Strategic Management x Agile Thinking: The Case of Fast Fashion Zara’s Agile Development

 I am the founder and former president of the Dynamic Competition Society, having held the position for over five years. After obtaining the CST (Certified Scrum Trainer) qualification in Scrum Alliance, I felt a strong need to focus more on promoting agile methodologies, prompting me to step down as president. The Dynamic Competition Society primarily discusses practical approaches to strategic management, which is also the core subject of my doctoral dissertation. Each year, I invite 12 speakers to share their experiences and insights, all of whom generously provide their knowledge without compensation.

After resigning from my position as president of the Dynamic Competition Society, my successor was Lin Wei-Zhong, a highly enthusiastic and loyal officer, who was the best choice to take over as president. When he invited me back to the Dynamic Competition Society to give a lecture, I accepted the task without hesitation.

Application of Agile Strategy Management: Zara and Fast Fashion

I’ve been thinking about how to present strategic management using a non-IT industry case. While agile implementation is widespread, its application at the strategic level is relatively rare. Zara, as a widely recognized success story in fast fashion, is rarely considered a successful example of strategic management and agility. Therefore, I decided to explore it as a topic. I started by studying Zara from an agile perspective through the lens of Uniqlo and Zara’s Bestselling Strategies.

The Brand Story of Zara and Its Fast Fashion Model

Let’s start with an introduction to Zara. Founded by Amancio Ortega in 1975, Zara initially focused on selling affordable versions of high-end fashion trends. Ortega soon opened more stores across Spain. In the 1980s, he transformed Zara’s design, manufacturing, and distribution processes by leveraging information technology and a team of designers to reduce lead times and respond swiftly to new trends—a concept he termed “fast fashion.”

Zara’s international expansion was also a carefully planned strategy by Amancio Ortega. He not only revolutionized the fashion industry with “fast fashion” but also established Zara stores across Europe and eventually worldwide. By maintaining quick turnaround times and closely monitoring customer preferences, Zara positioned itself as a global fashion leader, offering trendy clothing at reasonable prices with remarkable speed.

Zara reduces costs and increases product turnover by integrating its supply chain, without spending extra on advertising, which allows it to price its products at about half the cost of other brands. It does not offer customized fashion items but focuses on European fashion styles, selling them worldwide. Additionally, Zara’s designers are not famous designers, but rather individuals who can transform customer demands into products that meet the real needs of the customers.

Zara’s Agile Approach

• Agile Approach 1: At Zara’s headquarters, there is an operational point the same size as a retail store, where the displays mirror what is found in the stores. This setup plays an important role in product sampling and simulations before launching.
• Agile Approach 2: Furthermore, Zara’s agile strategy includes a rapid market response product plan, with the time from concept design to global store shelves taking only two weeks to one month, greatly shortening the fashion cycle response time. Additionally, Zara uses air freight instead of sea freight to accelerate logistics, allowing them to quickly respond to the ever-changing demands of the fashion industry.
• Agile Approach 3: Designers at Zara’s headquarters can immediately assess how their products are performing in actual sales environments. This allows them to adjust production plans, ensuring that products can quickly gather customer feedback after being launched, and they can then increase production by three more weeks’ worth.
• Zara’s Agile Logistics: Zara uses a door-to-door logistics approach. Zara’s headquarters are in Spain, and there are no warehouses between stores in different countries. For example, if there are three Zara stores in Taiwan, once the products arrive by air, they are directly distributed to those three stores, eliminating warehousing costs altogether.

Zara’s Agile Strategy

Agile Strategy 1: On the strategic management level, Zara demonstrates its unique business acumen. It not only contrasts sharply with UNIQLO in production strategy but also has clear advantages in pricing strategy. Zara adopts a diversified and small-batch production model, in stark contrast to UNIQLO’s large-scale production. This allows Zara to respond flexibly to market changes, frequently launching new products to quickly meet consumer demand. This strategy gives Zara’s products uniqueness, with a sales cycle of just four weeks. If consumers miss the purchasing window, they may never be able to buy the same item again.

Agile Strategy 2: Zara’s price-leading strategy showcases its highly efficient cost control. With an integrated service from design to production to air freight, Zara can minimize costs to the extreme. Its product prices are much lower than those of other luxury brands, yet the functionality and fashion are equally competitive. Zara’s cost-effectiveness not only comes from its streamlined supply chain but also from its minimal advertising spend. While UNIQLO might spend 3-5% on advertising, Zara’s promotional budget accounts for only 0.3%, significantly lower than its competitors.

Agile Strategy 3: Zara’s founder, Amancio Ortega, was ranked by Forbes magazine as the second richest person in the world in 2015. He believes that businesses should invest in profit rather than advertising, which is why Zara focuses its resources on improving product quality and customer service. This strategy has allowed Zara to maintain high quality while keeping its prices competitive.

How Zara Uses Agile to Mitigate Risks

Zara’s market strategy also includes high-frequency store and product updates, which significantly increase customer foot traffic compared to its competitors. Zara’s strongest form of advertising is its physical stores. Research shows that, on average, customers visit competitor stores three times a year, but Zara’s store visit rate is as high as 17 times a year. This efficient product update strategy, which quickly adjusts product lines based on market feedback, is one of the key highlights of Zara’s agile strategy.

Agile Risk Mitigation 2: Zara also implements a system similar to that of a Product Owner (PO). When a demand arises from stores around the world, it doesn’t go directly to the 350 designers. Instead, the request goes to the PO, who then communicates the demand to all the designers. This system ensures an immediate response between demand and supply, ensuring that each product precisely meets market needs.

Agile Risk Mitigation 3: Finally, Zara’s rapid design cycle and product lifecycle—from concept to store—emphasize the core of agile strategy: speed and efficiency. This model not only allows Zara to respond quickly to market changes but also significantly reduces inventory pressure, maximizing operational efficiency. Zara’s success is not just a victory in the fashion industry, but also a triumph of strategic management and agile practices.

Conclusion

The conclusion has three points:

1. Without agility, there would be no world-leading fast fashion brand Zara or Amancio Ortega, the second richest person in the world.
2. Zara represents a different mindset in manufacturing: if something is not enough, they make more, and they only sell the products customers want.
3. The design cycle is a typical agile approach. With feedback obtained in just 15 to 30 days after product launch, this rapid response is Zara’s most critical agile thinking.

In the movie Kung Fu Hustle, there is a villain called the “Fire Cloud Evil God,” who points a gun at his own head and catches the bullet with his other hand, then says, “In the world of martial arts, nothing is unbreakable, only speed is invincible.” This is the perfect metaphor for Zara’s agile, fast-paced business model.

At this sharing session, everyone showed great interest in Zara’s agile practices, and I personally gained a tremendous sense of fulfillment and accomplishment. Below are the key takeaways from the audience after listening to the lecture:

• Helen: Using agile allows Zara to strategically reduce traditional retail costs such as physical stores, staff, and inventory, while also responding more quickly to customer feedback.
• Chao-Ming FU: 1. Rapidly responding to the market and quickly satisfying consumers’ need for novelty. 2. Using RFID to track inventory, ensuring quick replenishment of best-selling products. 3. Synchronizing design and procurement to achieve high inventory turnover. 4. Zara’s digital transformation, with a focus on online sales and improving customer experience. 5. Commitment to sustainable materials in response to environmental impact.
• Lin O-Hua: The key to agile thinking is stimulating team creativity, combining project management and lean management to quickly meet customer needs.
• Yvonne Hsuu: 1. Hub-and-spoke system + logistics strategy. 2. Fashion + trends (online stores). 3. Customer demand and quality-driven, saving on advertising costs. 4. Hiring many small designers to listen to customer voices.
• Dai O-Zhou: Approaching customers closely, designing and producing with customer needs at the forefront.
• Lin O-Qiang: I have heard about Zara’s case before, but today, through the teacher’s explanation from an agile perspective, it was truly a different experience. It has made me even more interested in agile.
• Ellen Lin: The application of agile/lean in fashion, thank you for the sharing, teacher.
• Lin O-Rong: I was just preparing for my pre-course assignment for CSM, and I absorbed the essence of lean from the teacher’s sharing. Thank you so much! I’m curious about how a zero-inventory supply chain can agilely supply first-line stores for timely sales. Zara’s satellite suppliers must also be agile. I hope to hear more about agile supply chains in the future.
• Li O-Xun: By combining agile with fashion, creating a two-week purchase window generates curiosity and a sense of novelty among consumers.
• He O-Lu: Quickly collecting information, producing, and seeing customer feedback, the results are visible in the shortest time. That’s truly agile.
• Shi O-Xian: Zara is a great example of combining strategic planning with agile management in practical operations.
• Chen O-Ling: The efficiency of agile, quick feedback.
• Miro: Never thought about it, how many clothes to pick…