Case Study of the Spanish Retail Chain Zara

Ezra Case Study Introduction The Spanish retail chain, Ezra, owned by Indolent Is a retailer that has been so successful in our world of globalization and new technologies today by simply adopting a new approach in the industry. With their simple business model of speed, flexibility, and high fashion, Ezra has the competitive advantage to be sustainable.

Ezra was founded by Manioc Ortega Goanna (Ortega), in 1975 and went on to become the flagship brand of the holding company, Industrial De Dieses Textile, AS, popularly called Indolent, which was founded In 1979.

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As of 2002, Indolent operated six separate Haines, that being, Ezra, Misaims Duty, Pull & Bear, Berserk, Strabismus, and Shoo. However, each chain operates independently and is responsible for its own strategy, product design, sourcing and manufacturing, distribution, image, personnel, and financial results. Ezra, which contributes around 80 per cent of group sales (Grant 2005, p. 398), is by far the largest, most profitable, and most internationalization of the chains. Its stores can now be found In the most important shopping districts of more than 400 cities In Europe, the Americas, Salsa and Africa.

With year-on-year sales increasing at around 25% over the last 5 years, it has become one of the world’s fastest growing retailers (University of Cambridge Institute for Manufacturing). Discussion The global apparel market Is a consumer-driven industry (Craig, Jones ; Unite, 2004) In which profits derived from “unique combinations of high-value research, design, sales, marketing, and financial services that allow retailers, branded marketers, and branded manufacturers to act as strategic brokers in linking overseas factories”‘ with markets (Collins 2003, p. 4). Sara’s business model can be broken down into three basic components: concept, capabilities, and value drivers. Sara’s fundamental concept is to maintain design, production, and distribution processes that will enable Ezra to respond quickly to shifts In consumer demands and tastes.

The mall business tactics of the company In context of its business model Is:- short lead time: More fashionable clothes and embracing quick changing customer’s (ii) Decentralized Management: Taking advantage of the intelligence and tastes. Rust the Judgment of employees. Lower quantities: Inventory will be remediable burden in perishable products. (iv) More styles: Providing more choices for customers and more chances of meeting the customers taste. At the heart of Sara’s success is a vertically Integrated business model spanning design, Just-in-time production, marketing and sales.

The delectate vertical Integration feature of Sara’s business model, has allowed the company to successfully develop a strong merchandising strategy.

This strategy has led Ezra to create a climate of scarcity and opportunity as well as a fast-fashion system. Currently, H;M is Indies’s major competitor. Swedish retailer H&M has been growing at an average rate of 20% annually In the past two decades. These two European retailers are known for their fast fashion’ had unique business models and growth strategies which have needled teen to expand quickly Ana stressfully Demon a tenet own Dodders.

European markets becoming saturated, Both companies are expanding outside Europe and establish their hegemony in the world market. Yet what is it that distinguishes Ezra from H;M and its other competitors? In its process of expanding globally, Ezra, unlike its competitors such as Gap, Benton, and H;M, does not use cheap Asian outsourcing. Eighty percent of Sara’s materials are manufactured in Europe, with fifty percent made in Ezra controlled facilities in the Galatia region of Spain near headquarters.

Though the cost of production in Spain more expensive compared to Asia, Ezra still manages to maintain competitive advantage over its competitors in regards to operations. Ezra maintains local strategic partnerships with manufacturers and suppliers in Europe and this proximity gives Ezra great flexibility in adapting their product lines based on up to ate market trends and consumer behavior while decreasing costs of holding inventory. This proximity effect and the flexibility give Ezra its competitive edge in comparison to their peers.

However, the business strategies adopted by Ezra, does have its setbacks to Sara’s success. The vertical integration concept often leads to the inability to acquire economies of scale, which means Ezra cannot gain the advantages of producing large quantities of goods for a discounted rate which leads to higher costs being incurred as they have to set a higher pricing of Ezra products outside of Europe in order to cover supply costs. Ezra has not invested in distribution facilities to support their global expansion.

As a result, despite being able to quickly supply their stores at present, they may not be able to supply to a larger number of retail locations due to their “centralized logistic” model. Even though Ezra has been successful at scaling up its distribution system, the centralized logistics system might eventually be subject to discomposes of scale as Ezra continues to open stores all around the world and ships product from its single Distribution Center in Europe.

This system may work well with the current number of stores because majority of the stores are centralized in Europe.

However, Ezra won’t be benefiting from short lead times and low operational cost with a single central Distribution Center model in terms of globalization and branching out into other countries. Conclusion To successfully expand globally, Ezra should focus on one country at a time. Our team concludes that Sara’s current focus should be international expansion in a country that has an open trade market with well formed trade regulations as this revised a safer business environment.

During the globalization process, Ezra should maintain short lead time, quick inventory turnover, leading fashion brand and low advertising cost as its competitive advantage.

As a result of their product cycle, Ezra gives their customers the feeling of scarcity because new items are presented weekly and are often not restocked, and this encourages customers to come to the stores and buy frequently. As such, Ezra invests more in their store layouts as compared to marketing.

Their cost advantage and ability to maintain brand recognition and customer loyalty along with other factors such as regional distribution center, vertical integration, outsourcing and eye-catching window displays are essential elements for Ezra to build value in the company and to continue to re-invent and innovate themselves to stay Trees In ten apparel Industry. List of References Collins, J. L. , 2003.

Threads: gender, labor, and power in the global apparel industry. Chicago: University of Chicago Press. Craig, A. , Jones, C. , ; Unite, M.

(2004). EZRA: Fashion Follower, Industry Leader.