Fashion Retail Industry Analysis and Recommendations

The given assignment is about analyzing the fashion retail industry and providing recommendations for a fashion retailer. It involves researching micro and macro factors, conducting PESTLE analysis, and SWOT analysis to use strengths for new opportunities and remove weaknesses. The assignment also emphasizes the importance of implementing technology in every stage of business functions to address changes in fashion trends and customer tastes. Additionally, it suggests enhancing local market networks to reduce costs, deploying human capital where brainstorming functions are required, and utilizing automation in repetitive tasks. The study concludes that retailers can minimize risks by analyzing government policies, economic conditions, technical requirements, social, and cultural factors.

RETAIL THEORY AND PRACTICE

Table of Contents
INTRODUCTION...........................................................................................................................................3
TASK.............................................................................................................................................................3
1. Introduction to the company...............................................................................................................3
2. PESTLE analysis of Zara........................................................................................................................4
3.Change in micro and micro environment .............................................................................................5
4.Impact and Suggestion for micro and macro changes..........................................................................7
6.Recommendations-...............................................................................................................................9
CONCLUSIONS.............................................................................................................................................9
REFERENCES..............................................................................................................................................10

INTRODUCTION
Retailing is the process of sale product and service in small quantity to end customer.
Retailer acquire bulk of product and service on discounted rate from wholesaler and sale it to
customer with some profit margin. Retailer uses different marketing and promotion strategy to
attract the customer. Location of selling point (shop) play important role in retailing as it must be
easily accessible to customer. Fashion retailer performs all the activities right from the beginning
as designing and manufacture cloths and sale it to customer. ZARA is the biggest fashion Retail
Company in UK. It has global presences. It makes its own cloth and sale it on ZARA stores and
website only. ZARA is famous for maintain freshness in fashion by change its stock two times in
a year. ZARA not only offer cloths, it also provides belt, handbags, and shoes. This report
describes micro and macro factors which affect fashion industry and strategies to manage these
changes.
TASK
1. Introduction to the company
ZARA was founded in 1975 by Amancio Ortega and Rosalía Mera. Its 1st store was
opened in the beautiful European nation Spain. Inditex, the world's largest apparel retailer is the
parent company of brand ZARA. Inditex also owns brands such as M Dutti, Pull&Bear, Bershka,
Stradivarius, Oysho , Zara Home, and Uterqüe. Target customer of ZARA is middle class
people from 18 to 40 year age . This age group is very trend conscious and fashion forward
generally resides in urban areas. It has 7000+ stores across the world. Zara targets its customers
who want latest and updated fashion trends and accordingly it provides exclusive designs based
on customer's need around the globe. Its focus is always on style and latest fashion trends. As
fashion does not last here forever, So A fashion trend that can be found this week will not be
there two or three weeks later. It leads to a sense of urgency among customers. Consequently, it
provides higher sales. Without compromising on quality, ZARA targets the young customers
who are price conscious. So it provides trendy and affordable fashion styles at low prices. As far
as its positioning strategies are concerned, it is usage-based. ZARA shows customer’s centrict
approach by satisfying the customer's requirements. Undoubtedly, with the physical exclusive

stores around the globe, ZARA keeps on building up the interest among the target customers.
Zara has positioned itself as a trendy and quality fashion brand for young customers. Its fashion
seasons keep on changing faster than the rest of the fashion world (Ptak. and Schragenheim,
2016.)
2. PESTLE analysis of Zara
Political factor -
Political factor that affect a business are change in tax, ease of doing business facility,
foreign trade policy, change in tax rate, rules and regulations. ZARA faced political issue in
corruption level, political turmoil, global political practice of “nationalism” by many countries.
Which enhance the uncertainty and risk in Zara’s operation and decision. Foreign Government
promotes to buy fabric from local market for employment protection of local manufactures that
can hamper the quality of cloths if supply standard are not matched with brand standard.
Governments also have some control on fashion trends to protect the culture of that
country(Delbufalo, 2015).
Economical factor-
Economic factors which have high impact on business are inflation, interest rate, demand
and supply, labor cost, employment ratio, tariffs etc. ZARA also affected when there is high tax
rate in economy which reduces the disposal income of customers which result in decline in
demand by customers. Currently“BREXIT” create tension in UK economy like reduce per capita
income, immigration issues which increases labor cost, over control of UK government on UK t
trade policy practices. All this have one good side that this policy has short effect on business.
(Giannakis. and Papadopoulos, 2016)
Socio -cultural factor-
Social and cultural practices are common ideology, belief, customs and values accept by
a group. UK cultural now changing drastically as Active consumerism, The ‘new’ old, self care
culture, aesthetic pleasure etc. .ZARA faced criticism for cultural appropriation for using batti
style dress. Batti style dress are clothing of Muslim women. Zara uses this style as its tie-dye
maxi dress. ZARA is accused for not to use ethical and cultural norms for this action.

Technological factor-
Technological factor include various technological changes which help in improve
quality of day to day activity perform by any organization and individual. Some example of
technological changes is wireless internet, full automation in machines, artificial intelligence,
and internet of things. ZARA have lack of automation in its supply chain. It also has some issue
with customer data security, ZARA adopt technology for its all business function like it use
software to design cloths, virtual dress change experience on mobile , remote sensing in supply
chain, the latest software to, ZARA fail to provide prompt communication with in organization
because of lack of technical integration with functional units like finance department, marketing
because of poor technical ZARA'S store are not technically fit as compare to other competitors.
(Martino. and et.al., 2017)
Legal factor-
Legal factor that affect a fashion industry most are- wages law, trademark regulation,
textile labeling law, fabric laws, intellectual property right etc. ZARA has large global presence,
so it faces legal hurdle with local law of different country than UK. ZARA has to maintain all the
legal requirement attached with business like fair and equal wages to labor, healthy working
environment, provide chemical ressitent cloth to employee while dying the dresses. It has to
maintain non customer discrimination practice based upon income, race, religion and culture.
Environmental factor –
Environmental factor including climate, weather, availability of natural resources,
recycling and waste management instruction by government ,global warming affect ZARA's
production and distribution. Unpredictable climate change frequently change the clothing need of
customer. Now ZARA use hybrid fabric which changes its temperature according to climate
change. In business process ZARA has to make effort for sustainable environment by Eco
friendly store, recycling efforts, waste management of hazardous chemicals. ZARA launches
sustainable clothing collection make made by organic cotton, tencel and recyclable wool. High
level of pollution demand cloths witch can be easily washable. ZARA doing reaserch and
development so that these issue can be handle on time. Adverser environmental conditions

affects supply and fabric quality so ZARA starts using fabric made by sea plastic wastage. (Ptak
and Schragenheim, 2016)
3.Change in micro and micro environment
Supply chain change-
Supply chain function of any organization starts form procurement of raw material,
transform in as finished product and deliver it to end customer with help of logistic. Supply chain
of ZARA now rapidly change due to frequent change in customer choices, influence of internal
national market, and increase automation and digitization, quality demand by customer, labor
cost, transportation cost, warehouse cost, rent and carry cost. ZARA bring fresh and latest stock
for two time in a year for which it uses enterprise resources planning system which keep eyes on
data required to implement the change in stock. Competitor’s strategy for production,
marketing ,customer satisfaction also influence ZARA to bring drastic change in its functions
like use radio frequency identification in warehousing which insure smooth supply to customer,
avail production machine having AI and automation, robot to manage labor cost, drones for
product delivery in congested area. Fashion and trend change is prime factor which result in
change of whole supply change. ZARA use cognitive computing which interpret human behavior
by fashion review, weather forecasting, social media which help organization to know taste and
need of people so that it can be take in store in next launching (Delbufalo, 2015).
Customer behavior changes-
1. Earlier ZARA customer do not this much awareness and demand which they start now
because of increase level of education and substitute availability. Customer behavior and
expectation keep changing with the time. Customers know that they are assets for
business so they expect treatment of “king”. Traditionally customers purchase cloths
offer by ZARA but now they expect customization in product as per their choice,now
ZARA design more trendy dress and cross cultural and fusion wear. They want
innovation in style, design, color, zipper, buttons, accessories, wearable technology in
their clothing. Busy life schedule change customers buying habit, time and frequency.
Traditionally ZARA sale its product on stores and outlet but now it moved on online
shopping option which are available for 24*7. They are more aware about their right and

knowledge about product, they purchased so customer expect from ZARA to quick
response and restitution of their compliant. Customer also wants everything has to be
done by “clicks”. They do not have time for looking traditional marketing effort,
customer want to be informed through social media, mail, phone etc which gives them all
information on right time and as per their interest. etc(Giannakis. and Papadopoul, 2016)
4.Impact and Suggestion for micro and macro changes.
Technological factor –
According technological imperative model technological changes are uninvited guest
which an organization have to attend for organization benefit as well customer welfare. This
model also describes technology as “good for society”. Organization adopts the change it
reduces wastage of its time, money as well as maximize the customer satisfaction by innovation
in product ZARA still have some weakness in technical competency of stores and outlet. ZARA
also unable to handle smooth integration of information. Technology helps ZARA to know the
customer behavior, choice, preference, fashion predictions so it can bring fresh material to its
store before its competitors. ZARA use technology for designing and making the dress like it
use smart fiber,3 D printer, internet of things ,zero waste dress technology which replace
traditional cloths dying by removing chemical toxic element from dye color. ZARA can take
help of technology in its stores like virtual dress experience, digital signage, virtual mannequins,
NFC enabled shelf, robots, Smart Mirrors, self check out apps, voice based search etc.for
intregation problem ZARA must try ETL process, Enterprise application integration, enterprise
data replication etc. At strategic level organization must practice technical need and risk
assessment, consequence analysis, regular training and development of employees,
vulnerabilities assessment, and feedback and tactically organization must use outsourcing of
technical work, acquire new machine on rent, and pivot operation strategy, appraisal and benefit
to employee for voluntary efforts made by them in crucial time to handle technical
issue(Salehinejad. and Rahnama, 2015)
Economical factor –
Economic factor affect sale and profitability of business. When an economy face unfavorable
phase it affects customer demand behavior for some product. Customers minimize their demand
that reduce the sale and profit of any business. In low economy phase shut down some outlets,

termination of employee and cost cutting practice help a business to patiently handle the
situation. Fisher effect of economy also describes the impact of changes monetary policy and
interest rate on purchasing power of consumer. ZARA also faced major economic slowdown in
2008 which it handled by some short term tactical practices like launch customer incentive
programs, make cloths as per according to purchasing power of customer. A fashion industry
have so many short term cost cutting option like reduce physical marketing expenses( use social
media and internet for marketing.) etc. at the strategic level ZARA must keep eye on very single
changes in economy, maintain adequate fund, diversification decisions, avail short term and long
term investment combination, insurance, currency risk sharing contract with stakeholders. As
UK economy face instability because of BREXIT, it must use cost cutting pratices because
BREXIT reduce purchasing power of customer. etc(Giannakis and Papadopoulos, 2016).
Customer behavior changes- consumer behavior Model describe influence of customer
behavior on a business. A retailer manufacture and sale the product to customer, so customer
behavior effects the business decision from manufacture to after sale service. All the activities
has to mold accordance with need and preference of customers. ZARA make its marketing plan
like social media, internet marketing because it has more young and educated and job doer
customer segment. Cloth designing and style are chosen to according to fashion ,trend and
special demand from customer. ZARA must use data mining to predict customer behavior, it also
can take help of classification algorithms, A fashion industry launches a new clothing stock after
knowing the need of customer. ZARA can use survey software like lime survey, google opinion
reward and zoho survey for customer research .Change in customer expectation affect the
decision of new product launch, training and development, marketing and promotion strategy
and after sale services. Strategy ZARA has to mention customer satisfaction in its vision and
mission statement, give training to employee to understand the costumers need, emphatically
listening, quick compliant handling mechanism, avail the latest information and customer
management data, centralized sharing of customer data, establish customer research department
etc, deliver best after sale service policy. Tactically ZARA can conduct event to its excising and
potential customer to their behavior and need also use survey, feedback, and online reviews to
know more about customer expectation (Blut and et.al., 2015).
Supply chain change-

It helps in reduce cost and increase customer satisfaction for example in ZARA has technically
sound supply chain so customer gets their product on time with maintain packaging quality.
Fashion industry must practice customer oriented supply chain because all its supply chain
function like inventory, logistics, location of stores are for customer. A fashion retail must
increase automation in purchase the raw material and quality check of fabric received from
supplier, more transparency must be taken in supply chain by ERP, supply chain decision must
be taken after gathering accurate data,. ERP must be integrated with electronic data interchange
which automatically share supply chain data with other stake holder. Electronic fund transfers
integration with ERP help in reduce make and receive payments.( Martino, G. and et.al., 2017)
6.Recommendations-
A fashion retail business is all about customer and customer. Fashion retailer must do
proper research on each and every micro and macro factor before launching new cloths and
policy regarding marketing. It should compile PESTLE with SWOT to use its strength for avail
new opportunity and try to remove its weakness. Fashion industry is more dynamic as compare
to other industry so changes in PESTLE factor quickly affect customer purchasing power.
Retailer must implement technology at every stage of business function so that change in
fashion, trend, and customer taste can address as soon as possible. ZARA must enhance its local
market network to get the best fabric and raw material so that cost of can be reduce in ASIAN
market. Although ZARA keep itself competence and fit with fresh stock and customer
satisfaction practice but ZARA can take more proactive actions in technology and fashion so
than it can take competitor advantages before its competitors. It can use more automation where
repetitive action is taken on daily basis like in manufacturing department and deploy its human
capital where brain storming function required like research and customer service and creativity
in clothing, it will give more efficiency to work(Delbufalo, 2015)
CONCLUSIONS
From the above study it has been concluded that retail industry try enhance its quality of
production and distribution and marketing with the help of technology. In current competitive
era retailers are able to take proactive action with the help of PESTLE analysis and SWOT.
Fashion industry also makes short term and long term strategies to adopt frequent fashion
changes. A fashion retailer’s analysis for government policy, economical condition, technical

requirement minimize their risk help him to minimize his business risk with help of advance
technology. Social and cultural factor help a retailer to know about customer's acceptances to
technology and fashion. Proper research and customer analyze help in brand image and
positioning. Corporate social responsibility and customer welfare practice enhance the good of
organization in market which eventually increases world to mouth sale and brand loyalty
REFERENCES
Books and journals
Blut, M. and et.al., 2015. How procedural, financial and relational switching costs affect
customer satisfaction, repurchase intentions, and repurchase behavior: A meta-
analysis. International Journal of Research in Marketing. 32(2). pp.226-229.
Delbufalo, E., 2015. The influence of supply network structure on firm’s multiple innovation
capabilities: A longitudinal study in the fashion industry. Management Decision. 53(10).
pp.2457-2476.
Giannakis, M. and Papadopoulos, T., 2016. Supply chain sustainability: A risk management
approach. International Journal of Production Economics.171.pp.455-470.
Kuijer, L. and Bakker. Of chalk and cheese: behaviour change and practice theory in sustainable
design. International Journal of Sustainable Engineering. 8(3). pp.219-230.
Martino, G. and et.al., 2017. Supply chain risk assessment in the fashion retail industry: An
analytic network process approach. International Journal of Applied Engineering
Research. 12(2).pp .140-154.
Ptak, C. A. and Schragenheim, E., 2016. ERP: tools, techniques, and applications for integrating
the supply chain. Crc Press.
Salehinejad, H. and Rahnama, C., 2015yan, S., 2016, December. Customer shopping pattern
prediction: A recurrent neural network approach. In Computational Intelligence (SSCI),
2016 IEEE Symposium Series on (pp. 1-6). IEEE.