ZaraPresented By:Aditya MaluNiti ModiPramod Srinivas

Introduction

Zara is a Spanish clothing retailer

1700 stores , 78 countries worldwide

Zara practices fast fashion – trends moves from the runway to stores within weeks, as opposed to months.

Zara’s supply chain has undergone tremendous changes in order to sustain its competitive advantage in today’s market

Zara has continually maintained its mission to provide fast, affordable, and fashionable items

Online Retail Websites

Purchase conversion – the number of purchases over the total number of visits. This metric is specifically helpful if it is tied-in with the changes made to the site itself and the changes to the product

inventory

• Average Order Size – the dollar/euro/other currency amount spent on each order.

• Items per Order – shows the effectiveness of cross-selling on the site. This helps to optimize recommendations to various groups of customers and fine tune the marketing message.

• Purchase dropouts rate – the number of customers who abandoned the purchase to the total number of customers who started the purchasing process. This metric is extremely helpful in identifying what steps in the sales process deter the customers from completing the transactions.

• Effect on offline sales –Not all online visits may end up with purchase, but some of those visitors could be gathering additional information before visiting the store to make a purchase.

• Returned items rate – the percentage of returned items purchased online. It is critical to receive and analyze customer’s feedback on the reasons of the return. For example this metric indicates deficiencies in product presentation online, whether it is the picture of the item or its verbal description. Could be helpful in improving the copy quality and clarity

Marketing The information gathered from online and in-store sales can be used for designing and executing Zara’s own marketing initiatives• Response rate by segment – after the customers segmentation is

done, Zara measures which segment responses better to particular marketing campaign.

• Response rate by the marketing media –measures if customers respond better to regular mail, email, website promotion or in-store promotional offers.

• Response rate by marketing message –After the message is tested online, its transferred to other marketing channels with greater level of assurance about its effectiveness.

• Revenue per marketing campaign/revenue per sale – measures the overall revenue generated by a particular campaign or by an average sale in the campaign.

Strategic

Ratio of winning designs

Ratio of cross-brand conversions

Clearance Pricing Optimization

Fast-fashion retailers such as Zara offer continuously changing assortments and use minimal in-season promotions.

Until 2007, Zara used a manual and informal decision-making process for determining price markdowns.

In collaboration with their pricing team, they designed and implemented since an alternative process relying on a formal forecasting model feeding a price optimization model.

This new process increased clearance revenues by approximately 6%.

Zara is currently using this process worldwide for its markdown decisions during clearance sale

Operation

Distribution SystemTheir system links demand to manufacturing and manufacturing to distribution

Determines each inventory shipment it sends from its two central warehouses to its 1,500 stores worldwide

Retail size-assortment view of a store's inventory, the model incorporates the link between stock levels and demand to select store replenishment quantities

Shelf exposure time increased by 3.5%

Transshipments and returns reduced by 19%