Swot Zara
Swot Zara
Swot Zara
ANALYSIS
ZARA’S
COMPANY
NARDO Aurore
MAGDICH Salima
DUHEIL Emilie
TURQUIN Mélanie
CASSOU-LALANNE Noémie
TABLE OF CONTENTS
INTRODUCTION...............................................................................1
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 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.
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.
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
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.
"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
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.
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.
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.
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
Anonyme. (s.d.). Zara Fashion Case Analysis . Consulted 10th November 2011, sur
scribd: www.scribd.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.