. He then
modified his name to Zara for no apparent reason. That is how the world's most famous fashion
company of today came to be. Zara gradually spread its domain from the towns of Zara in Spain
to the rest of the world and, eventually, to Portugal. By the 1990s, the shop had spread across the
United States, France, as well as the majority of Europe. Zara currently has over 6500 outlets in
88 countries worldwide.

Zara is a high fashion company that sells clothing, boots, and accessories for females, males,
and children ranging in age from infants to adults aged 45. Zara outlets have basically two
product categories: men's apparel, women's clothing and kids clothes, which account for 22
percent, 58 percent, and 20 percent of sales, respectively. Any of these fashion line is divided
into five sub-categories: lower garment, upper garment, accessories, cosmetics, and
complements.   Zara manufactures over 11,000 individual goods per year. Zara's offerings are
customer-focused and distinguished by their distinct name. Furthermore, the brands are chic,
fashionable, and one-of-a-kind. Zara's goods are customer-focused and differentiated by a
distinct name. Furthermore, the brands are chic, fashionable, and one-of-a-kind. This is attributed
to Zara's ability to produce new concepts more efficiently than its counterparts. As a result, the
majority of the items in Zara stores are newly crafted. Furthermore, Zara uses fresh inventory as
a big selling tactic. Zara replenishes its shops with innovative concepts twice a week. This
demonstrates the speed at which modern technologies are designed.

Zara has been labeled as ”perhaps the best creative and destructive fashion retail giant"

This Spanish victory covers a wide range of trends, from everyday wear to casual wear and
formal wear, offering a total one-stop clothing fix for ladies, men around the world, and kids.

Opening with a single outlet Zara now has 1,520 locations worldwide, offering unique apparel to
customers across the globe and generating annual revenues of 6,824 million Euros. Another very
critical thing to note is that 75 percent of their gross profits come from overseas revenue.

Apart from Zara, the Inditex company holds Massimo Dutti, Pull and Bear, Oysho, Uterqüe,
Stradivarius, and Bershka.

COMPANY BACKGROUND
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Zara was founded in 1975 by Amancio Ortega Gaona in the Galician seaport of A Corua. Zara
and its parent firm, Inditex, have since achieved phenomenal prosperity. Its massively
oversubscribed share price in May 2001 and a roughly 50% surge the next year raised its market
cap to €13.4 billion, making his owner Ortega Spain's richest individual (Ghemawat and Nueno,
2006). Today, the Inditex Group has over 4000 outlets in 73 countries and hires over 90,000
employees. The company earned €1253 million in net profits and €5914 million in gross profit.
Inditex operates seven other brands in addition to Zara: Pull and Bear, Massimo Dutti, Bershka,
Stradivarius, Oysho, Zara House, and the freshly formed format Uterqüe (Appendix I). Zara,
Inditex's powerhouse, had net revenue of €6824 million in 2008, a 25% rise over the previous
fiscal year. Zara contributed for 75% of the group's revenue in 2008. Zara grew so fast that it
exceeded the world's biggest apparel chain, Gap, with 1292 outlets worldwide (Keely and Clark,
2008).

Zara, the franchise of Spanish fashion shops, started its business on central A Corua Street in
1975, marking the Inditex firm's initial prominent investment. Amancio Ortega incorporated
Zara into a separate holding firm, Industria de Diseo Textil, INDITEX S.A., in 1985.

Later in 1976, the Zara fashion model was well received by the public, leading it to extend its
customer base to other major Spanish cities.

During the years 1981-1988, Zara's fame grew, and she began new projects not only in Spain,
but all over the world.

Zara, who was famous with fashionistas, joined the residential furniture and home industry in
2003 by launching the very first Zara store.

RIVALS
Apart from dealing with local supermarkets, global and foreign clothing stores, and Internet-
based businesses, Inditex and Zara's main international rivals in terms of market capitalization
are H&M, Benetton, and Gap (Mazaira et al., 2003). In addition, rivals such as Mango, Benetton,
Adolfo Dominguez, Cortefiel, C&A, and Next are frequently listed. Furthermore, firms such as
El Corte Inglés and Carrefour sell apparel as well as other commodities. To give you an idea of
Zara's biggest rivals, here's a look at H&M, Gap, and Benetton.

Basic details regarding Zara's biggest rivals

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H&M

Hennes and Mauritz (H&M) was formed in Sweden in 1947 and sells mid-priced clothes for
men, women, teens, and children, and even some cosmetics and accessories. Despite the fact that
H&M is Inditex's nearest rival, there are many major gaps between these two stores. To begin
with, H&M has a single format and significantly cheaper premiums than Zara. This may be
because H&M outsourced half of its manufacturing to low-wage countries (the other half to
European suppliers). H&M's growth policy, in comparison to Zara's, is marked by targeting one
region at a time. This resulted in Zara becoming a greater foreign footprint, amid the fact that
H&M stopped operating beyond its country of residence ten years ago. H&M employs popular
designers such as Karl Lagerfeld and depends heavily on ads to entice consumers into their
outlets. In comparison to Zara, H&M hires less models and renovates its stores less often. H&M
runs 1,700 outlets in 34 countries, with Germany being the main market (H&M, 2009).

GAP

Gap, founded in San Francisco in 1969, was the largest global niche clothing retailer till it was
replaced by Zara. At a reasonable price, the company provides clothes, personal care items, and
accessories. Gap's globalization strategy is focused on a small number of nations. Gap, which
had been operating in the domestic market for almost 20 years, expanded into the UK and
Canada (1987 and 1989). In the 1990s, Gap widened into France and Japan. Gap outsourced 90%
of its demand, but its activities are still located in the United States. Similarly to Inditex, Gap has
five distinct store chains: Gap, Banana Republic, Old Navy, and Piperlime. Gap is represented by
3,100 stores in six countries: The United States, Canada, the United Kingdom, France, Ireland,
and Japan are also represented. Gap outsourced much of its manufacturing to distributors in the
United States and overseas. Gap purchased Athleta, a women's sportswear brand, in order to
recover lost market share and extend their product portfolio (Gap, 2009).

BENETTON
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Benetton, which was founded in Italy in 1965, is well-known for its vibrant colors knitwear. Its
unorthodox advertisements helped the industry become well-known in the 1980s and 1990s. The
Benetton Group now has 5,500 outlets in 120 countries worldwide. In addition to its casual
United Colors of Benetton, it is portrayed by the glamour-oriented Sisley and the American
college style-oriented These franchises are mostly owned by individual owners and have a
combined turnover of around 2 billion euros. Benetton, like Zara, has its own production plants
and only outsources labour - intensive operations to subcontractors. Even so, more than 90% of
the output takes place in Europe. Edizione Holding, the Benetton family's holding firm, now
owns 67 percent of the company (Benetton, 2009).

AT ZARA
FASHION AND DESIGN
Zara's collections' popularity stems from their potential to understand and integrate the
continuous trends in fashion, continually creating new styles that react to consumer desires.

Zara's adaptable strategy allows it to adapt to seasonal trends by introducing new items to outlets
in the smallest period of time.

The creative teams create the templates for each season – over 30,000 last year – from start to
finish.

Around 300 fashion designers – 200 for Zara itself – draw their key influences from both recent
fashion styles and consumers themselves, as gleaned from retail store knowledge.

PRODUCTION OF GOODS
A considerable amount of manufacturing is carried out in the Band's own warehouses, which
mostly produce most trendy apparel. The Inditex Group has complete ownership over cloth
supply, labeling and shaping, and finished garment fitting, while subcontracting the garment
manufacturing stage to specialized companies primarily in the Iberian Peninsula's north-western
corner.

Zara's global vendors the majority of whom are European, usually obtain the fabrics and other
materials used to make the garments from Zara.
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LOGISTICS
All output, irrespective of source is received at the brand's logistics centres, from which it is
shipped concurrently to all stores worldwide on an extremely regular and consistent basis.

and in the specific case of Zara, shipping occurs twice a week, with each supply always
including new designs, ensuring that the retail outlets' inventory is still new.

The logistics system, which is built on software developed by the business's own people, ensures
that interval between processing the request at the fulfilment centre and getting the products at
the store is on average 24hrs for European outlets and a maximum of 48 hours for U.s or Asian
outlets.

NO ADVERTISING CAMPAIGNS
Have you ever seen a Zara advertisement or television advertisements?

Another trend-breaking feature of the company's corporate model is its approach to ads. Fashion
stores pay an estimated of 3.5 percent of their sales on product or service ads, while Zara's parent
firm, Inditex, invests just 0.3 percent. However, this doesn't really imply that Zara is doing little
to promote its products; Zara's approach to product marketing differs somewhat from that of its
competitors.

The corporation insists that the products of its store windows, that are often determined in La
Corua, are appropriate ads.

The concept has indeed been successful. The popularity of the business demonstrates that this is
still achievable to create a big business by doing nothing but satisfying a consumer demand.
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MERCHANDISING (VISUAL)
Their shops serve as a gathering place for their clients and serve as the perfect promotional
strategy for the company. They have been introduced in major cities around the world, offering
their apparel proposition to the main street and reflect the real signature of the business, often
with an original design and exclusive touch.

Zara extends the concepts of its corporate strategy to the layout of its retail outlets: construction,
continuous creativity, rapid response, and local adaptation to the needs of their clients and the
demands of the environment. The development of store is viewed as a continuous and
transparent process that is integral to its success and is the product of skilled coordination among
various departments.

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IMPORTANCE OF SUPPLY CHAIN MANAGEMENT

In the manufacturing cycle, efficient supply chain management processes reduce expense, waste,
and time. A just-in-time supply chain, in which store purchases instantly signal replenishment
orders to suppliers, is becoming the corporate norm Retail stores will then be replenished just as
soon as goods are sold Data processing from supply chain stakeholders to see if more changes
can be made is one way to enhance this method.

There are three situations in which successful supply chain management adds worth to the supply
chain loop by reviewing partner data:

1. Detecting emerging issues

When a consumer buys more goods than what the seller can provide, the contractor has the
right to report about bad service. Manufacturing companies are capable of predicting a
shortfall by data collection even before customer is dissatisfied.

2. Dynamic price optimization

Seasonal goods often have finite life span. These goods are usually dumped or traded at
heavy discounts at the end of the regular season. Airline companies, restaurants and hotels, as
well as other businesses that sell perishable "items" usually change their prices dynamically
to satisfy demand. Similar analysis techniques, also for hard commodities, may boost
profitability by using advanced analytics.

3. Developing the distribution of inventory that is “available to promise”

Analytical modelling systems assist in dynamically allocating capital and scheduling work
based on revenue forecasts, current requests, and scheduled raw material distribution.
Manufacturing companies may validate a product arrival date whenever an order is made,
minimizing wrongly loaded orders dramatically.

Unlike yesterday's supply chains, which were concerned with the distribution, transfer, and
expense of tangible goods, today's modern supply lines are dealing with the management of data,
supplies, and materials packaged into solutions to problems. Advanced supply chain
management seem to be about much more than just where and when. Services and products
efficiency, logistics, prices, customer satisfaction, and, inevitably, sustainability are all
influenced by supply chain management.

Current supply chains rely on vast quantities of data produced by the supply operation, which is
managed by analytical analysts and data scientists. Future supply chain executives and the ERP
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networks they run would more certainly rely on maximizing the utility of this data — processing
it in real time with limited lag.

SUPPLY CHAIN MANAGEMENT AT ZARA

Quick fashion is capturing the people's hearts (and wallets) of customers in modern shopping
industry. Moving beyond the problematic features of fast fashion, such as the creation of
unnecessary inventory and poor industrial standards, today's buyers have partnered with the
positives of fast fashion, such as the rapid turnaround of clothing patterns and the low cost of
goods.

So what does this imply for today's retail chains? Developing an optimized supply chain that
increases consumer demand and smart production strategies seems to be more crucial than it has
ever been.

This has promoted the word "quick fashion," which refers to apparel producers who switch out
their designs quicker than the next day shipping. It provides customers with a steady stream of
fresh fashion trends in small numbers

So how do they really do it?

Today’s modern fashion retailers rely on an agile supply chain capable of bringing products and
services to market easily and affordably. Since then, the industry's focus on speed-to-market has
prompted companies to revisit their production and supply chain policies.

Fast fashion pieces are manufactured easily and forced onto retail shelves. Allocation, order
processing, and storage processes must also respond to this fast-paced timetable.

Let's take a look at a few defining features of Zara's supply chain to see what other firms can
benefit from its success.

1. VERTICAL INTEGRATION
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To succeed effectively in today's new trend-driven industry, companies should first learn to
compress their supply chains and gain direct leverage of layout, manufacturing, and operations, a
practice known as vertical integration.

As opposed to many other designs made by their global peers, Zara's marketing strategy is
distinguished by a significant level of vertical integration. It handles all aspects of the apparel
industry, including architecture, manufacturing, logistics, and delivery to its own run stores. In
all of its corporate sectors, it has a diverse framework and a deep consumer orientation.

Zara's business strategy is unusual in that it encompasses every phase of the luxury retail
business, including layout, manufacturing, delivery, and selling of fashion in self-operated stores.

Vertical integration occurs as businesses at various points of manufacturing or delivery are

acquired. Retail stores who use a vertical integration supply chain strategy experience the
following consequences;

 improved leverage over their supply chain

 lower distribution costs
 improved synchronization with ever-changing fashion patterns

It also allows you to respond almost immediately to evolving consumer preferences, correctly
measure demand, and then react promptly using fast-cycle manufacturing processes. Vertical
integration also has the following advantages:

 improved process management

 lowered supply chain vulnerability
 enhanced product oversight
 increased consumer visibility

To ensure the supply chain working perfectly, Zara has used vertical integration. Zara is able to
retain greater management of the supply chain by purchasing companies at various points of the
chain, allowing it to act rapidly to changing customer demands.

Zara manages everything including layout to display to delivery, relying on limited outsourcing
and empowering it to collect useful data at any point. This information will then be applied to
detect shortfalls, evaluate areas of growth, and provide reliable forecasts.

Vertical integration not only gives the multinational apparel company more leverage, but it also
lets it minimize risk, offer more transparency to consumers, and lower shipping costs.
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Furthermore, since Zara can retain power and supervision over the complete supply chain
improved coordination and cooperation between various parties can be accomplished.

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2. JUST-IN-TIME MANAGEMENT
Zara is dedicated to keeping ahead in the market, updating its clothing styles every two weeks on
average, while the rest of its rivals do so every 10–14 weeks. Zara employs Just-in-Time (JIT)
manufacturing processes to keep delivery times as short as possible in order to sustain this
lightning-fast speed.

JIT manufacturing, also identified as JIT production is a lean approach that focuses on
eliminating excess from company operations in order to create a highly productive, simplified
operation. As a result, businesses will effectively satisfy consumer demand.
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The aim OF JUST IN TIME Production is to manufacture limited amounts of in-demand

products which sell early and rapidly.

Via its cutting-edge forecasting techniques, just in time production still makes for prediction
errors. Throughout their special promotional hours, leftover products are available at a 20-30%
discounted price.

Zara accomplishes this by doing all of its manufacturing in-house, with most of its factories
situated near the company's headquarters in Galicia, Spain. It also keeps about 85 percent of
room available for any required in-season modifications, calling for more stability and versatility
about how and when new pieces are introduced.

This is the formula for the just in time production supply chain:

 Create exclusive objects.

 Produce in minimal amounts
 Logistics- Factories are held in close proximity.

The major risk factor is removed from the equation in the low-risk formula of production in
small amounts. Owing to the fast turnover of goods, if stock stocks are depleted, production will
rapidly fill the void.

Every year, half of Zara's stock is subjected to this scheme. Shop managers from their 1,670
outlets from around world order products twice a week, at specific hours, and fresh fabrics
arrives twice a week, on schedule. This translates to over 10,000 new projects each year. From
concept to completion, the process takes just 10 to 15 days.

Zara's unique manufacturing models will provide useful insights for businesses trying to
accelerate their time to market. While most small companies would not be able to reach the same
level of productivity, there are a few main areas in which they can focus exclusively:

1. Putting money in in-house manufacturing practices may provide more stability and
control, lowering the risk of mistakes, setbacks, and cost overruns.
2. In-house manufacturing automation may make a dramatic impact in terms of bringing
goods made and out the door as early as possible while growing precision.
3. Producing products in restricted or reduced amounts adds a sense of privilege and
immediacy to the shopping environment, which encourages consumers to buy.

OVERCOMING CHALLENGES
The well-known fast-fashion firm, founded in 1975, has proved the dependability of its critically
acclaimed successful business model, which is based on technological creativity and consumer
experience. Zara made a $254 million profit in the second quarter of 2020 with little or no ads.
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Even then, three major obstacles have recently confronted the brand: e-commerce, competition,
and sustainability.

Before the pandemic, the brand took a turn towards digital advancement to ensure its wide
impact, and it paid off. Zara has reported a 74% growth in online sales so far in 2020.

Fortunately, Zara may rely on artificial intelligence to make a significant impact by better
predicting patterns in best-selling brands in order to increase e-commerce revenues.

A new digital shift: A foreshadowing of the future

During the worst of the pandemic last year, Zara was pushed to shut 1200 stores worldwide.
However, from May to July, the company was able to reopen 98 percent of its stores. Amancio
Ortega sees the third quarter of 2020 as a "progressive return to normalcy."

In terms of e-commerce, Zara saw a 74% increase in online revenue this year after improving
digital communications and retrofitting their supply chains to accommodate shipments over in-
store inventory. They also tailored their ranges to match "quarantine styles," such as big trousers,
jumpers, and household slippers.

The company would not have been as effective digitally this year if it hadn't been for Zara's
digital reactivity. This demonstrates how important digitisation and becoming mindful of the
times were in 2020.

The need to transition to a more viable business model, fuelled by trend forecasting

Zara puts a lot of strain on the end-to-end supply chain due to a rapid time-to-market, rapid
response approach, and just-in-time production. There is mounting indication that people worried
with environmental concerns are starting to doubt as to if they can buy fast fashion.

To address these issues, Zara has created its own sustainability line under the #joinlife banner.

Growing e-commerce in order to compete

It will take time for its brand awareness departments to handle service offerings when it launches
e-commerce services to increase online sales. Finding appropriate mix and match models to
create silhouettes in accordance with actual customer preferences can be quite time-consuming.

Zara will use artificial intelligence to boost the pattern radar in order to stay ahead of rivals and
potential entrants into ultra-fast fashion. Cutting-edge technologies can identify and forecast the
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most common product and brand connections, as well as the most enticing designs, colours, and
textures.

From just-in-time output to predicting demand and patterns, Zara will become more competitive.

This case demonstrates how tough it is for a luxury industry pioneer to change its reputation in
the midst of a consumer culture switch toward sustainability.

The fast logistics icon now wishes to be known as a competitor who practices “responsible
fashion.”

By enhancing market forecasting, artificial intelligence will help close the “just-in-time”
production gap. The corporation prioritizes reacting to latest fashion needs over predicting
clothing styles for the near future, with 85 percent of its activity taking place during current
season.

Zara successfully generated a $254 million second-quarter profit in 2020, but the company also
faces three big challenges: e-commerce, rivalry, and environmental sustainability.

Forecasting ai - driven would give Zara an advantage over its digital native rivals including
Boohoo and Fashion Nova, who are falling behind with just 14 percent of net revenue from e-
commerce.

Zara produces 85 percent of its products during the current cycle and through predicting
demand, Zara can prevent excessive production and mistaken identity of patterns, allowing it to
be more profitable.
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CONCLUSION
Secret and success

Zara's popularity was essentially down to the way it managed to keep up with street wear as the
times changed. The brand explores how fashion progresses on a regular basis. It creates new
ideas and sells them in shops within a week or two. Most other apparel designers will take six
months to introduce new products to the industry.

And that is where the Zara outperformed the competition and became a favorite brand for those
who wanted to stay current with fashion. Ortega was well-known for his concept of clothing as a
fresh produce object, one that people would be happy to use and then discard, much like yogurt
or bread. It is often mentioned that he manufactures hot flavoursome clothing" that only last a
couple of months due to evolving street latest fashions. When you returned to the supermarket a
week later, all the clothing will have been updated.

Amancio Ortega Gaona, Zara's creator, is famous for his reclusive attitude and dislike of media
sources. He is proud of what he's doing the business he has created. Gaona has risen and became
the world's third richest person as a result of Zara's growth. Gaona, on the other hand, is modest.
Zara's philosophy reflects Gaona's personality in several respects. It does things in a different
way and has also been extremely influential as a result. Zara, on the other hand, is not as
sensitive as other stores. It cautiously considers the policy and takes a long-term view.

There seems to be one aspect of Zara that surprises people. Despite its continuing popularity, the
brand has got bad marketing. The brand does not support itself in any way. Amancio has never
made a public statement or promoted Zara in any manner. Zara did not require any advertising
to be such a well-known company. Speak about efficiency doing the job!
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