OverviewThe Spanish clothing company Inditex, owner of the Zara clothing store chain, has one of the most unique and successful operating strategies in the retail industry. While their techniques are somewhat unorthodox, their consistent focus on capital investments, supply chain synchronicity, and merchandise design has given them a significant edge over the competition. Not only has Zara reported annual sales and net profit growth of 20% since 2001, but it also claims to have grossed an impressive 85% of the full ticket price of its clothing items. Although it would be counterproductive for Target to try to emulate many of Zara's more intensive business practices, taking a closer look at some of the specific operational techniques used by Zara can provide tremendous insight into ways to improve Target Corporation's profitability. Supply Chain Since its founding, Zara has adopted a strategy that has given it unrivaled control over its supply chain. The company's founder, Amancio Ortega, once said that "you have to have five fingers touching the factory and five fingers touching the customer." This is exactly what Zara does today. They own more than 50% of their manufacturing facilities and produce nearly all non-commodity products in-house.(2) This strategy allows them to have a great deal of control over production and transportation schedules and gives them the freedom to manage production capacities . Although the capital investment would have to be quite large, the Target company could gain the same supply chain benefits that Zara sees if it were to own some of the manufacturing facilities used to produce its clothing. Using JIT SystemsZara also uses sophisticated JIT systems that allow them to feel......middle of the paper......success. Target should also continually reevaluate its office layout and communication channels because these aspects have proven to be key factors in Zara's design success. Thinking Outside the Box Zara's merchandising and replenishment methods are what truly set them apart from the competition. Zara frequently changes clothing styles in its stores, causing customers to purchase more merchandise due to the exclusivity associated with temporary styles. Additionally, they keep a limited number of items on display even though their stores are spacious, in an effort to further attract their customers.(2) Target may not be able to mimic this strategy exactly, but ideas like this are key to gain a competitive advantage. Target Corporation can still try to think more like Zara, resisting management fads and ever-changing industry practices.