Retail Management of Zara

This essay discusses the retail management of Zara, including an introduction to retail management, PESTEL analysis of Zara, issues in the micro and macro environment, and recommendations. Learn more about Zara's success in the fashion retail industry.

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RETAIL MANAGEMENT OF ZARA
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Contents
Introduction to Retail management............................................................................................3
About the company....................................................................................................................3
PESTEL analysis of Zara...........................................................................................................4
Political:.................................................................................................................................4
Economic:..............................................................................................................................5
Technology:............................................................................................................................5
Environmental:.......................................................................................................................6
Legal:......................................................................................................................................6
Changes in the micro environment of Zara:...............................................................................7
Competition in the Industry:..................................................................................................7
Potential of the new entrants:.................................................................................................7
Power of supplier:..................................................................................................................7
Power of customers:...............................................................................................................8
Threat of substitute:................................................................................................................8
Issues related to the micro and macro environment of Zara......................................................8
Macro issues:..........................................................................................................................8
Social:.................................................................................................................................8
Legal:..................................................................................................................................9
Micro issues related to Zara:......................................................................................................9
Competitors:...........................................................................................................................9

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Intermediaries:........................................................................................................................9
Supplier:...............................................................................................................................10
Publics:.................................................................................................................................10
Recommendation:....................................................................................................................10
E- Commerce.......................................................................................................................10
Active Wear.........................................................................................................................10
Sustainability initiatives ‘Closing the loop’ and ‘Join Life’................................................11
Brand extension....................................................................................................................11
Conclusion................................................................................................................................12

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Introduction to Retail management
Retail management is a procedure by which the customers are able to procure the desired
merchandise from the stores of retail for their own personal use. It gives an overview of a
basic concept that is related to the visual merchandising and it forces emphasis on the
management of the customer relationship, sales management, and brand management.
Fashion retailing is a kind of procedure that manages the merchandise flow from the selection
of initial designs to the presentation of the end product. The main goal of the fashion retail
industries is to maximize the profits and sales of a company. For a successful fashion
retailing it is important for understanding the needs and wants of the consumer. The retail
industry is one of the most important things to the economy of the UK. In the year 2017, the
retail industry of the UK alone generated Euro 395 billion sales and during the year 2018, the
sector housed around 319,000 businesses of retail. This essay discusses, pestle, porters, issues
in the macro-micro industry and lastly recommendation for Zara (Hansen, 2012)
About the company
Zara is one of the most known brand names. It deals with accessories and clothes around the
world. It is one of the most popular industrial and fashion planning company. It is professed
as one of the most important and efficient market replying enterprise. Zara is one of the best
companies as it keeps up with the latest demands and trends with affordable prices. Zara is a
brand that slowly became popular and then captured the market of the United Kingdom and
then across the globe. One of the main motives overdue the success of Zara is that it adapts
the rapid change of street fashion in its environment; this is one of the main reasons behind
its great profit earning. With the help of the Inditex group as well it is able to achieve a high
majority of the market. Zara continues to fight with its competitors with the help of

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introducing the new designs in the stores in a week or two, on the other hand the other
fashions brands almost take up to six months in order to get new and to the market and this is
one of the main reasons that it is the favorite brands for the customers. Zara is brand that is
also recognized as one of the greatest Eco- friendly companies as it customs turbines and
solar panels also it is one of those extremely rare brands that produce clothes which are
hundred percent toxic free (Gamboa, and Gonçalves, 2014)
PESTEL analysis of Zara
There is a lot of burden on Zara because of the global market and if Zara has understood
achievement always, it definitely has smart planning of the business. Zara is subjected to
various services of the international market due to the fast changes in the fashion industry.
Below is the PESTEL analysis that will help in understood how microenvironment is
affecting the business of Zara (Ton, Corsi, and Dessain, 2010).
Political:
Political disruptions are something that can disrupt the whole market and can have a high
effect on the economy of the country as well. The main thing that is impacted by political
disruptions is the supply chain of a brand that leads to major difficulties for the brand. Zara is
a brand that has overwhelmed this by restrictive the processes of the supply chain in the
neighbouring countries as well as the home country. By the help of this, it consumes the
limited threat of political disruption. In some countries where political disruption is common
and unvarying. Business is always below threat and even the government policies impact the
business. The friendly political environment is one of the utmost important brands that
operate globally (Hemantha, 2012)

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Economic:
The economy is one of the utmost significant and serious factors for any industry. Zara has
one of the greatest strategies with affordable pricing as well. So smooth if there are the
economic action failures and people move to saving, they might have to change from the
luxury brands but not from Zara because of its inexpensive prices. The affordable pricing
policy helps Zara to match the effects of the little economy. Some of the brands have
remained hurt by the recession very deeply and a stronger dollar has not made the situation
better for them. Due to the strong dollar, there are various issues like the reduces profits from
the markets outdoor the UK, low economic movement also decreases the buying power of the
customer who is forced to cut costs and this also has a large impact on the sales of the
company and so on.
Social:
There are various companies that are investing their money into social responsibility,
Companies does not do this just to attract the customers but also because they find it very
important to invest in the society for the betterment. Through research it is found out that
culture and society are an significant part of any business. Zara has always focused on this
thing and it never enters a new market deprived of doing it initial research apart from this
Zara researches the cultures and the markets before launching its new product line into the
market. Culture is something that easily influences the buying behavior of a customer. This is
one of the reasons behind the success of Zara.
Technology:
Technology is something that is altering the belongings everywhere in the world and it is
creation of the things that happen at a very wild rate. It can be related to anything statement
transport or any other feature of the day to day activities of the commercial. All the activities

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of the business are exaggerated by technology. Use of technology in business has reached a
whole new level. Zara is considered as one of the most disruptive fashion retail industry but it
highly focuses on operating the power of technology to its profit. The technology use of Zara
has also allowed it respond to the demand of the customer quickly, it helps to coordinate the
activities of supply chain and logistics effectively and lastly it decreases the weight on the
companies and upsurges the reach and efficiency (Anwar, 2017). Zara has also used the RFID
system which helps in the tracking of inventory and value chain activities. This system also
helps the employees of the stores in tracking the inventory and it also improves the customer
experience by the helps of its website. The RFID system has also helped in the replenishment
of the orders with the processes and augmented the inventory counting. All this has also led
to the achievement of Zara.
Environmental:
Sustainability was something that in progress as a trend and it has now develops one of the
greatest significant things in the commercial globally. The green side of the commerce is
something which is really important and hence Zara has also capitalized in sustainability. The
parent corporation of Zara which is Inditex has pledged to make its stores 100% eco-friendly
by the year 2020. The importance of this plan is that it will help in consuming less was and
liveliness as likened to the other stores and the companies (Dahan, and Peltekoglu, 2011).
The stores will also have well-appointed liveliness and reprocessing feature. Zara also
focuses on the removal of hazardous leftover from the supply chain. Inditex and Zara have
also capitalized in the sustainable costume of the clothes which are prepared through the
organic substantial by the use of sustainable technology. Zara calls it green to wear
technology (Crofton, and Dopico, 2012).

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Legal:
Zara focuses on sustainability and ethics throughout its commercial activities and its supply
cable as well. There are various laws that a company needs to deal with. That is the reason
Zara has attentive on making an ethical brand image. Zara ensures that it follows the local
laws in the local markets wherever it functions.
Changes in the microenvironment of Zara:
Competition in the Industry:
The main competitors of Zara are Benetton, H&M, and Gap. Although Zara is one of the
most fashionable brands which beat the sales of Gap and Benetton. However, H&M is
equally fashionable like Zara and both have a tough competition. Zara has a slight
competitive advantage as its supply chain model is super approachable than the others. Other
companies devote months in order to presentation the latest collections; however, Zara is
brought out the new collection within weeks (Royo-Vela, and Casamassima, 2011)
Potential of the new entrants:
Due to fast-growing industries and the fiscal crisis, there are people who look for more
economic goods. Zara is able to overcome this issue as it provides rational values with good
superiority products although the upsurge in the Euro rate will upsurge the selling price for
the consumers and this can lead to the company losing its advantage in comparison to the
competitors.
Power of supplier:
During the time of globalization. The market endures to grow more generous. The power of
suppliers is a week outstanding to the low wage limits in China. However, the supplier

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industry is now reliant on on the apparel industry for its operations. For this Zara delivers
their dealers with agreements so that they are left with no option for the design variation and
it also lessens the hold in the market.
Power of customers:
According to a study it was seen that Zara devotes around 0.03% of its budget on its
promotion. It depends on the mouth publicity more. However, it invests a lot of money in the
R&D subdivision in order to know the requirements and wants of the consumers (Sternquist,
2010). The requirements and wants of the customers in the fashion industry are very
unpredictable as customers buy whatever the like living aside the fashion statements that are
made by the brand (Kim, Cho,., Jin, Kim, and Lee, 2010).
The threat of substitute:
Hennes and Mauritz are the two brands that have a high level of competition with Zara in
terms of affordability and quality. However, Zara spends a lot on its advertising and takes
advantage of its economic advantage also it has a responsive supply chain (Weske, 2012).
Issues related to the micro and macro environment of Zara
Macro issues:
Social:
According to various researches, there is a 6% forecast deterioration in the amount of 15-24-
year-old in the populace of the UK. This thing has affected all the brand including Zara It has
also affected the target market of Zara and that is the reason that the traditional ways of
marketing are not working and brands are breaking out continuously (Srdjevic, Bajcetic, and
Srdjevic, 2012). The women aged between 25-34 years old are forecasted to grow just by 8%

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in order to reach 4.5 million by the end of 2017. This is an age group that likes to spend more
on brands like Zara and the age group under 25 are cautious about spending. If the stats are
compared with the year 2012 then it can be seen that there is only an increase in a 7%
increase in the amount of people who select to have a throwaway income. Apart from this,
there is a lot of difference in the culture of UK and this has a excessive impact on the
auctions of Zara in the UK because of its designs which are more inclined by the culture of
Europe (Mo, 2015). The statistics demonstration that the UK retail marketplace is mostly
based on European based apparels. Zara’s limited origin designs make its worldwide brand
image of the fashion industry. There are also different cloth designs for special occasions
which are lacking in Zara stores (Hofman, and Rotenberg, 2017).
Legal:
Rise in the amount of UK MP in the parliament, who is the key supporter and pusher behind
leaving the EU. That is because if it comes into fruition then it will affect the export and
import of other laws. In the UK there are some legal supplies for every company. Start a
business and the most significant one is that you have to make a local partner from the UK.
Zara has started its business with the collaboration with Marks & Spencer, Accessories,
Debenhams and Guess have all franchised their stores to India (Rastogi, and Trivedi, 2016).
Micro issues related to Zara:
Competitors:
River Island, Top shop and mango are the main competitors of Zara. And these brands give a
very tough competition to Zara (Garg, 2010)
Intermediaries:

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Social media is one of the most important parts of any business marketing strategy. Zara is
affected by sophisticated techs, like the PDA’S with a wireless broadcast which is used by the
managers in order to report and track to know which products are selling the best in the
stores. Store use DOS – based POS system by the companies IBM.
Supplier:
In 2011 Zara had a amount of reviews from its dealers and the outside manufacturer doubled.
Inditex has around over 1300 suppliers out of which 50% of the products are mass-produced
in Spain. 26% in the rest of Europe and 24% in African and Asian countries and also in the
rest of the world. The basic products are contract out to the suppliers with low costs mainly in
countries like turkey and Asia.
Publics:
These were owned by Inditex- CEO Jose Rios – the biggest shareholder of which is Garter,
S.L. (owns 50.01%) / Inditex has over 60,000 shareholders (Kolios and Read, 2013)
Recommendation:
E- Commerce
The first thing that Zara should do is bring an E- commerce website. Zara only have online
stores that operate in 27 out 93 markets which are operated by inditex. According to the CEO
the average spending of per customer online is higher than it is in the supplies. Sales online
provide a good omni channel for the customers to purchase (Chu, 2016)
Active Wear

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It is seen that the lifestyle trend impacts the fashion industry and the consumers are fetching
more health and wellness absorbed, which is increasing the demand for athletic attire in the
market. Zara must offer active wear line. The need for sports apparel has grown by 6% from
the last year alone.
Sustainability initiatives ‘Closing the loop’ and ‘Join Life’
The consumers nowadays are also becoming very conscious about the environment as well.
One of the main issues with the sustainability of Zara is that they directly target to their
consumers (Olexová & C.E.C.Í.L.I.A., 2014) They should start a garment collecting initiative
known as “closing the loop”. H&M already have this service and that is the reason that it has
a competitive edge in the market. Zara wants to take this advantage from them and
according to a study it was found that 43% of the consumers said the company’s commitment
to the environment changed their buying decision. If Zara will start this thing they will be
able to fulfill the needs of the customers and attract more new customers (Musa and ISRA
LLC, 2010)
Brand extension
Brand extension usually occurs when an company extend the product offerings and
specifically a horizontal level of brand extension comes into place when it creates a new
product that are part of the same product class and is related to the existing offerings as well.
The benefit for using this strategy is that it can allow the organization to capitalize its own
brand name and also benefit the care brand (Palladino, 2010). As there are various customers
that already have trust on Zara they can buy the new offerings that would be made by the
company. An aspect on the basis of these proposed extensions it is the closest competitions
are found in their position. H&M, Top shop, Woolworths and Cotton On, offer these items in
their product offerings, and therefore by Zara not offering these items, consumers will return

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to shopping at these competitors. This gap in Zara’s product contribution delivers them with
an chance for the company to reply to their rivals as well as further meet consumer demand.
There for through implementing the above strategies, Zara can increase their sustainable
advantage in the market and along with that it will also help Zara to shape brand equity in the
market. The above given recommendation will help Zara to gain a competitive advantage in
the market.
Conclusion
This report is study of a retail industry. Fashion retailing is a kind of procedure that manages
the merchandise flow from the selection of initial designs to the presentation of the end
product. Retail management is procedure by which the customers are able to procure the
desired merchandise from the stores of retail for their own personal use. After that Pestle
analysis of Zara is discussed in which various things are discussed, such as the political
factors, economic, social, technological, legal and lastly environmental through the report it
can be seen that Zara has strong base and that is the reason it is not affected by the external
factors so fast. After this the micro environment is analysed in which porters analysis is done
it includes, threat of substitutes, threat of new entrants, Power of supplier, power of
customers and competition in the industry. After this the issues in the micro and macro
environment of Zara is discussed which shows, Zara needs to focus on various factors in
order to have a competitive edge in the market. Lastly the recommendations for Zara are
discussed which includes: brand extension, developing an E- commerce website and
Sustainability initiatives ‘Closing the loop’ and ‘Join Life’ lastly through implementing the
above strategies and following the recommendation Zara can attract more customers . Zara
can increase their sustainable advantage in the market and along with that it will also help

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Zara to build brand equity in the market. The above given recommendation will help Zara to
gain a competitive edge in the market

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