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Analysis

Spotlight on Zara: Lessons from a Brand that Spends Next to Nothing on Ads

Fast-fashion giant Zara is worth over $13 billion - despite spending less than 0.5% of its annual revenue on advertising. Learn why

Matt Duczeminski
November 05 2018

Founded in 1975 by Amancio Ortega and Rosalía Mera, Zara is one of the largest fashion companies in the world – clocking in at #24 on Interbrand’s list of Best Global Brands of 2017 (for reference, IKEA ranked 25th here). In terms of monetary value, Forbes lists Zara’s worth over $13 billion as of May 2018.

That’s not bad for any company – let alone one that spends a mere 0.3% of its revenues on advertising.

While this is certainly a huge accomplishment, it’s worth pointing out that “advertising” is not synonymous with “marketing.” Yes, Zara spends next to nothing on advertising via the traditional channels you’d expect content, but the company does do its fair share of marketing – albeit in its own unique way.

In this article, we’re going to discuss Zara’s unique approach to marketing its brand, as well as what your company can learn from the fast-fashion giant.

Physical Presence as a Marketing Channel

The items Zara sells are definitely stylish and high in quality, but the brand doesn’t exactly target high-end shoppers who have a seemingly infinite amount of money to spend.

The people at Zara do, however, intentionally aim to generate a presence in the areas these high-end shoppers are known to hang out. In fact, the company typically increases its expenditures on physical locations by 6-8% each year; in 2011, it bought some prime real estate on Fifth Avenue for a record $324 million.

As marketing consultant Masoud Golsorkhi explains, “The retail strategy for luxury brands is to try to keep as far away from the likes of Zara. Zara’s strategy is to get as close to them as possible.”

(Source)

From a simple numbers’ game perspective, placing the store in the middle of a high-traffic area means Zara is bound to get eyes on its brand. And not only that, a decent percentage of the individuals traversing the area are going to want to at least take a quick look at what the store has to offer.

Those who end up taking a walk around the store – whether they be high-end shoppers expecting luxury prices, or “everyday” consumers looking for a bargain – are going to be hit with a sort of “reverse sticker shock,” with products offered at a fraction of the price that similar items are housed right next door.

There are two main lessons to take away, here:

As it stands, Zara has over 2,000 stores worldwide, and offers its products on nearly 40 online marketplaces. That said, the more places your brand is present, the more likely you are to generate brand awareness and recognition. Think McDonald’s: You could probably go your entire life without seeing another commercial for the popular fast-food chain and would still immediately recognize those golden arches gleaming in the distance.

However, it’s not simply about being present somewhere; it’s about being present where your target customers are. In Zara’s case, this means high-traffic metropolitan areas (and on certain social media platforms, which we’ll discuss later). The lesson here is to know where your customers typically hang out, and figure out how your brand can fit into the location.

Exclusivity, Urgency, and Scarcity

Instilling a sense of urgency and scarcity among consumers is a pretty common tactic used by brands from all different industries. Many – if not most – companies artificially create urgency and scarcity by intentionally withholding products from their brick-and-mortar and online storefronts. A prime example being how Disney only offers certain titles from its movie library for specific periods of time.

On the other hand, there truly is a limited supply of the products Zara offers, due to the nature of how the company operates. Unlike traditional fashion retailers, Zara limits the number of products it manufactures (knowing that what’s currently in style will soon be yesterday’s news).

Along with this, while most other fashion brands release new products on a seasonal (and sometimes only bi-annual) basis, Zara updates its inventory on an almost constant basis. We’ll get into how the company is able to do this in the next section. Basically, when a given product sells out, it’s gone until the company decides to manufacture more – which may or may not be anytime soon.

With this sense of scarcity comes a sense of urgency. Because Zara’s customers know that a certain item will only be around for as long as it takes to sell out, they know they either need to buy it now, or risk never seeing it on shelves again.

As Zara’s customers are aware of the brand’s mode of operation, they’re always on the lookout for new products the company has to offer and consistently check in with the company on an ongoing basis to ensure they don’t miss out on something awesome.

In comparison, most traditional fashion retailers offer the same products for three to six months at a time – meaning if customers don’t see something they like in June, they won’t have to check back in with the store until September or October for an updated list of products.

Finally, this sense of scarcity also breeds a sense of exclusivity among its customers – and a sense of FOMO among outsiders.

(Source)

Those who are able to snatch up the latest trending products from Zara are going to feel like part of the “in” crowd – which will motivate them to continue shopping at Zara in order to keep up with the rest of the crew. For those who miss out on a certain trend, there’ll be a sense of “wanting what they can’t have,” simply because they can’t have it. Even if they’ve never shopped at Zara before, these interested individuals will likely walk into their nearest Zara specifically with the intention of making a purchase.

Circling back to Zara’s use of location as a marketing tactic, it’s also worth noting that the brand’s seeming ubiquitousness, when coupled with this sense of scarcity, urgency, and exclusivity, makes passersby even more likely to check out what their nearest storefront has to offer.

Leveraging Social Proof

Zara relies heavily on social proof and word-of-mouth to generate visibility for its brand. Those who manage to scoop up a sought-after product from Zara’s shelves before it disappears are going to feel like they’re part of an exclusive club of sorts. Generally speaking, these individuals are probably going to want to show off their exclusive duds to their friends and family members – both in person and via social media.

The above Instagram post wasn’t created by Zara, or by a contracted influencer, but a fan showing off her new wardrobe. This individual – and many others like her – took it upon herself to create the post – and also to tag Zara in it. In turn, anyone who follows this woman on Instagram will be exposed to Zara as a fashion brand – without the company having to do anything aside from creating an attractive, high-quality product.

Now, in addition to generating this free publicity without lifting a finger, Zara also focuses on soliciting user-generated content.

Still, the company does so by merely presenting a piece of content or campaign, or championing a cause, and letting its customers take over. In 2016, Zara created the hashtag “#joinlife” to coincide with its Join Life Sustainable Collection, a line of clothing made from eco-friendly materials. While the brand itself used the hashtag in its own social media posts, this enabled its followers to take the reins and share their own hashtagged content:

When you take into account that Zara has over 27 million followers on Instagram alone, it’s safe to assume that pretty much any sort of social media-focused campaign the brand comes up with will quickly take on a life of its own. Need proof that Zara is a master at facilitating the creation of UGC? The brand earned nearly $60m in earned media value within the first five months of 2018 alone.

Zara partners with influencers to create content and generate exposure among new audiences, however, the earned media value of these paid collaborations typically amount to a mere 1% of the company’s total social media EMV. In other words, the vast majority of value produced by Zara’s social media presence came about organically.

Again, this “hands-off” success is facilitated by the fact that Zara offers quality products in scarce quantities, which incentivizes its fan base to “show off” whenever they get their hands on the newest style of clothing. To reiterate, Zara’s business model, once again, proves to be its strongest marketing tactic.

Getting Consumers Involved in the Creative Process

As we alluded to earlier, most traditional clothing and fashion companies develop and release new seasonal collections right before the season begins – essentially telling their customers “what’s in style this year,” whether they like it or not.

Zara takes a more reactive approach to developing its products. Rather than attempting to be a trendsetter, Zara is more of a trend-finder: Their team looks into what’s hot (and what’s not) at any given moment in time, then works quickly to create clothing that fits the current style of the time.

It’s not so much that simply Zara copies the success of other clothing and fashion brands (although the company admits that is a part of its operational methods). The retailer intentionally focuses on listening and paying attention to its customers – and works diligently to provide the products their desires as quickly as humanly possible.

Zara collects this data in several ways, such as:

  • Analyzing browsing habits and search terms used by its online customers
  • Monitoring the fashion choices of its customers as they browse brick-and-mortar stores
  • Actively engaging with customers to generate meaningful feedback to be acted upon

Zara’s ability to truly attend to its customers’ needs is due in large part to its direct-to-consumer mode of operations. In contrast to most retail stores (in any industry), Zara’s “on-the-ground” employees are trained to take note of customers’ comments, feedback, and engagement events, and report their findings to Zara’s corporate teams on an ongoing basis. In turn, the company’s executives can make quick decisions regarding the next steps to take in terms of manufacturing and disbursement of new items.

Once again, Zara’s method of operation becomes a marketing tactic in itself. Because the brands customers know their suggestions are not only heard, but are appreciated and acted upon, they inherently feel a sense of empowerment. In turn, they can trust that Zara will continue to provide for them long into the future.

A Quick Note to Wrap Up On

Truth be told, Zara does to its fair share of marketing. However, since the company’s tactics don’t fall into what’s typically considered “marketing” in the traditional sense, its initiatives often fly under the radar, unnoticed as “marketing” to the general public.

Yes, Zara doesn’t go the traditional route of purchasing billboards, magazine ads, and other such airspace, which decreases some eyeballs, but customers never feel like they’re being marketed to when they are exposed to the brand. Customers experience the brand for what it is, a fast-fashion empire that enables customers to showcase the styles in their own unique way.

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Matt Duczeminski

Matt is a professional writer specializing in helping entrepreneurs improve relationships with their customers. He lives in Philadelphia with his wife, Sarah, and he'd probably get a lot more work done if his cat would stop bothering him.

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