Political European Trade Agreements Zara

Political
European Trade Agreements
Zara is a Spanish brand, so it enjoys all of the benefits of operating a business out of the European
Union. In a political context, one of the biggest pros of running a company in the EU is the country’s
extensive trade agreements. Not only does this make it incredibly easy to import raw materials and
export finished products within the European Union, but it also means that Zara can send its
merchandise across the world with little effort and for a low cost. Overall, the EU’s free-trade policies
are massively beneficial for Zara. (swotandpestleanalysis,2020)
Economic
Low Cost of Labor
As mentioned previously, Zara is a Spanish brand. Since Spain has one of the highest unemployment
rates within Europe, this means that it has a relatively low cost of labor — especially in comparison to
other Western European countries, such as France, Germany, and the United Kingdom. Zara
manufactures a good fraction of its products in Spain, so this low labor cost allows them to minimize
costs and, in doing so, improve profitability. (swotandpestleanalysis,2020)
Pandemic of Covid-19
The pandemic of covid-19 and lockdown have shutdown businesses across the world. Zara has no other
choice except to shut down 2270 of its worldwide retail stores. One of the smartest decisions the
company has ever made is to bring its business online. It helped to minimize the damage.
(swotandpestleanalysis,2020)
In the Vietnamese market, Zara has made steady steps since its first presence in 2016. According to
market survey companies, this affordable foreign brand has quickly proven itself. proving its
attractiveness to Vietnamese consumers when sales far outstrip fashion chains such as Blue Exchange,
Ivy Moda or Kowil... However, during the COVID-19 pandemic, Zara's sales in Vietnam were also
affected. seriously affected.
With traditional retail sales falling seriously, Zara seems to have realized its limitations and is forced to
transform its business model. When the e-commerce platform becomes an important point of retail
businesses, especially during the pandemic, Zara is no exception to that rule. (nguyen chuan, 2020)
BREXIT
Britain has been the top export of Zara in Europe and the high sale in Britain define the success and
growth of the company. Brexit deal (exit of Britain from Europe) has had a huge impact on fashion.
Clothing and apparel sales have dropped significantly. It’s because Brexit doesn’t allow free trade of
European brands in the UK. The decrease in sales means that the company has to decrease the
production rate and lay off the extra workforce. The unemployment rate would increase and the
purchasing power of customers would drop. (swotandpestleanalysis,2020)
SOCIAL FACTORS
CHANGING SOCIAL TRENDS
The interesting thing about the fashion industry is that it doesn’t stay the same. The social trends keep
on changing and they impact the supply and demand of a company’s products. The target market for
Zara is very big and large. The company offers a great variety of products to its customers. They don’t
always create social trends. (swotandpestleanalysis,2020)

Zara's responsiveness allows garments to be exported 24 hours, 365 days a year, resulting in the delivery
of new products to stores twice a week. Once the product is designed, it takes about 10 to 15 days to
arrive in the stores. All clothing items are processed through a distribution center in Spain; where new
products are inspected, sorted, tagged and loaded onto trucks. Clothing items will be delivered to stores
within 48 hours. (goacademy, 2020)
FASHION BRAND
Despite its economic price range and other advantages, Zara is a catchy brand name for many shoppers.
It’s because of the company’s work on quality products and years of brand marketing. The customers
feel exclusive when they buy Zara’s products. The shareholders of the company earn a great profit and
customers feel that they’ve got a great deal. (swotandpestleanalysis,2020)
Besides its own models, most of Zara's clothes are modeled from the designs of high-end brands. With
this strategy of "reimagining" fashion, not "creating" fashion, anyone who has ever set foot in Zara to
buy clothes is overwhelmed by the speed of its fashion updates.
Each year, Zara launches more than 11,000 designs on the market, many times more than their
competitors. Furthermore, since Zara doesn't have to spend a lot of money on unique designs, its
customers are always happy to be able to wear trendy outfits that aren't as expensive as other brands.
And in Vietnam, Zara has penetrated the market with an almost similar strategy with a wide range of
products and limited quantities. (hotrodoanhnghiep, 2020)
TECHNOLOGICAL FACTORS AFFECTING ZARA
E-COMMERCE
When the pandemic of covid-19 hit the world,
the wave of lockdown and shutdown of businesses emptied streets, shopping malls, and shops across th
e world. Zara was quick to invest in the e-commerce and online retail tech business.
(swotandpesrleanalysis, 2020)
At the root of the marketing strategy for Zara eCommerce is the combination of omnichannel marketing
with a sophisticated integrated stock management system. Zara’s eCommerce strategy uses an automat
ed marketing platform for sending relevant and timely emails notification to shoppers regarding everythi
ng from order status updates to back in stock notifications, and so on. Throughout the entire customer j
ourney, the brand keeps its messaging on-target and personal, catering to
the shopping needs and web behavior. (swifterm, 2021)
DATA ANALYSIS
As we know that Zara has a huge database of customers. The brand uses advanced analytical tools and
algorithms to find the trends and shopping patterns of customers. It would help the company to launch
products that would appeal to the customers better.
ZARA captures data from e-commerce sales, PDA devices and RFID tags on the clothing, POS terminals,
and customer surveys. Customer preferences are captured by store employees in their PDAs in details:
cut, colour, buttons, zippers, and more.

Zara has constructed its business on RFID tags as per the Wall Street Journal. This helps Zara to manage
inventory economically and allows the company to make a note of the regularity of the outfits that are
moving in and out.
Zara also collects data from its social media platforms and surveys. They are active all the time that helps
them understand their customers’ fashion sense and needs.
After collecting all the data from the above-mentioned sources, it is then collated in their data centre in
Arteixo, Spain. The analysts work 24 hours a day to process the data to initiate new design releases, ship
to stores and much more. Zara generates data driven predictions weekly based on every single SKU they
sell. With the help of Data Analytics Zara understand customers in and out.
Zara also collects data from its social media platforms and surveys. They are active all the time that helps
them understand their customers’ fashion sense and needs.
After collecting all the data from the above-mentioned sources, it is then collated in their data centre in
Arteixo, Spain. The analysts work 24 hours a day to process the data to initiate new design releases, ship
to stores and much more. Zara generates data driven predictions weekly based on every single SKU they
sell. With the help of Data Analytics Zara understand customers in and out. Hence, the popularity.
According to Zara's data-driven comparison with competitors:
Zara retails over 11,000 diverse items every year versus 2,000 to 4,000 sales carried by its competitors.
Zara also prides in having the lowest level of year-end inventory among all. This lean working capital
management counterbalances their high production costs that further enables them to boast rapid sales
turnover rates.
Only 15% to 25% of a line is designed before the advent of the season compared to 80% designs being
made by the competitors.
Over 50% units are manufactured after designing in the mid-season based on data driven results of
previous sales popular products whereas competitors manufacture only 20% items on a real-time at the
peak of the season
While other retailers commit are left with excess inventory due to advanced manufacturing ahead of the
season, they have end up selling stocks at a heavily discounted end-of-season sale.
In contrast, Zara’s quick refill cycles create a sense of shortage which in turn generates more demand
and hence ZARA always ends in profit. (madridsoftwaretrainings, n.d)
ONLINE COMMUNICATION
Zara's ecommerce and online marketing doesn't just need to have a great product selection with
trending styles to be a successful e-commerce.