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Linked-in-distribution (Example of the Spanish Zara)

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The past twenty years has been a disturbing phase for the textile market. China has contributed immensely to thus upheaval. However, other factors such as increase in cost (cost of fabric, production costs, etc) should also be taken into account. Again, ?competition' has surfaced in the market with the birth of new companies and specialized designs.

The present scenario has reflected that 40.6% of the clothing market constitutes towards specialized designs as against 18.7% in 1990. Specialized clothing and the generic clothing industry have been working in tandem especially because of their independent retailers and diverse distribution channels.

In this study, we will focus on the problem of converting a European economy which has close resemblance to the traditional sector. The problem just doesn't end with conversion. The anticipated problems are to ensure that the company becomes a powerful and profitable company at the global level and within the European horizon. Therefore, we will be using the Spanish brand ?Zara' which is a prominent brand in the market.

Initially, we will observe the basic conditions in a market which is in correspondence to supply and demand. Secondly, we will analyze the structure of the market through the competitive strengths which were particularly applied to the Zara brand. Finally, in a precise manner, we will study the behavior of Zara in the market and its strategies.

There are three major clothing markets. The European Union is the largest with a turnover of approximately EUR 135 billion, followed closely by the United States with 100 billion and finally we find China and Japan, which correspond to the younger market but also the most dynamic, with a turnover of 35 billion euros.

Thus, the dynamism of Asian countries reflects important changes in the textile market, the latter being due to:
- fads
- appearance of superstores in city suburbs
- shifts in production to countries with low cost workforce

This last point is important because, according to the, nearly 50% of world production of textiles and clothing happens in China, thanks to an hourly wage cost of $0.4 (against $15.9 for France) and more advanced technology (80% of textile equipment sold worldwide go to China).

We will now discuss, more specifically, the French market.This includes nearly 5,900 companies, 80,000 employees, a turnover of 10 billion euros. In 1999, 1,750 million pieces of clothing were purchased (source: Consoscan). This amounts up to 3462 francs per household.
- The men's clothing expenditures amounted to 56 million francs. The budget of the average male is 2,430 francs, it is lower than that spent by female consumers (3520 francs).
- 20 million households purchase goods on sale or promotion each year.

The distribution of the textile market in France:
We can separate the business of the textile market into three major groups:
- Clothing (77%).
- Technical textiles (15%).
- The home textiles (8%)

Zara chain was founded in 1975 in La Coruna, by Armancio Ortega Gaona. Zara is a textile company that sells clothing for men, women and children. The company installed its first store abroad in 1988, Portugal.

Tags: Linked-in-distribution, Zara logistics, clothing market in France

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