Introduction: A Spanish Retailer base company founded in 1975 by Amancio Ortego. Zara is main brand of Inditex group which is world’s largest apparel retailer. Initially named the store Zorba after the film Zorba the Greek, but after learning there was a bar with same name, Ortego renamed it as Zara. In 1988 company start its international expansion, and in 2010 Zara launch its first online store.
Outsourcing: Company start its international expansion in 1988 through Porto and Portugal.
In 1990 it entered in USA and Belgium. Company start its expansion in Asia in 2010 through India. In the same year first online boutique is launched by Zara. Website begin in Portugal, Spain, Germany and Italy. Online stores are available in almost every region now. Zara’s products are supplied based on consumer trends.
After products are designed, they take ten to fifteen days to reach the stores. All the clothing is processed through the distribution center in Spain. New items are inspected, sorted, tagged, and loaded into trucks. In most cases, the clothing is delivered within 48 hours.
Company’s relationship with customers is very good. They now the demand of customer which help them in stocktaking by 80%. Stock management is very good, that allow to fulfill customers online orders both from the store and warehouse, helping to shorten delivery time and enhance customers need. The transportation and distribution of products is undertaken entirely by external contractors, but they still play an active role in trying to reduce the greenhouse gas (GHG) emissions involved Company work with the suppliers and manufacturers across 53 different countries to source their products. Headquarters are present in Spain, Portugal, Turkey and Morocco.
While some competitors outsource all the products to Asia. Clothes with a longer shelf life, such as basic T-shirts, are outsourced to low-cost suppliers, mainly in Asia. They are committed to supporting more sustainable cotton production and their wood-based fibers never come from primary or high ecologically relevant forests. Protection of human rights and the promotion of international labor rights, health and safety, and environmental aspects is main Code of Conduct of the company.
The Code apply not only to all the suppliers but all the facilities all the way down t the last production unit. They Key factor in their outsourcing is that the suppliers and manufacturers are present in 53 different countries. So raw material come to the nearest possible manufacturer and then after manufacturing the products are distributed in all over the world easily. These countries send the final products to the nearest countries. Online stores are present in every region now. Zara due to its vertical integration have more rapid product turnover; Zara can design a product, and have it sold in stores a month later.
H;M: Hennes and Mauritz is multinational Swedish retailer base company founded in 1947 by Erling Persson. It is second largest global clothing retailer company, just behind Spanish Inditex (Zara). Like Zara H ; M also have significant online presence with online shopping available in 33 different countries. Hennes is used in Swedish for hers, that simply shows that their focus is on women clothing.
It has a wide range of products, beside clothing H;M also focus on home furnishings. Now they started H;M homes as well. Outsourcing: Company start its international expansion in 1964 through Norway. A unique fact when analyzing the outsourcing habits of H;M in Bangladesh is that they do not own any of the factories in which production of H;M merchandise takes place.
Instead, roughly 900 independent suppliers deliver their products. H;M is the second largest buyer in Bangladesh as a single buyer. H;M has outsourced their most of the components of their production to more experienced suppliers such as Liz Fashion Industry Limited a gold rated manufacturing supplier for H;M in Bangladesh that can reduce costs with lower labor costs, lower costs of input, lower cost of energy and easier access to customers because of legal and trade barriers. First online store was introduced in 1998 by H;M. Now they have online stores in 33 different countries.
The key factor in their outsourcing is that their focus is on women clothing. They got 900 suppliers, due to which they have large number of varieties in their clothing. Their lead time is less than Zara but better than rest of all competitor’s. They have 900 suppliers so there is no shortage of raw material. From Bangladesh they outsource their products in Asia.
Difference between Zara and H&M: Zara’s global average of 17 visits per customer per year is considerably higher than the three visits to its competitors namely H;M, GAP, Banana Republic and Forever 21. Zara is a vertically integrated retailer. The company set its own price range while on the other hand H;M vary the price from brand to brand. H;M doesn’t own any factory, instead partners with 900 suppliers worldwide. H&M is a horizontally integrated retailer. Zara’s lead time is 10-15 days while H;M’s lead time is 20 days.
According to a report in 2014 brand value of H&M is more than Zara. H&M focus on womenswear while Zara covers all three categories. H&M have bigger online offering with currently 2000 more options than Zara. Average price point at H&M is $21.4 and at Zara is $48. So, we can say H&M is less expensive.
746760800862000H&M face 62% decrease in profit in first quarter of 2018, because of too much stock of clothing, about $4 billion worth of unsold cloths. While their competitor Zara increase their profit by 7% in the same tenure.
