Swot Zara

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The document discusses a SWOT analysis of the fashion retailer Zara and its parent company Inditex. It analyzes Zara's business strategy, strengths, and opportunities/threats in the global fashion market.

Zara follows a vertical integration business model where it controls all steps of the production process from design to distribution. This allows it to quickly respond to fashion trends and keep prices low.

Zara's strengths include its vertical integration model, rapid production cycles, international expansion, and ability to target young fashion-conscious customers.

SWOT

ANALYSIS
ZARA’S
COMPANY

NARDO Aurore
MAGDICH Salima
DUHEIL Emilie
TURQUIN Mélanie
CASSOU-LALANNE Noémie
TABLE OF CONTENTS

INTRODUCTION...............................................................................1

I- ZOOM ON ZARA’S COMPANY...............................................................2

II- ZARA IN FRONT OF HIS ENVIRONMENT...........................................3

III- ANALYSE INTERN OF ZARA.................................................................4

CONCLUSION....................................................................................7

REFERENCES-SOURCES................................................................8

APPENDICES.....................................................................................9
INTRODUCTION

Within the framework of the courses on Segmentation and Positioning, we confided us the
task to make an analysis SWOT.

The analysis SWOT (Strengths-Weaknesses - Opportunities-Threats) is a tool of strategic


analysis. It combines the study of the strengths and the weaknesses of an organization, a
territory, a sector, etc. with that of the opportunities and the threats of its environment, to help
in the definition of a strategy of development.

The purpose of the analysis is to take into account in the strategy, at once the internal and
external factors, by maximizing the potential of the strengths and the opportunities and by
minimizing the effects of the weaknesses and the threats.

For this analysis we chose the ZARA Company. ZARA is one of the biggest distributors of
garment to the world. We find her stores in more than 400 cities in the world and always place
in places strategic as the trade streets of the city center. ZARA proposes clothes for the
children, the women and the men. ZARA has just developed a new branch of store: ZARA
HOME, who proposes domestic products (of the linen, the objects of decoration, frames…)

We can thus wonder: What is the hand challenge that ZARA should deal with to maintain
its position on the clothes' market?
To answer it in first time we shall study the ZARA Company. Secondly we shall analyze the
environment of ZARA Company and at the end we shall make an internal diagnosis on
ZARA.
I- ZOOM ON ZARA’S COMPANY

First, it is necessary to know that Zara is a member of the group Inditex. Inditex it’s a big group and is
one of the world’s largest fashion retailers. In fact, in the group there are eight store formats, Zara, Pull
& Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe, which gathers 5.221
stores in 78 countries.

The group’s success and the unique business model based on innovation and flexibility. Inditex today
it’s the biggest retailers in the world. It proposes different type or style of garment. The Inditex group
is really creative they propose quality design and rapid turnaround to adjust to changing market
demands. It has allowed the group to expand internationally.

The first shop of the group was Zara was created by Amancio Ortega. Zara opened in 1975 in A
Coruña in Spain. The group began doing business in this same city and is still home its headquarters.

Zara is a distributor of products of clothing. It proposes a very wide range of choices: collections for
the woman, the man and the child (Appendix 1). However, Zara proposes a cosmetics, perfumes and
domestic products (Appendix 2).

We can see it in more than 400 cities in Europe, the Americas Asia and Africa. (Appendix 3)

Since the beginning of its creation, Zara remained faithful at the idea of departure of his founder who
is to make accessible luxury. So, she has to democratize the luxury in manufacturing of the mass
products strongly indexed to the evolution of the fashion.

Thanks to this policy, Zara is an industry capable today of proposing products trends and affordable
prices.

The objective is that the customers who open in stores have more chance to go out with a purchase.

Zara has an innovative management to differ from his competitors: the vertical integration. The
vertical integration is a strategy which allows at insuring the activities of the company which were
previously managed by outside organizations
II- ZARA IN FRONT OF HIS ENVIRONMENT

a- Opportunities

 Consumers’ behaviour :
 Interest in good quality products
 Want new fashion clothes as soon as possible
 Prefer buy clothes in big corporate company instead of independent company
 Technological :
 Reduce the costs production by knowing the market and the expectation of
consumers.
 Having a strategy of brand integration to be competitive
 Increase of men’s consumption in clothes. They want to be well dressed and change more
often. Like the women behaviour.
 Development of internet which permit to touch more people by the new fashion and buying
clothes on-line. To be more close with consumers.

b- Threats: A hypercompetitive sector

The market of clothes is strongly competitive.

 On one hand, we have a competition on the basic products from the regions of low-cost
production.
 On the other hand, a competition companies of world of up-market products such as H*M,
GAP and Mango.
 Concerning products from the low-cost regions, Zara is not directly competed on this point.
Indeed, contrary to these companies, she proposes an offer more elaborated with products of
better qualities. Consequently, his direct competition is rather the one of company as H*M.
 It is a very wild competition because every these brands are the new generation of stores.
Indeed, their strategies products are very similar . All propose fashionable products in
affordable prices.
 So we have on a very profitable market but with companies which are very concentrated on
the same segment.
 Internet is very present in our society and consumers use more and more internet to make on-
line purchases. It can be a threat for Zara because she has an important delay on Web contrary
to her competitors.

H&M, Gap, and Mango have a good fame and very known and are appreciated by the category of
customers of Zara. They propose products practically identical to those of Zara. However they propose
more up-market products. It is a threat for Zara.

She must be vigilant the competition proposing basic products from the regions of low-cost
production. Even if she proposes products of better quality

Zara is on a very competed market and proposes similar strategies to his competitors. It is a threat for
her. But Zara differs because she renews very regularly her collections and is present in strategic
places all over the world.
She must be reactive and catch up his technological delay because the society buys more and more on
the Internet.

III- ANALYSE INTERN OF ZARA

STRENGTH WEAKNESSES
Development of the internationalization Manufacturing costs more expensive than 15 to
(branches and) franchises 20%, cost of important distribution related to the
frequency of supply
Standardization of the modes through the planet, ZARA is more expensive than its competitors
so standardization of the application such as H & M and ETAM, but this gap is not as
experienced by its consumers

Distribution network integrate = 80% of the 0.35% of the CA dedicated to communication


market
Today presence of ZARA in 73 countries with Missing ZARA of different mass media
1361 shops or 66% of the CA's Group (Contrary to H & M or Benetton)
Inditex = creation, production, Logistics and
distribution. (large) (flexibility and minimum
stock)
Orientation to client = shops design, comfortable
frames
Great ability to adapt to the change of model
Paternalistic spirit with communication internal
development (low turnover and) cost of
recruitment and training
Diversification of activity with creation Zara
Home in 2003
ZARA is located in the city centre in a
commercial or pedestrian area
ZARA opted for marketing of the rarity: common
renewal of the collection, production in small
quantities What distinguishes it from competitors

The record of the company is rather impressive. Since 2000, Inditex (consisting of signs Zara,
Massimo Dutti, Pull and Bear, Stradivarius, Bershka, Oysho) has tripled its sales and profits, the
number of stores has doubled. Inditex has managed to go so far in so little time with a management
and innovative logistics techniques, which has even become a subject of study in business schools
around the world. (1)

(1) For example, a Zara Fast Fashion Workshop was conducted on 21 October 2005, at the Fashion
Institute of Technology in New York.

The group manages 3 900 stores in 70 countries. These last months, development were such that Zara
has exceeded its main competitor in the US to impose as the largest textile retailer in the world. The
difference is certainly small but not negligible. The US market had long resisted and is still somewhat
resistant to Zara. Three years earlier, Zara became the largest European retailer, exceeding the deemed
unbeatable H & M.

 The concept store:

"Zara was a fashion imitator." "It focused its attention on understanding the fashion items that its
customers wanted and then delivering them, rather than on promoting predicted season's trends via
fashion shows and similar channels of influence, which the fashion industry traditionally used." 1

 Three golden rules:


1- Paste to the trends from the catwalks: Zara talent is manifested in their donation to observe
relevant way to follow trends. Therefore, what is proposed is in complete accord with the
wishes of the clients themselves conditioned by the fashion.
2- Raise the envy of clients: Zara made the last musts of the large houses of affordable
clothes by the largest number fashion. Thus, ZARA man, often found shirts that mimic the
last season of DIOR. A few months later, the style of these "trend" clothes are found
everywhere, including H & Mr. Zara is however each time a precursor.
3- Be continuously in phase with the desires of the customer: 200 stylists receive indications
of the shops on what sells or not and adapt their products almost simultaneously with the
purchase behaviors. They are also kept informed of the status of the sales of creators and
the houses which they inspired, to determine the potential of this or that piece.

 Strategy "Design on demand"

The success of the models is the fact that the sign is able to adapt the offer to what want to customers
in record time.

Inditex, the time is the main factor to be considered, even more than the cost of production.

The company can draw new products and send to the stores in four to five weeks; existing articles can
be modified in two weeks. (against an average of six months for the rest of the fashion industry). Each
year, approximately 11000 different articles are produced against 2 000 and 4 000 articles for principal
competitors.

If an article does not properly sells from the first week, it is withdrawn from sale and a new article is
created. No article remains of more than four weeks in the store.

The Group has 49% of its collections in Spain, the Portugal and the Morocco. For this production,
Inditex has 11 plants near its headquarters.

With 400,000 m2 on two floors, the Arteixo logistical centre is the largest platform of the group,
before Madrid (160,000 m2) and Zaragoza (120,000 m2). The organization is directed to the
reactivity: Spanish is able to deliver in 24 hours for Europe and 48 for America and Asia.

The flexibility and speed are the key words of the Zara concept.

 Intimate communication / marketing of scarcity

Zara has chosen to develop an interactive relationship with its customers.


1
Businessworld magazine
-Not hype: from other retailers, who spend 3 to 4% of revenues for advertising, Zara did it spends only
0.3 per cent. The little he spends is used to reinforce its identity of brand of loan to small price.

-The means of communication: its weekly showcases.

Zara uses the Windows of its stores to communicate its brand image. They are developed in Spain and
must be identical to the model released by the parent each week.

The choice of a quasi non-disclosure allows the mark to identify a result budget, including to invest in
real estate, to find the best location for shops. This is crucial on their communication strategy: signs
must be visible, accessible, and present in the conducive to consumer-shopping districts to maintain a
direct relationship with the customer.

Customers who enter a store Zara on Regent Street in London, in the street Rivoli in Paris, on Fifth
Avenue in New York or on the Americas to Rio de Janeiro are found in a similar environment: a
spacious, modern store and almost entirely white, well lit walls filled with large mirrors.

 Delocalization Zara: "vertically integrated retailer"

The key to the diversification of the trade mark is its vertical integration. Almost all phases of the
development of a product are managed in the mother house: design production logistics and sales.
Zara is the design, production and distributes itself. Unlike similar retailers in the same market, Zara
controls all stages.

50% of the Zara products are manufactured in Spain, 26% in the rest of Europe, and 24% in the rest of
the world. While competitors subcontract in Asia, Zara manufactures its products the more fashion
itself (articles about half): the dozen companies that manufacture them and belong to ZARA are in
Spain and the Portugal, especially in Galicia and in the North of the Portugal because the workforce is
very cheap (cheaper in Western Europe). The clothes made to last a little more, as the Basic T-shirts,
are contracted to manufacturers, in Asia and Turkey primarily.

 Limits

The "Zara model" seems to work much better for markets where customers have a great appetite for
fashion (such as the France, the Italy, the Japan and the United Kingdom). For markets where
customers are less focused on fashion (for example, the Germany and the US), the success of Zara is
less obvious.

 Other weaknesses of Zara its:


 First, this implies a saturation of stores in Europe to be held to 2013. The costs of the
stores will exceed their revenue.
 -Second, being a strong currency, the euro and its disadvantageous for countries like the
US exchange rate are that the price of the same item can be up to 50% more expensive
than in Spain. Therefore, Zara products are widely affordable in Europe, while their prices
outside Europe are so high that they are luxury products. The European would be appalled
to see prices ZARA in Buenos Aires (more expensive than in Europe for a country where
the level of life is clearly lower). Singapour, one of the best places to go shopping in the
world, Zara is also very expensive compared to other similar stores non-European.
CONCLUSION

To conclude, we can say Zara considered as an example of adaptation in the market of the
clothing. In fact, in front of a difficult economic context in the sector of the textile, she has a
good management which is innovator: the vertical integration. The vertical integration
allowed him to master its activity and to propose products in affordable prices

She succeeds thanks to his behaviour to get a profitable market segment: the young people
what allows him a beautiful future. We can think that the future of Zara is promising; but you
should not forget the danger of China.

To answer at the question, at the problem that we put in introduction, we can say to be more
competitive as a time of the economic crisis; Zara could develop its website to sell more
clothes available by more people. That’s including to reduce the delay of expedition and
propose reduction to encourage people buying clothes on internet.

Furthermore Zara could better promote its new line clothes through consumer because Zara
has a big lake in promotion compared to its competitor.
REFERENCES-SOURCES

 Alan Chapman 1995-2011, “SWOT analysis method and examples, with free SWOT
template” ; http://www.businessballs.com/swotanalysisfreetemplate.htm, consulted
25th November 2011
 Industria de Diseño Textil, S.A., ”Our Group”; http://www.inditex.com/en, consulted
25th November 2011
 Consulted 24th November 2011; http://sitecon.free.fr/zara.htm
 « Les évolutions de ZARA » ; Consulted 24th November 2011;
http://pdf.rincondelvago.com/zara.html
 « Un cas d'entreprise sur le marché de l'international de l'ESCE » ; Consulted 24th
November2011;http://www.esce.fr/wpcontent/uploads/2009/12/CORRECTIONREU
SSITE_2009.pdf

 "L'entreprise ZARA de Fabien Cateville » ; Consulted 24th November 2011;


http://christophe.benavent.free.fr/IMG/pdf/ZARA_msgx_2007.pdf 
 Marie Claire, « Zara » ; Consulted 24th November 2011;
http://www.marieclaire.fr/,zara,200115,36052.asp 

 123helpme. (s.d.). Zara’s Business Model, Information and Communication


Technologies, and Competitive Analysis. Consulted 27th November 2011, sur
123helpme: http://www.123helpme.com

 Anonyme. (s.d.). Zara Fashion Case Analysis . Consulted 10th November 2011, sur
scribd: www.scribd.com

 Burgaleta, R. (2010, 11 18). Analyze a company INDUSTRIAL: The Phenomenon


ZARA. Consulted 27th November 2011; http://reenciso2.blogspot.com

 eyesight, T. (2002). retail at the speed of fashion. Consulted 27th November 2011;
www.3isite.com
APPENDICES
 Appendix 1: Zara it’s for children, woman and men.

Appendix 2: Zara’s perfume and Zara home.

 Appendix 3: Map where there are the Inditex Group

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