Category winner: Zara: The World’s Largest Fashion Retailer

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This case won the Production and Operations Management category at The Case Centre Awards and Competitions 2017.
 
The case
Zara logo

Who – the protagonists

The top management team including Pablo Isla, CEO of Inditex; Jesús Echevarría, Chief Communications & Corporate Affairs Officer; Jose M. Álvarez Gallego, Director of Corporate Development; and Miguel Díaz, Zara’s Finance Director.

What?

Zara is the flagship brand of the Spanish retail conglomerate Inditex and the world’s largest fashion retailer.

rack of clothesWhy?

During the last decade, Zara had repeatedly defied predictions that it had reached the limit of its business model. In 2014, it seemed to be continuing its phenomenal growth into the future. Nevertheless, many observers still wondered whether it needed to modify its business model and operating systems to account for its increasing size and global footprint.

When?

Zara shop

Amancio Ortega Gaona began working as a delivery boy for a shirtmaker when he was only 13 years old. In 1963, when still in his 20s, he started Confecciones GOA in La Coruña, Spain, to manufacture women’s pyjamas for sale directly to wholesalers. In 1975, when a German customer cancelled a sizable order, the firm opened its first Zara retail shop in La Coruña.

Where?

Zara established retail operations in all the major Spanish cities during the 1980s, and in 1988 opened its first store abroad, in Porto, Portugal, followed by New York City in 1989 and Paris in 1990. By 2014, Zara had over 6,600 stores in 88 countries worldwide.

Fashion designing

Key quote

‘We know that this business is an art, we try on a daily basis to add science to that art, but it is still an art.’ - Miguel Díaz, Finance Director

What next?

How can such a large company continue to react to fast-moving global markets so accurately and rapidly? Could it continue to design, produce, distribute and sell new products in as little as two weeks when many firms in the industry took several months? And was it possible for Zara to continue to grow at such a phenomenal pace?

*This is an updated and extended version of the authors’ Zara case that came 15th in our list of bestselling cases compiled in 2013.
 
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The authors

Kasra Ferdows, Jose A.D. Machuca,
and Michael Lewis

authorsThe authors explain why Zara continues to fascinate them and what they got wrong about the company.

Winning the award

It is most gratifying is to see that others find value in what you have done. Writing a case takes considerable effort and it is wonderful when you see it is benefiting more than just a few people.

Revisiting the case

Zara’s story has been and continues to be absolutely fascinating. We have been following the events in this company since our last case (published in 2003) and been delighted, and frankly a little surprised, to see that they have continued to become better year after year. We thought we should update the case, but after we went back and observed the operations and interviewed the senior managers, we decided to write almost a new case. There is still a lot to learn from this company.

Art versus science

We think there is an art in every business, particularly one dealing with fashion. We thought it was important to emphasise that, while one can describe how different processes in Zara’s are organised, and in a sense standardised, there is still a lot of judgment that must be exercised by its designers, market specialists, procurement and factory managers and other employees.

Business meeting with graph

More cases?

We have been wrong about the limits of Zara’s model. One of the questions we asked at the end of our case in 2003 was, ‘Is Zara reaching the limit of its business model?’. Time has shown that the clear answer is ‘no’. Zara is now six times bigger with four times more stores in more countries, so the model has proven to be more robust than we thought 14 years ago.

We are certainly curious to see how Zara continues to develop, and regardless of how its operating model might change, it would be interesting to report on it in yet another case.

Teaching experiences

We’d like to thank the many faculty and educators who adopted both the original case and this revised version. It would be great if we could learn about their experiences in teaching this case.

About the authors

Kasra Ferdows holds the Heisley Family Chair of Global Manufacturing at the McDonough School of Business, Georgetown University, US.
e ferdowsk@georgetown.edu

Jose A. D. Machuca is Professor of Operations Management at Universidad de Sevilla, Spain.
e jmachuca@us.es

Michael Lewis is Professor of Operations and Supply Management in Information, Decisions and Operations Division at University of Bath School of Management.
e m.a.lewis@bath.ac.uk
tw @OpsProf

 

View all the 2017 winners