INDITEX, fashion leader case study of ZARA in the transformation era:
The superiority in Inditex's Digital Transformation strategy started in 2012 by building an integrated store system with an online sales platform. Underscored in the past 2020, Inditex has been able to maintain its leadership and generate new growth.
Spanish multinational retailer INDITEX, one of the world's largest fashion retailers has eight brands: Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, and Uterqüe.
Sold in 216 markets through an online platform. with 6,654 stores in 96 countries.
Founded in 1963, based on “customer at the center of everything we do” from scratch with a different business model called ‘Fit to Demand’, revolutionizing the fashion industry with Fast Fashion presentation.
In 1988, Inditex kicked off a fashion revolution where other players focused on mass production for a cost advantage. Instead, Zara focused on its so-called “fit to demand” business model that produced a small number of products but there are various designs and fast production to meet the needs of consumers quickly and at an affordable price.
Zara's business model also allows it to bring more products to market, with Zara launching up to 20 new collections per year. This is in contrast to other apparel brands that are bound by the seasonal calendar The new collection may only be released four times a year.
Zara's success has enabled new competitors to copy Zara's business model, eventually designing and producing products faster and cheaper than Zara with its Ultra Fast Fashion concept. These companies include Shein, Boohoo, Fashion Nova and ASOS
Inditex’s challenges is how to stay ahead as a FAST FASHION LEADER in this transformative era?
Inditex has been innovating its digital transformation strategy since 2012 by building an integrated store system with an online sales platform by focusing on the customer as the center of recognizing and delivering what customers really want no matter where the customer is. Inditex pays close attention to detail and creates technological innovations and cutting-edge logistics investments in every part of the value chain whether they design, manufacture, or distribute products. Inditex also develops ways to improve operations and customer service and the quality of the customer experience which helps to identify and meet customer needs and also always improves the store and develops the online platform with new designs.
Starting from a change in operations which was previously tracked by consumer behavior data from sales data and fashion trends collected by store managers around the world every two weeks.
To Track products from the production process, delivery to the sale of every piece around the world instantly with the introduction of an RFID chip system on every product in 2014, Zara was able to as well as collect data from every product from both physical stores and online sales channels to create a more efficient customer shopping experience than ever before.
Zara be able to gain more understanding of what customers want and can meet their needs better, seamlessly from the data obtained. This allows Inditex's 700+ designers to create 60,000 different works. Merchants around the world receive two collections per week and this makes Zara's "fit to demand" capabilities faster and more stable and able to get ahead of competitors.
In 2017, Zara also launched a new pop-up store, fused with an online ordering service.
Along with the Smart Mirrors service that can present and display the size of hair and jewelry that is suitable for each person including the return or replacement service to the customer as well as other services that will create a better shopping experience for customers.
Not only that, but in June 2020 Zara also announced plans for Digital Transformation.
In the next two years, Zara plans to invest up to 1 billion Euros (about 38 billion Baht) in online business development, and another 1.7 billion Euros (about 65 billion Baht) will be investments to upgrade a platform to connect both online and storefront systems.
This allows shoppers to have a great experience with Zara on any device, anywhere, anytime.
Isla Pablo, Inditex's CEO
" Storefront will continue to play a key role in Inditex's strategy and will play a greater role in improving online sales. Due to our digitization and ability to reach customers from the best locations around the world, overall, our overriding goal between 2020 and 2022 is to accelerate the full implementation of our integrated store concept. This is driven by the idea of being able to serve our customers without interruption, wherever our customers are, on any device and at any time of the day."
Source: www.inditex.com, Inditex Annual Report 2020, Mahadeva Matt Mani and Paul Leinwand (2021) [Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future]
Decode ZARA step-by-step business transformation with 9 boxes of Digital Transformation Canvas
