Zara Case Study

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Zara Case Study

Company Name

Zara

Type of Industry

Lifestyle and Retail

Headquarters

Artexio, Spain

Sales/Revenue

17.2 billion USD

Area Served

Worldwide

Number of Stores

2,200 stores in 96 countries

Competition

Mango, Uniqlo and H&M, GAP, Benetton

USP

Perfect combination of high end fashion at affordable price

Target Group

People with high and medium purchasing power who love stay in fashion

Products

Clothing line for women, men and children

Website

www.zara.com

Zara Introduction

Zara has evolved as one of the greatest retail success story on a global basis, dominating the lifestyle and retail sector. A Spanish fast fashion retailer, Zara has been able to sustain its reputation as a global retail giant dealing in clothing, accessories, swimwear, shoes, beauty products, and perfumes. To ascertain the business expansion and multinational reach of the Company, the Zara business case study (Zara case study) becomes an imperative. It has to be taken into account that the grand success of Zara should be ascertained through the Zara case study that is necessary to interpret how proper implementation of the strategy of growth through diversification along with vertical integrations can pave the way for success of a retail company like Zara. A thorough SWOT and PESTLE analysis would be required to be infused in the discussion to ensure the effectiveness of the Zara caste study in a thorough manner.

Zara Swot Analysis

The Strengths, Weakness, Opportunities and Threats (SWOT) analysis of Zara is necessary to justify the importance of the Zara case study.

Strengths

A thorough analysis of the Zara case study is sure to reveal the retail giant’s strengths. The Company is spread extensively across the globe having a strong global presence with more than two thousand stores (Inditex, 2017). Being part of one of the biggest Spanish retail chain, Zara is supported by sufficient marketing and financial strategies. Owing to the marketing agility of Inditex (Zara’s mother company) and by the dint of the global business reach of Zara, the Company has been able to establish its brand name on a global basis. Another strongpoint of Zara is the Company’s capability to successfully implement the concept of Just in Time production (TradeGecko, 2018). Zara has succeeded in keeping a significant amount of its production in-house and in simultaneously ensuring that its own production units reserve around 85 percent of the Company’s capacity for in-season adjustments (TradeGecko, 2018). This strategy has strengthened Zara’s suppleness in the amount, regularity, and variety of those new products that would be launched (TradeGecko, 2018). Zara case study should also reveal that a strong online presence of the Company, both in its own Website and on other commercial platforms, has also contributed to the strengthening of Zara’s market presence globally. Moreover, this presence has also made Zara a sustainable brand name. Zara produce clothes at a competitive price and the production relies on innovative fashion designing strategies. Moreover, in-time production and fast delivery – both have strengthened Zara’s business in a thorough manner. Besides, being able to cater to the needs of a broad array of customer segment should also be considered Zara’s strength.

Weakness

Despite having strengths, Zara is exposed to specific weaknesses. For instance, compared to other clothing and accessory brands, Zara’s marketing and advertising campaigns are not up to the mark. And this has put hindrances in the way of Zara’s obtainment of the competitive advantage. Moreover, a high competitive market in which Zara operates has confined and limited Zara’s market share as well as its high brand switching strategy quite explicitly. Also, higher employee attrition rate is yet another weakness that Zara should overcome.

Opportunities

The Zara case study is also bound to reveal the fact that Zara has the opportunity of exploring more global markets which are still not being saturated by clothing and accessory retail brands. Besides, Zara has the scope and opportunity to utilize the growing e-commerce trend to its benefit by enhancing its online presence and thereby reaching more customer segments in new markets across the globe. The Zara case study also reveals that the Company has the opportunity to collaborate with celebrity designers to add more value to its product and to strengthen its market presence.

Threats

Zara’s business is threatened by intensifying competition offered by high-end fashion merchandisers who are locally and globally positioned. The gradual loss of appeal for Zara’s product within the present customer segment should also be considered a threat for the Company. Moreover, the growing trend of imitating counterfeit Zara products is yet another threat to Zara’s global business.

Zara Pestel Analysis

The Zara case study essentially emphasizes the importance of the political, economic, social, technological, legal, and environmental factors that impact Zara’s business.

Political environment

Political disruptions in the form of instable governments and unfavorable political environments can lead to the decline of a particular business in a particular country or region. Political turmoil also has the potential to disrupt the supply chain, jeopardizing the brand presence. Zara has been able to overcome such political problems by confining its supply chain operations to its home country and to those of its neighboring nations that are ingrained with stable governments.

Economic environment

The economic conditions of a company are important determinants of a business’ prosperity in a particular economy. In terms of business, economy is always a critical factor. To overcome the economic hurdles and to align with the economic needs of the targeted markets, Zara has adopted an affordable pricing strategy. Such strategy has made it easier for Zara to cope with phenomenon like recession and resulting cost cutting on the part of consumers. The affordable pricing strategy has ensured that in times of economic declination, owing to the affordable price of Zara’s products, customers of Zara are not compromising with their brand loyalty by switching over to other brands.

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Social/Socio-Cultural environment

No business can stand divorced from the society and the society’s cultural needs. In this respect, Zara is no exception. Zara case study reveals that to sustain its market reputation and business study, Zara invests a lot in upholding its corporate social responsibility (CSR). Prior to entering a new market, Zara conducts through research on the society and culture that constitute the market, and this gives the Company the advantage of designing and marketing products that align with the targeted market’s socio-cultural needs. In this respect the popularity of Zara’s lungi skirt (on a socio-cultural basis) deserves special mention (Janmohamed, 2018).

Technological environment

The technological environment plays a vital role in determining the success or failure of a business. Those businesses that have succeeded in utilizing technologies to their benefit have survived the market dilemmas in a thorough manner. In this respect the success story of Zara deserves special mention. To utilize technological innovations for gaining the competitive advantage, Zara did partner with Toyota in the past in terms of application of JIT and lean facilities across Zara’s manufacturing operations. Moreover, Zara’s introduction of the RFID system for inventory tracking should also be exemplified as a great effort on Zara’s end to use the technological environment to the Company’s favor.

Legal environment

Legal compliance is the other name of coping with the legal environment of a particular market, and in this respect Zara has showed its efficiency in a thorough manner. The Company has succeeded in enforcing strong copyright laws to remain compliant with the business laws of the countries in which it operates. Moreover, it should be noted that to uphold the principle of legal compliance, Zara has focused thoroughly on implementing programs that ensure living wages for the Company’s labor force on a global basis (Pratap, 2017). Besides, by remaining ethical in its business practice, Zara has been successful in surviving in the diversified legal environments quite explicitly.

Environmental factors

To comply with the economic policies of the governments of those different countries in which Zara operates, Zara’s mother company, Inditex, has strived for making its stores more eco-friendly, contributing to the development of a greener business environment. Moreover, it has been observed that Inditex has invested billions in sustainability targets for making Zara a Company upholding the process of sustainable clothes production, and this investment has also been meant for making Zara stores more energy efficient (Scarano, 2017).

Conclusion

The Zara case study has revealed that the Company has been able to sustain its success and market reputation by utilizing its strengths, understanding its weaknesses, utilizing its opportunities and gauging the threats. Moreover, the Company has succeeded in coping with different socio-economic, legal, and political factors, focusing thoroughly on how to meet the environmental needs.

References

Indetex (2017). Annual Report 2017. Retrieved August 6, 2019, from https://static.inditex.com/annual_report_2017/assets/pdf/memoria_en.pdf

Janmohamed, S. (2018). Zara’s Lungi fashion skirt is the latest example of uncomfortable cultural appropriation. The National. Retrieved August 6, 2019, https://www.thenational.ae/opinion/comment/zara-s-lungi-fashion-skirt-is-the-latest-example-of-uncomfortable-cultural-appropriation-1.700958

Pratap, A. (2017). Zara PESTEL Analysis. Retrieved August 6, 2019, from https://notesmatic.com/2017/03/zara-pestel-analysis/

Scarano, G. (2017). Inditex Invests Over $7.5B in Sustainability Targets. Retrieved August 6, 2019, from https://sourcingjournal.com/topics/sustainability/inditex-invests-5b-sustainability-targets-63534

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