Benefits of Vertical Marketing System to Zara

Zara: The Technology Giant of the Fashion World
Synopsis
Zara is a company that defines what the fashion industry has termed “fast fashion.” The flagship specialty chain of Spain-based clothing conglomerate, Inditex, Zara has built an information and distribution system that allows it to put the latest runway fashions in its stores in a matter of weeks at a fraction of what the big-name designers charge.
In addition to fast, Zara is prolific. In a typical year, Zara launches about 11,000 new items. Compare that to the 2,000 to 4,000 items introduced by both H&M and Gap. Zara stores receive new merchandise two to three times each week, compared to four to six times per year for most clothing retailers. More and smaller batches of items translates into fashion exclusivity. This in turn results in fewer mark-downs and higher profits.
Zara controls a true vertical marketing system. A good portion of the channel participants are centralized geographically around its corporate headquarters in a remote corner of Northeast Spain, rather than spread out around the globe. This and its IT system are what allow it to achieve the speed and responsiveness that it does.
Teaching Objectives
The teaching objectives for this case are to:
Illustrate a value delivery system in action.
Help students understand why and how companies use value delivery systems.
Expose students to issues of channel conflict and conflict management.
Illustrate how value can be added through different aspects of supply chain management.
Discussion Questions
Which type of vertical marketing system does Zara employ? List all the benefits that Zara receives by having adopted this system.