Zara & Big Data: A 5-Minute Case Study

By Adam Nathan — July 11, 2017

Zara is the envy of its competitors. The company spends virtually nothing on advertising. Their products rarely go on sale, and their typical customer visits an astonishing 17 times a year.

While their competitors’ products are still making their way in container ships across the world, Zara is taking a new product, from sketches to the rack, in two to three weeks. It is a big data business model that briefly made its founder the richest man in the world.

How does big data play into this stunning achievement, and how is this mega fast-fashion retailer able to move new looks from catwalk inspirations into their customers hands in such a blindingly short time?

“Mind-spinningly supersonic” — The New York Times

What are Zara’s critical big data approaches?

• Data is captured from POS terminals, e-commerce sales, customer surveys, PDA devices and RFID tags on the clothing. Store personnel are trained to capture customer preferences in their PDAs on ever detail: buttons, zippers, color, cut and more. They enter and upload the feedback nightly and regional managers isolate their region’s preferences and tastes.
• The Wall Street Journal reports that “Zara has built its business on RFID tags.” This gives Zara the ability to manage inventory cheaply at the same time it allows the company to observe the frequency of garments moving in and out of dressing rooms.
• Zara gathers data from Instagram, surveys, and online social media, creating a central nervous system of their customers’ fashion sensibility in each and every market.
• Then, all the data above is compiled in the Arteixo, Spain data center (see picture below.) 24 hours a day, analysts work, processing data to drive new design releases, shipping to stores twice a week. Zara generate weekly predictions for every single SKU they sell, offering their designs in tiny batches that run out — but rarely go on sale. Zara knows their customer inside out, and when they get it wrong, they can adapt faster than their competitors.

“They don’t really have seasons in the way a normal fashion retailer would.” — Richard Hyman, independent analyst

So what are the questions you should be asking?

• Do you have a Zara level of understanding of your own customer’s needs and desires? What would it take to tap into it?
• Are you able to meet demand for your customer’s needs more quickly than your competitors? If your competitors doubled or tripled their speed, what would happen to your business?
• Zara pays more to produce their garments, but gets better margins on them. What tradeoffs exist between higher manufacturing costs and a more responsive supply chain in your environment?

Deeper Dive

• Zara’s Big Data Supply Chain
• Zara, A Successful Big Data Application
• Fast Fashion Case Study — Slide Share

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Thanks for taking the time to read this 5-Minute Big Data Case Study! I’m delighted to engage with readers, clients and peers as we explore how to leverage advanced analytics to drive ROI and revolutionize our business models.

As a long-time entrepreneur and CEO in business intelligence and data warehousing, I understand that creating value from information is never a given, that the likelihood of failure is high, and that a well-developed data strategy can be game-changing. Please feel free to reach out directly, and if you would like to read my regular blog, please follow me on LinkedIn or Twitter.