Product development for various fabrics is made through processes that are market-based and reactive to the actual information in the market. Based on findings of market research, new products are developed in order to respond to the actual need and demands of customers. Fabric designers and commercial designers meet periodically in order to strategize on the most appropriate garments as far as the cost of production is concerned and selling prices established. The work of designers entails sketching the garment style indicating its specifications. Garment cutting is the next step which utilizes high-tech automated facilities.
Cut pieces are distributed through a network of workshops across Spain and Portugal. Workshops employees are provided with simple guidelines on how to sew up different cut pieces into appropriate garments, finishing done and packaging. High-tech distribution facilities ensure a quick transfer of garments from the processing plants to designated markets. Essentially, merchandise is distributed within the shortest time possible from the head office to the market. Based on daily sales numbers, the relevant information is created as a guideline for future design. This real-time information facilitates the work of designers and commercial teams for new garment styles.
Availability of differential production enables standardization of garment designs in accordance with customers’ requirements. Retailers’ product development and design go through an approval process where common definitions about different products are vetted and streamlined in accordance with standardized manufacturing processes. Zara warehouse possesses an elaborate physical inventory of merchandise on various fabric and trims specifications which match with available stock demands. Materials are developed according to product information and inventory data available for quality fabric designs. Distribution management is equally standardized and verified. The state-of-art distribution facilities enable effective distribution of manufactured garments with minimum human intervention.
There is a comprehensive fleet of underground trucks that move merchandise from the point of manufacturing to different designations. There are no cumbersome time-wasting human sorting procedures at Zara. Costs are therefore kept at the lowest minimum. Assembly workshops are equally owned by the company where informal economy workers are employed to carry out finishing and packaging processes. This informal labour is “composed of mothers, grandmothers and teenage girls”. Informal labour helps them to generate additional incomes within their neighbourhoods in small towns and villages. Remuneration for informal labour is quite fulfilling as compared to similar companies in India and China. Informal labour workers receive about $1 300 a month while seamstresses earn about $500 a month, which is about 5-6 times the salary paid to Indian and Chinese factory workers.
The maximum price for garment merchandise sales is therefore realized for Zara. This is also attributed to their cost-cutting measures in marketing and advertising. Zara utilizes prime retail locations for attracting their customers instead of conventional advertising interventions. Marketing costs are therefore reduced to an average of 0.3% of sales, which is far much better than the 3.5 % incurred by competitors. The choice of prime retail locations is, therefore, a better advertising strategy compared to advertising. Essentially, Zara makes use of a strategic fashion design system that manufactures low volumes of designs seasonally. Discounted products are therefore minimized as Inditex clothing serves to match with customers’ demands. Product design and development corresponds to hot designer brands expected by the market.