Cases
Strategy Documents
C02/2011
Public Affairs
Zara: Managing chain of
value and driving CSR
with consumers
The fast fashion Spanish company Zara and its Inditex Group has become a
milestone after revolutionizing its sector and has succeeded in becoming one of
the few brands in the country which stands among the best in class in the world
but, is it a responsible brand, has it been a pioneer in the control of the supply
chain or in the establishment of the ecological label?
There are several consumer trends in recent
years which are especially influencing in a special
manner the relationship that companies establish
with their stakeholders, especially with their
consumers and clients:
• Convergence of middle class:
exponential population growth and
narrowing of social classes.
• Low cost/free era: price is a
key competitive factor.
• Changes in behavior: adolescents are
those who do not work yet, although
they are more than 25 or 30 years old.
• Sustainability: different use of natural, human,
social, financial and productive resources.
These trends are fixing FMCG brands behavior in
the market, but especially this last one has forced
companies to review their corporate policies, to
reconsider the way in which they engage with their
suppliers (a common source of problems for global
brands, as in the famous cases of Nike, Nestle or
Cargil) and, above all, with their clients.
Consumers, in the opinion of Jose Luis Nueno,
professor at the Marketing Department of IESE, ask
companies to collaborate in the solution of social
problems which, they consider, governments can
no longer solve and, many of them, do not change
their attitude nor their actions in relation to how
consumer expect them to.
What is Zara’s secret
Zara’s strategy has always been to drive the creation
of value for clients. Today it is one of the most
profitable fashion businesses in the world. The
leading fashion brand of Inditex Group opened
its first store in La Coruna in 1975 and began by
designing and selling dressing gowns to be worn at
home. Today, there are Zara stores in international
cities such as New York, Paris, Tokio or Buenos
Aires with a total of nearly five thousand. National
barriers are not an obstacle for a globalized fashion
culture such as Zara’s but, how did they achieve it?
What is their secret?
Zara is a brand which sells three types of fashion:
basic, fast and seasonal. The model, actually, is based
Document prepared by Corporate Excellence with reference to, among other sources, the intervention of Jose Luis Nueno (professor in
the Marketing Department at IESE) during the sessions of the Executive Education Program “Making Social Responsibility Work: The
Cornerstone of Sustainable Business” organized by the IESE Business School in Barcelona in July 2011.
Managing chain of
value and driving
CSR with consumers:
the case study of Zara
on attracting fashion traffic with copied designs
placed on the market in a very short time, in order
to sell fundamentally, basic and seasonal fashion.
Inditex was one of the first manufacturers in the world
which implemented in integrally the concept of
vertical integration, based on logistics and the whole
of the operation. Most of the production is carried
out in it completely automated factories and the
tailoring is subcontracted to independent workshops,
which allows for great flexibility to increase or reduce
production according to demand.
‘Consumers ask companies
to collaborate in the solution
of social problems which,
they consider, governments
can no longer solve.’
The stores are located in city center streets, are
owned by the company, thereby having a total
control on its image and sales data. The sores are the
best display and advert for Zara, its brand image is
its store. Its information is permanently transmitted
to design teams and the stores regularly receive
consignments of garments in a short space of time,
speeding up the renewal of stock. The majority of
models (about 20,000 a year) are in the market
no more then two weeks, in that way consumers
purchase while stocks last.
The key of Zara’s success is, therefore, to have at
its disposal a system of rapid response, a leading
edge technology, to have great experience at the
point of sale, anticipate the competition, neutralize
the impact of the changes on consumers which
we described at the beginning and, above all, the
systemic nature of its competitive advantage: its
way of operating and working is the advantage
itself, therefore, the most difficult to copy.
From being a company of accessible fashion in the
70s, it became a disintermediated company in the
80s, a quick company in the 90s and in search of
sustainability in 2000. How does it try to achieve it,
considering its model and its presence in so many
countries with such a significant pressure in the
market and on its clients?
Business model Young clients Daily world reports
No advertisement, presence in key placements
Provokes new trends in fashion Little or no stock
Good price/quality relationship Innovation in
products delivery Mobility
Zara’s socially responsible policy
How do you combine a business model based on
selling the maximum amount and producing as
close as possible to the tastes of consumers, to the
sales needs? Doesn’t this provoke overconsumption
Zara: Business Model
Mobility
Innovation
in product
delivery
Young
customers
Global
reports
daily
No
advertising,
presence at
key places
Zara
Good
Quality /
Reasonable
Little
or no
stock
Causes
new trends
in fashion
Source: Knowledge Management, 2010.
in customers, something that does not seem very
responsible? Can its main social contribution be
limited to maintenance of its immediate surrounding,
its community, jobs created and a type of determined
professionals that would not have otherwise existed?
The main milestones in the implementation of CSR
in Inditex are as follows:
• 1995: establishment of an environmentally
friendly policy commitment and creation of
a specific area for the CSR management.
• 1996-1998: first plans for energy efficiency
and cogeneration plant put into operation.
• 1999: plans for emission control,
dumping and waste.
• 2001: internal code of conduct centered on
responsibility towards employees, partners,
suppliers and society, and the first Spanish
company to sign the Global Compact.
• 2002: admission to the Dow Jones
Sustainability Index and GRI adoption.
The company uses, in this sense, a triple system
to manage the sustainability and responsibility of
its business model, following the traceability of its
vertical and horizontal integration model form its
origin to the final presentation to clients, what is
known as the 3 pillars of responsible behavior in the
production chain:
1. The DNA of its offices: tied to its employees
(legality, respect and diversity).
2. The DNA of its factories: tied to its suppliers
and business partners (transparency, legality
and traceability).
3. The DNA of its stores: tied to its clients (quality,
security and health).
Zara has achieved three great milestones in
search for a management model and the most
sustainable business:
1. Design of the business: creation of
value for consumers, for society and
Cases
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Inditex Sustainability Model
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There are three ways to recognize ecological
clothing using environment labels which certify
that the textile products and the treatment used
are nature-friendly:
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Managing chain of
value and driving
CSR with consumers:
the case study of Zara
ial
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Source: Zara, 2010.
especially for the community.
2. Operations: control of suppliers’
responsible policies.
3. Logistics: sustainable mobility plans
following the principles of Kioto.
4. Sales: teaching for a more responsible
way of consumption.
To end this section, one must highlight the task
developed by Inditex in the permanent control of
its supply chain, specified in its Code of Conduct for
Manufacturers and External Workshops, structured
around respect, control or eradication of 10 key points:
1. Forced labor.
2. Child labor.
3. Discrimination.
4. Freedom of association and collective bargaining.
5. Abuse or inhuman treatment.
6. Security and hygiene.
7. Payment of salary.
8. Working hours.
9. Environmental commitment.
10. Regular work.
The green label and care
for the environment
In relation to the consumer and the tractor effect that
it can exert so that the entire supply chain applies
to the maximum extent and with the maximum
attention to detail the sustainable principles that
form part of CSR, Zara has incorporated on the label
of its products the ecological information about its
manufacture, the materials used and what type of
treatments applied, in line with what retail stores
had already carried out also with clothing, but going
further in order to achieve something that until now
seemed impossible: being fashionable without giving
up respect for environment. That is the slogan of
ecological clothing.
1. European Union green ecological label: applied
to all textile products except wall and
apartment coverings.
2. “Made in Green” stamp: certifies that the
products do not contain harmful substances
and that environment and labor rights have
been respected.
3. Oeko-Tex Standard 100 badge: guarantees the
absence of harmful substances in textile products
during their entire transformation process.
Zara, for its part, began to include some years ago in
its collections items that had been made from raw
materials cultivated without pesticides or chemical
agents and entire collections made of sustainable
clothing, with more then 15 million items of clothing
manufactured worldwide in 2006, and it is developing
a project for ecological shoe design, in line with what
Camper, another Spanish company, is also doing.
‘The objective of green
label is to analyze the
lifecycle to understand the
impact from the cultivation
of raw materials and the
design, to the manufacture
and final recycling.’
The objective, ultimately, is to analyze the
entire lifecycle of the product to understand the
environmental impact which Zara has from the
cultivation of raw materials and the design, to the
manufacture and final recycling, looking for an
approach to sustainability centered on the client and
educating new consumers (especially in emerging
markets) to consume in a different manner than until
now in the West.
Conclusions: to integrate CSR
management in the business model
Managing Corporate Social Responsibility entails
integrating social, labor and human rights concerns
within companies management, giving rise to
policies, strategies, procedures and business models
which satisfy consumers, as in Zara’s case, because in
the end CSR has to answer an important question:
what type of society do we want to build and what
role do companies play in it?
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