The multi-faceted journey of the fashion retail giant agilityUsing Big Data and Advanced Technologies: Weaknesses of Zara's Manufacturing Strategy:ChallengesInternet of ThingsAutomation, Change and RoboticsCyber SecurityChanging Customer BehaviorConclusion:References:The Story of ZaraZara, the largest fashion store in the world, was founded by Amancio Ortega in La Coruna Spain in the year 1975 (Inditex, n.d.). It is the most profitable brand of its parent company, Inditex Group, and has several departments such as Zara Women, Zara Man and Zara Kids. Zara is one of the top 500 multi-channel retailers in Europe according to the research "The Internet Retailing Europe Top500 (IREU 500) of 2017" (Jindal I., 2017). Furthermore, the Zara brand has more than 2200 stores worldwide in 96 markets in 2018 (Forbes, 2018), while it plans to expand its online presence to another 106 countries around the world (Dowsett S., 2018). Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay Mission, Vision, Goals Zara has an elegant perception of quality and authenticity. According to Inditex, the Zara brand has remained true over the years to its beliefs and values expressed by the four key words of beauty, clarity, functionality and sustainability (Inditex, n.d.). Zara has a strong vision and respects the environment and the development of society through its business model. Furthermore, it aims to build an excellent relationship with its customers based on trust and loyalty and to improve customer service through unique and responsible clothing. Zara brand designers have customer satisfaction at the top of their priorities and respond instinctively to the changing needs of the public. Furthermore, Zara is intelligently reacting to the latest trends and continuously improves the quality of its collections through innovative design ideas and affordable products (Inditex, n.d.). Specific target market For this report I have chosen to analyze the Zara brand in the Spanish market based on segmentation – Philip Kotler's Targeting – Positioning Theory (STP).SegmentationThe segmentation method aims to identify groups of customers with similar needs and characteristics . There are four segmentation variables that can identify the different segments of Zara in the Spanish market. First, according to the demographic variable, Zara segmentation based on people aged between 18 and 40 with average income. According to Statista, 65.88% of the Spanish population in 2017 was between the ages of 15 and 64 (Statista, 2018). Additionally, Zara's demographic segmentation includes people who are interested in fashion trends, work in big cities, and pursue higher education. According to consumer research conducted by Mintel, Spaniards are interested in sustainable fashion and clothing retailers. They are conservative and prefer known products to new ones (Trade Portal, 2018). Furthermore, Zara has no gender specifications while it has three different departments of Zara women, Zara men and Zara kids. Second, use geographic segmentation by region. According to Appendix 1, Zara has 306 stores in Spain in different cities in 2018. Third, Zara uses psychographic segmentation and targets people who are conscious of their appearance, tend to have trendier clothing choices and are fashionable researchof quality. Spanish customers have a very modern outlook and quality is the most important factor for them.TargetingAccording to Appendix 2, Zara ranks first in BrandZ's survey of the 10 most valuable Spanish brands in 2017 with a brand value of 25,135 million dollars (WPP, 2017). Furthermore, Spanish customers visit Zara stores on average 17 times a year compared to 3 times a year for competitors. Since their clothing designs change often, it is more difficult for people to see them clearly on the Internet and therefore they are encouraged to enter stores and try the unique clothes offered by Zara. PositioningZara's competitors in Spain are Mango, Stradivarius, Bimba y Lola, Desigual, Pull&Bear, Adolfo Dominguez and Oysho. Zara has a deep understanding of the entire value proposition it exchanges with customers. Its fast-fashion products are available in the quantity, format and time the customer needs the product. This translates into great value (Danziger P., 2018). Manufacturing Strategy Analysis Zara's manufacturing approach Zara has its global headquarters in Arteixo, a small city located in northern Spain. Its 860,000 square foot campus is home to 10 different factories, producing Zara's hottest clothing, as it appears from Appendix 1. These factories are connected to the distribution center through a network of secret underground tunnels that transport garments up electric clothes rails. However, all the items produced will return to one of its distribution centers to be sent to the stores, as we can see from Appendix 1. Zara is a leader in the retail market, thanks to the innovative technological strategy it uses to produce its products. The multi-channel retailer adapts new tools such as big data which helps in a successful production strategy (Aller MG, 2017). In-depth data analysis helps Zara recognize the average number of people's weight in different stores. Zara uses this information to determine what sizes they should produce for each gender, city or neighborhood. For example, each product is tagged with an RFID microchip before it leaves the factory, which gives the company the opportunity to track the product until a customer purchases it. According to Ravneet Uberoi, “Data on the sale of each SKU (stock keeping unit), the inventory levels in each store, and the speed at which a particular SKU moves from the shelf to the store is sent in real time to the data center central of Inditex” (Ravneet Uberoi, 2017). Zara's successful production strategy allows, through innovative technology, to stay up to date with the user's experience and needs real time and controls both its physical stores and its online stores Strengths of Zara's manufacturing strategy Zara's manufacturing approach has various strengths that help the company have a competitive advantage.Vertical integrationFirst. place, Zara uses vertical integration and this is a key strategy for its rapid product introduction cycles. The company produces most of its products “in house” compared to other traditional fast fashion companies that produce their own outsourced clothing items. Furthermore, most of Zara's factories are located around its main production facilities in Spain, which also helps to speed up production cycles (Gorrepati K., 2016). Small-batch production Secondly, Zara produces its produced in small batches to support just-in-time capabilities. As a result, it reduces the waste of large design batches. Furthermore, Zara focuses on highproduct variability and wins. The multi-channel retailer produces 11,000 distinct items a year compared to competitors who sell 2,000 to 4,000 in stores, so that's a strong point for Zara. So Zara's production strategy has the advantage of low opportunity cost because its customers do not lose their interest and do not look for new designs from competitors. According to a case study by SCM Globe, Spanish customers visit Zara stores on average 17 times per year compared to 3 times per year for competitors (SCM Globe, 2015). In this way Zara wins the "brick" game. Excess Agility Capability Furthermore, another strength of Zara is her excess agility ability. The company's factories in Spain have the flexibility to respond quickly to unexpected requests. They also have extra capacity to be able to cope with changing demand. For example, it normally operates 4.5 days a week 24 hours a day at full capacity, leaving some flexibility for extra shifts and temporary labor to be added when needed (Gorrepati K., 2016). Use of Big Data and Advanced Technology: Furthermore, the use of big data and advanced technology helps Zara save inventory, personalize customer experience, and achieve more efficient production. For example, the Zara store on Paseo de la Castellana has a large stock of dresses and shirts because it is located in a commercial location, while its Gran Via store offers more knitwear for women aged between 20 and 40. Zara understands the unique demand of each neighborhood and knows how to satisfy it. The company is in close contact with customer needs and offers a virtually personalized user experience. Weaknesses of Zara's Production Strategy: However, Zara's production strategy has one major weakness. The main part of Zadar's production system is located in Spain, close to its central districts. This centralized system can make the company more prone to unexpected problems. For example, if a technological problem were to occur in the distribution network, it would affect the entire production system because Zara has control over production, production and distribution from one corner. Challenges As the technological environment is changing rapidly, Zara must face challenges regarding its manufacturing strategy to remain innovative among its competitors. Internet of Things The first technological challenge for Zara's production approach is the adoption of the "Internet of Things". According to research by I-Scoop, “IoT” is an umbrella term for a wide range of underlying technologies and services, which depend on use cases and, in turn, are part of a larger technology ecosystem that includes technologies related such as AR, cloud computing, big data, digital twin simulation, etc." This technology is vital for the manufacturing approach as through smart objects IoT can provide crucial data for inventory and can help companies save on costs, improve efficiency and manage machines (Intel, n.d.). Zara already uses some of the “IoT” technology such as RFID microchip tags and big data as analyzed above rapid and the digitalization of the world has made things more complicated. Zara needs to find new ways to use “IoT”, such as a deeper way to make its production approach faster. According to the McKinsey Global Institute, in By 2025 the total global value of IoT technology could reach $6.2 trillion and most of this value will come from the manufacturing sector ($2.3 trillion) (Bughin J., 2015). We can therefore say that the competition is huge for Zara, when it comes to the use of IoTin the production approach. The multi-channel retailer must embrace big data technology to stay innovative and maintain its fast-fashion supply chain in a world that is faster than light. Changing Automation and RoboticsOne of the latest innovations in multi-channel retailing that Zara faces is changing automation and robotics. Undeniably, technology is advancing and its demand is increasing. Manufacturers are under more pressure than ever to fulfill large orders and deliver goods. Efficiency has never been more important, so many are turning to modern robotics and automation to improve production rates. Cyber security One of the main production challenges that Zara faces is data security, specifically cyber security. The digital age and technological advances increase the risk of cybercrime. A report by EEF and AIG, conducted by the Royal United Services Institute (RUSI), shows that 48% of manufacturers who took part in a survey had at some time been subject to a cybersecurity incident, half of them as a result have suffered financial losses or business interruptions, as we can see in Appendix 4 (EEF, 2018). The challenge for Zara's manufacturing strategy is to protect the supply chain and production data through cybersecurity systems. Changing Customer BehaviorHowever, the world is transforming every day through the advanced evolution of technology. As a result, customer behavior is changing rapidly, along with the online world. According to Telefonica, “Digitalization has had an impact on consumer habits, transforming them completely, especially when comparing offline and online user experiences.” The biggest challenge for Zara is to control the "bricks and clicks" choices of a Spanish customer and meet their needs through a smart manufacturing strategy. Please note: this is just an example. Get a custom paper from our expert writers now. Get a Custom Essay Conclusion: All in all, Zara's manufacturing strategy in Spain has a strong profile and many strengths that make it competitive. But Zara's central districts in Spain must implement new ways of producing their products to maintain their competitive advantage. References: Aller MG (2017) Zara: Technology and User Experience as Drivers of Business [online] Reinventing Higher Education. Available at: https://www.ie.edu/corporate-relations/insights/zara-technology-and-user-experience-as-drivers-of-business/ [Accessed: 14 January 2019] Bughin J. (2015) An Executive's Guide to the Internet of Things | McKinsey. Available at: https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/an-executives-guide-to-the-internet-of-things (accessed January 11, 2019). Danziger P (2018) Why Zara succeeds: It focuses on attracting people, not pushing out the product. Available at: https://www.forbes.com/sites/pamdanziger/2018/04/23/zaras-difference-pull-people-in-not-push-product-out/#615e540323cb (Accessed: 14 January 2019) .Dowsett S. (2018) Zara launches online sales in 106 new countries - Business Insider. Available at: https://www.businessinsider.com/r-zara-launches-online-sales-in-106-new-countries-2018-11?r=US&IR=T (accessed January 9, 2019).EEF ( 2018) Cyber Security for Manufacturing | EEF. Available at: https://www.eef.org.uk/resources-and-knowledge/research-and-intelligence/industry-reports/cyber-security-for-manufacturers (accessed 11 January 2019).Forbes (2018) Zara in the list of the most valuable brands according to Forbes. Available at:. 2019).

Topic > The multi-faceted journey of the fashion retail giant agilityUsing Big Data and Advanced Technologies: Weaknesses of Zara's Manufacturing Strategy:ChallengesInternet of ThingsAutomation, Change and RoboticsCyber SecurityChanging Customer BehaviorConclusion:References:The Story of ZaraZara, the largest fashion store in the world, was founded by Amancio Ortega in La Coruna Spain in the year 1975 (Inditex, n.d.). It is the most profitable brand of its parent company, Inditex Group, and has several departments such as Zara Women, Zara Man and Zara Kids. Zara is one of the top 500 multi-channel retailers in Europe according to the research "The Internet Retailing Europe Top500 (IREU 500) of 2017" (Jindal I., 2017). Furthermore, the Zara brand has more than 2200 stores worldwide in 96 markets in 2018 (Forbes, 2018), while it plans to expand its online presence to another 106 countries around the world (Dowsett S., 2018). Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay Mission, Vision, Goals Zara has an elegant perception of quality and authenticity. According to Inditex, the Zara brand has remained true over the years to its beliefs and values expressed by the four key words of beauty, clarity, functionality and sustainability (Inditex, n.d.). Zara has a strong vision and respects the environment and the development of society through its business model. Furthermore, it aims to build an excellent relationship with its customers based on trust and loyalty and to improve customer service through unique and responsible clothing. Zara brand designers have customer satisfaction at the top of their priorities and respond instinctively to the changing needs of the public. Furthermore, Zara is intelligently reacting to the latest trends and continuously improves the quality of its collections through innovative design ideas and affordable products (Inditex, n.d.). Specific target market For this report I have chosen to analyze the Zara brand in the Spanish market based on segmentation – Philip Kotler's Targeting – Positioning Theory (STP).SegmentationThe segmentation method aims to identify groups of customers with similar needs and characteristics . There are four segmentation variables that can identify the different segments of Zara in the Spanish market. First, according to the demographic variable, Zara segmentation based on people aged between 18 and 40 with average income. According to Statista, 65.88% of the Spanish population in 2017 was between the ages of 15 and 64 (Statista, 2018). Additionally, Zara's demographic segmentation includes people who are interested in fashion trends, work in big cities, and pursue higher education. According to consumer research conducted by Mintel, Spaniards are interested in sustainable fashion and clothing retailers. They are conservative and prefer known products to new ones (Trade Portal, 2018). Furthermore, Zara has no gender specifications while it has three different departments of Zara women, Zara men and Zara kids. Second, use geographic segmentation by region. According to Appendix 1, Zara has 306 stores in Spain in different cities in 2018. Third, Zara uses psychographic segmentation and targets people who are conscious of their appearance, tend to have trendier clothing choices and are fashionable researchof quality. Spanish customers have a very modern outlook and quality is the most important factor for them.TargetingAccording to Appendix 2, Zara ranks first in BrandZ's survey of the 10 most valuable Spanish brands in 2017 with a brand value of 25,135 million dollars (WPP, 2017). Furthermore, Spanish customers visit Zara stores on average 17 times a year compared to 3 times a year for competitors. Since their clothing designs change often, it is more difficult for people to see them clearly on the Internet and therefore they are encouraged to enter stores and try the unique clothes offered by Zara. PositioningZara's competitors in Spain are Mango, Stradivarius, Bimba y Lola, Desigual, Pull&Bear, Adolfo Dominguez and Oysho. Zara has a deep understanding of the entire value proposition it exchanges with customers. Its fast-fashion products are available in the quantity, format and time the customer needs the product. This translates into great value (Danziger P., 2018). Manufacturing Strategy Analysis Zara's manufacturing approach Zara has its global headquarters in Arteixo, a small city located in northern Spain. Its 860,000 square foot campus is home to 10 different factories, producing Zara's hottest clothing, as it appears from Appendix 1. These factories are connected to the distribution center through a network of secret underground tunnels that transport garments up electric clothes rails. However, all the items produced will return to one of its distribution centers to be sent to the stores, as we can see from Appendix 1. Zara is a leader in the retail market, thanks to the innovative technological strategy it uses to produce its products. The multi-channel retailer adapts new tools such as big data which helps in a successful production strategy (Aller MG, 2017). In-depth data analysis helps Zara recognize the average number of people's weight in different stores. Zara uses this information to determine what sizes they should produce for each gender, city or neighborhood. For example, each product is tagged with an RFID microchip before it leaves the factory, which gives the company the opportunity to track the product until a customer purchases it. According to Ravneet Uberoi, “Data on the sale of each SKU (stock keeping unit), the inventory levels in each store, and the speed at which a particular SKU moves from the shelf to the store is sent in real time to the data center central of Inditex” (Ravneet Uberoi, 2017). Zara's successful production strategy allows, through innovative technology, to stay up to date with the user's experience and needs real time and controls both its physical stores and its online stores Strengths of Zara's manufacturing strategy Zara's manufacturing approach has various strengths that help the company have a competitive advantage.Vertical integrationFirst. place, Zara uses vertical integration and this is a key strategy for its rapid product introduction cycles. The company produces most of its products “in house” compared to other traditional fast fashion companies that produce their own outsourced clothing items. Furthermore, most of Zara's factories are located around its main production facilities in Spain, which also helps to speed up production cycles (Gorrepati K., 2016). Small-batch production Secondly, Zara produces its produced in small batches to support just-in-time capabilities. As a result, it reduces the waste of large design batches. Furthermore, Zara focuses on highproduct variability and wins. The multi-channel retailer produces 11,000 distinct items a year compared to competitors who sell 2,000 to 4,000 in stores, so that's a strong point for Zara. So Zara's production strategy has the advantage of low opportunity cost because its customers do not lose their interest and do not look for new designs from competitors. According to a case study by SCM Globe, Spanish customers visit Zara stores on average 17 times per year compared to 3 times per year for competitors (SCM Globe, 2015). In this way Zara wins the "brick" game. Excess Agility Capability Furthermore, another strength of Zara is her excess agility ability. The company's factories in Spain have the flexibility to respond quickly to unexpected requests. They also have extra capacity to be able to cope with changing demand. For example, it normally operates 4.5 days a week 24 hours a day at full capacity, leaving some flexibility for extra shifts and temporary labor to be added when needed (Gorrepati K., 2016). Use of Big Data and Advanced Technology: Furthermore, the use of big data and advanced technology helps Zara save inventory, personalize customer experience, and achieve more efficient production. For example, the Zara store on Paseo de la Castellana has a large stock of dresses and shirts because it is located in a commercial location, while its Gran Via store offers more knitwear for women aged between 20 and 40. Zara understands the unique demand of each neighborhood and knows how to satisfy it. The company is in close contact with customer needs and offers a virtually personalized user experience. Weaknesses of Zara's Production Strategy: However, Zara's production strategy has one major weakness. The main part of Zadar's production system is located in Spain, close to its central districts. This centralized system can make the company more prone to unexpected problems. For example, if a technological problem were to occur in the distribution network, it would affect the entire production system because Zara has control over production, production and distribution from one corner. Challenges As the technological environment is changing rapidly, Zara must face challenges regarding its manufacturing strategy to remain innovative among its competitors. Internet of Things The first technological challenge for Zara's production approach is the adoption of the "Internet of Things". According to research by I-Scoop, “IoT” is an umbrella term for a wide range of underlying technologies and services, which depend on use cases and, in turn, are part of a larger technology ecosystem that includes technologies related such as AR, cloud computing, big data, digital twin simulation, etc." This technology is vital for the manufacturing approach as through smart objects IoT can provide crucial data for inventory and can help companies save on costs, improve efficiency and manage machines (Intel, n.d.). Zara already uses some of the “IoT” technology such as RFID microchip tags and big data as analyzed above rapid and the digitalization of the world has made things more complicated. Zara needs to find new ways to use “IoT”, such as a deeper way to make its production approach faster. According to the McKinsey Global Institute, in By 2025 the total global value of IoT technology could reach $6.2 trillion and most of this value will come from the manufacturing sector ($2.3 trillion) (Bughin J., 2015). We can therefore say that the competition is huge for Zara, when it comes to the use of IoTin the production approach. The multi-channel retailer must embrace big data technology to stay innovative and maintain its fast-fashion supply chain in a world that is faster than light. Changing Automation and RoboticsOne of the latest innovations in multi-channel retailing that Zara faces is changing automation and robotics. Undeniably, technology is advancing and its demand is increasing. Manufacturers are under more pressure than ever to fulfill large orders and deliver goods. Efficiency has never been more important, so many are turning to modern robotics and automation to improve production rates. Cyber security One of the main production challenges that Zara faces is data security, specifically cyber security. The digital age and technological advances increase the risk of cybercrime. A report by EEF and AIG, conducted by the Royal United Services Institute (RUSI), shows that 48% of manufacturers who took part in a survey had at some time been subject to a cybersecurity incident, half of them as a result have suffered financial losses or business interruptions, as we can see in Appendix 4 (EEF, 2018). The challenge for Zara's manufacturing strategy is to protect the supply chain and production data through cybersecurity systems. Changing Customer BehaviorHowever, the world is transforming every day through the advanced evolution of technology. As a result, customer behavior is changing rapidly, along with the online world. According to Telefonica, “Digitalization has had an impact on consumer habits, transforming them completely, especially when comparing offline and online user experiences.” The biggest challenge for Zara is to control the "bricks and clicks" choices of a Spanish customer and meet their needs through a smart manufacturing strategy. Please note: this is just an example. Get a custom paper from our expert writers now. Get a Custom Essay Conclusion: All in all, Zara's manufacturing strategy in Spain has a strong profile and many strengths that make it competitive. But Zara's central districts in Spain must implement new ways of producing their products to maintain their competitive advantage. References: Aller MG (2017) Zara: Technology and User Experience as Drivers of Business [online] Reinventing Higher Education. Available at: https://www.ie.edu/corporate-relations/insights/zara-technology-and-user-experience-as-drivers-of-business/ [Accessed: 14 January 2019] Bughin J. (2015) An Executive's Guide to the Internet of Things | McKinsey. Available at: https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/an-executives-guide-to-the-internet-of-things (accessed January 11, 2019). Danziger P (2018) Why Zara succeeds: It focuses on attracting people, not pushing out the product. Available at: https://www.forbes.com/sites/pamdanziger/2018/04/23/zaras-difference-pull-people-in-not-push-product-out/#615e540323cb (Accessed: 14 January 2019) .Dowsett S. (2018) Zara launches online sales in 106 new countries - Business Insider. Available at: https://www.businessinsider.com/r-zara-launches-online-sales-in-106-new-countries-2018-11?r=US&IR=T (accessed January 9, 2019).EEF ( 2018) Cyber Security for Manufacturing | EEF. Available at: https://www.eef.org.uk/resources-and-knowledge/research-and-intelligence/industry-reports/cyber-security-for-manufacturers (accessed 11 January 2019).Forbes (2018) Zara in the list of the most valuable brands according to Forbes. Available at:. 2019).