Zara Bypasses The Gap; It’s All About Customers

The Spanish retail chain Zara has overtaken The Gap as the world’s largest clothing retailer. That’s amazing since many people outside of Europe probably don’t know much, if anything, about Zara. So what can we learn from Zara’s ascension to the top spot?

First of all, Zara is a division of Inditex, which is a vertically integrated apparel juggernaut. Unlike other large apparel corporations, the company owns all of its retailing, designing and manufacturing operations. This structural difference allows Zara to break some norms in the apparel industry.

Zara offers “instant fashions:” cheap, trendy clothing. In Zara shops, there are two new collections every week, and the company manages to design, produce, distribute and sell each of its collections in just four weeks. Here’s what Professor Isabel Díez Vial from the Complutense University of Madrid, who has studied Inditex, has said about the company:

The customer doesn’t go to the store at the beginning of summer or winter, and see what they want, and think about it and decide later what to buy. Instead, the customer has to go to the shop every 15 days because the collection is refreshed so frequently… This approach leads to a complete change in the production process. Instead of offering products that take a year to plan and sell, you now have a product that the customer demands.

In addition, Zara relies heavily on its front-line employees. Rather than squeezing costs out of its personnel costs, it sees them as a key to its advantage. By analyzing sales data, the retailer increases staff during the periods when there is heavy traffic in the store. Employees are also expected to provide feedback on any fashion trends they see or hear about — including what’s hot, what’s cold, or what’s missing from the current collection.

My take: Zara represents a great case study in how to change the paradigm by focusing on customers. Here are few lessons that others can learn from Zara’s approach:

  • Break supplier-driven paradigms. In many industries you’ll find approaches that are based on some limitation of the companies. These supplier-driven paradigms, like very discrete seasons in apparel, aren’t optimizing customer experience. So there are opportunities to expand your business by challenging the status-quo.
  • Disrupt with service amplification. Many firms view front-line employees as costs; which they try to minimize. That’s why there’s an opportunity for companies to differentiate themselves by investing in their people, like Zara. This approach, called service amplification, is one of the five disruptive customer experience strategies that I’ve mentioned before.
  • Shorten cycle times. If it takes six months to define, design, and manufacture something, then you need to make decisions six months too early. Zara’s ability to cut the cycle times for getting products to market provides it with the ability to respond more effectively to changes in the market. So firms should find ways to cut down the time it takes to make changes in their offerings. 
  • Look to customers for innovation. As I discussed in the post Customer Experience Innovation: As Simple As 1-2-3, companies need to focus their innovation efforts around the needs of customers. Zara’s growth shows that there’s a lot of opportunity to find new and better ways to meet their needs.

The bottom line: The path to the top is always fueled by customers.

About Bruce Temkin, CCXP
I'm an experience (XM) management catalyst; helping organizations improve results by engaging the hearts and minds of their employees, customers, and partners. I enjoy researching and speaking about these topics. I lead the Qualtrics XM Institute, which is the world's best job. We're igniting a global community of XM Professionals who are inspired and empowered to radically improve the human experience. To achieve this goal, my team focuses on thought leadership, training, and community building. My work is driven by a set of fundamental beliefs: 1) Everything starts and ends with human beings, so you need to understand how people think, feel, and behave; 2) XM is a discipline that needs to be woven throughout an organization's entire operating fabric; and 3) Building the XM discipline requires a combination of culture, competency, and technology.

7 Responses to Zara Bypasses The Gap; It’s All About Customers

  1. Pingback: Weekly Points of Interest 2008-08-22 at Experience Matters

  2. Romain says:

    Indeed customers are the tipping point here. And it is the same thing on every market. But only some companies are getting the point keeping the needle on product-centric way of thinking/ working instead of creating a user experience that matter to consumers.

    Great post. Thanks

  3. Pingback: Bookmarks for 08-25-08 - Fast.Fwd.Innov@tion

  4. Graham Brown says:

    Appreciate the tip. I’ve blogged about your post in my Crowdsourcing 101 – which features how other youth clothing & soda brands are using these methods to drive product development

  5. AJ says:

    Went by the Zara’s at the Eaton Center in Toronto. Had the worst experience. I wanted to buy a suit and asked the sales girl if she could give me the nicer hanger instead of a flimsy plastic hanger that she was giving. She got dramatic and started saying that they only give the plastic hanger and straightaway said that “my manager would say the same”. Few minutes later, the manager of the store comes in and says the same thing. I asked him if they care if their customers are happy and he outright said “NO” and “we can do without the sale”!!!! The sales girl started smirking.

    I was so shocked at how they treat their customers!! I have bought suits at Zara’s in Montreal and they always threw in nice hangers.. even during sales!..Don’t really want to deal with such crude people. This was definitely my last time at Zaras

    • Bruce Temkin says:

      AJ: Sounds like the Zara’s in Montreal does a better job than the one in Toronto. I edited out the name of the person in your comment, since I don’t allow negative things to be said about individuals (unless they are public figures).

  6. James Tau says:

    I am a man who occasionally shops at Zara as a gift for my girlfriend, and the service in the Perimeter mall in Georgia is abysmal. I went there on Sunday then again on Monday, and there was not a single person greeting, helping, or even to ring me out. Do they want a sale or not? As a business owner, the cashier’s inability to close a sale when it’s dangling in front of her is unforgivable. She was too busy running schedules and inventory to bother ringing me out.

    I seriously don’t see Zara investing in its employees, nor have I experienced any of their “fashion knowledge,” because as a guy I really don’t understand women’s fashion, and any help or advice would’ve been appreciated. Even at jewelry shops the staff understands this: men occasionally buy gifts for their women, and we don’t (generally) know anything about women’s trends or fashion.

    In all fairness, the Zara at Lenox mall is a little better, or at least it had a smiling staff and even bothered to ask me if I needed any help, but that was last year and I did end up purchasing a coat.

    J Crew, Anthropologie, Banana Republic, CK, Express, and even GAP has a more helpful staff. At JCrew their staff helped me find the right style, size, and even color for a woman’s winter jacket. I’ll skip Zara entirely and take my business to JCrew from now on.

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