Zara is the flagship store of the Inditex group, the world'slargest clothing retailer. The company is an excellent example ofhow putting the customer in control, having collaboration infusedinto the culture, building seamless communication into theorganization, using “Big Data” in day to day operations andimplementing very effective processes has built one of the world'smost successful companies.

The New York Times has published a feature on Zara. Wehave extracted some key business points for this summary.

Zara is the oldest and biggest brand of Inditex, which is basedin the economically depressed region of Galicia, Spain. Inditexessentially pioneered “fast fashion,” in which the latest fashionsare imitated and their cheaper versions are quickly distributedinto stores. The results are trendy, well-made and inexpensiveproducts that are sold in high end-looking stores. The company hasapproximately 5,900 stores in 85 countries. It manufactures 840million garments a year. Its founder, Amancio Ortega Gaona, is nowconsidered the world's third-richest person.

Jesus Echevarria, Zara's communications director, aptlydescribes putting the customer in control, stating, “Wemust have a dialogue with the customers and learn from them.” Thisimportant lesson can be applied to credit unions to bring memberfocus to new heights as well.

Zara focuses on understanding the items that its customersactually want. This differs from the traditional method in fashionof predicting seasonal trends and then promoting the line throughfashion shows, media and magazines. Inditex does not advertise.Instead the company invests heavily in the beauty, historicalappeal and location of its shops.

Zara's strategy is to locate their stores as close to thehighest-end luxury stores as possible. The customer associates thelocation with the quality product, in addition to shoppingconvenience and an enhanced experience.

The company monitors customer reactions carefully. It notes whatthey buy and don't buy. It records feedback that customers give tothe staff. This information is reported to headquarters daily. Itis transmitted to a vast team of in-house designers, who quicklydevelop new designs. The factories then manufacture clothes basedon these designs.

If Zara stores in London, Tokyo and São Paulo all have customersresponding enthusiastically to a specific item, the company canvery quickly deliver more of these. Moreover, customer feedbackabout recommended changes to a product can be accommodated aswell.

Customer demand drives store deliveries. Often specific itemsare adjusted according to customer feedback. Zara generally shipsonly a limited number of dresses, shirts or jackets in each styleto a store about twice a week. In doing so, the company keeps itsstock fresh with very little leftover stock.

Merchandise moves very quickly and customers know that they willbe buying something nearly unique. Furthermore, Zara customersrealize that since the fashions turnover and change quickly, theymust buy it now or never; because the prices are so low, they buyit now.

Zara's approach has been innovative and disruptive to theindustry. Traditional ready-to-wear fashion companies had stockedstores in spring and fall, with smaller shipments throughout theyear. Because of Zara, about half of the high-end fashioncompanies, like Prada and Louis Vuitton, now make four to sixcollections instead of two each year.

Zara succeeds in ways that traditional fashion firms cannot.Traditional firms seek cheap labor, sending their designs toindependent factories in countries like China and India. Inditexmanufactures most of its items in factories located in more-costlylabor markets.

The trendiest items are made closest to home. This allows theentire production process to take about two to three weeks. Greaterflexibility, smaller inventory cost and faster turnaround speedoffset higher labor costs.

Zara uses the voluminous data it collects to gain insights intothe global market. The managers collect information from China orChile to learn what is selling. They might observe that what isfashionable in Istanbul may also be so in New York. They meet withthe designers to decide whether there is a true trend. Inditextakes the fashion pulse of the world and responds accordingly withcustomer focused products.

By taking customer focus to new heights, Inditex grew during thefinancial crisis. In the past five years, its annual sales havegrown to 13.8 billion Euros from 9.4 billion Euros. Its profit hasrisen to about 2 billion Euros a year. Zara's customer-focusedbusiness strategy has delivered impressive results and createdcustomer loyalty. Credit unions can learn many lessons on howlaser-sharp member focus creates enormous results.

Stuart R. Levine is chairman/CEO of Stuart Levine &Associates. He can be reached at (516) 465-0800 or stuartlevine.com.