RETAIL MARKETING. for case study: Zaras Vertical Supply Chain - Essay Example

Zara clothing opened in 1975, with limited operations in Spain, selling men’s and women’s clothing (Lowson 2002). It’s operational strategy, an added value system incorporating a vertically integrated supply chain, has allowed Zara to grow to 500 stores world-wide, with a “value net”, or impressive bottom line (Lowson 2002, 236). Zara clothing is operationally supported by its vertically integrated supply chain. In this way, Zara has complete logistical control of its flow of merchandise from the point of origin, to the consumer.

Also, because Zara has a high turn around rate, meaning that they restock and supply every 10 to 15 days, there is little overhead other than the manufacturing cost and transportation of goods to the various stores. Zara is controlling its logistics because there is very little in between the production of the fashion pieces, to delivery, to consumer purchase that either interferes with the timeliness of the product or causes it to sit in storage. Rather Zara’s products go its floor for purchase, and this keeps loss due to damage and outdated items at a minimum.

So we see how Zara’s vertical supply system supports their fast fashion model of distribution, which allows the company to demonstrate its interest in its customer’s fashion needs with creative and readily available new fashion designs and products. This is not to suggest that every fashion piece Zara creates is an overwhelming success, or that the chain sells every item it produces. Quite the contrary, it is to suggest that Zara has a fast supply chain, open lines of communication between the manufacturing process and the stores, and that Zara reacts very quickly to items that do not sell by deep markdowns of fashion items or products that are not successful (Varley and Gillooley 2001) “Once the bulk order for a successful