Retail Theory of ZARA

This assignment discusses the retail theory of ZARA and its significant changes in the UK fashion retailing sector. It explores the strategies and tactics adopted by ZARA to meet the changes in the micro environment. The report also provides recommendations for ZARA's future growth.

Retail Theory of ZARA

Table of Contents
INTRODUCTION...........................................................................................................................1
Introduction to Company........................................................................................................1
Main significant changes at UK fashion retailing sector........................................................2
PEST................................................................................................................................................2
Political factor........................................................................................................................2
Economic environment...........................................................................................................2
Social environment.................................................................................................................2
Technological environment....................................................................................................3
SWOT analysis................................................................................................................................3
Strengths.................................................................................................................................3
Weakness................................................................................................................................3
Opportunities..........................................................................................................................4
Threat......................................................................................................................................4
Significant Changes in Micro environment.....................................................................................4
Strategies and Tactics in Adopting Changes...................................................................................5
RECOMMENDATIONS.................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Retail theory is considered as a procedure in which organisation focuses on selling product
to its consumer by using various channel for gaining profit margin. Therefore, it has been
analysed that fashion retail sector is a kind of organisation that help in providing goods to its user
at market place. They primarily deal with accessories as well as product that are fashionable.
Here in this assignment the company should be undertaken named as Zara. It is considered as the
well known company across the world and they operate their own brand like Zara home, pull and
bear and so on. They emphasized on fashion retailing Organisation in which they use current
iteration in goods by assessing internal as well as external environment. They also provide
description regarding different strategies that help the company in satisfied the customer with
their changing needs. In this report the recommendation regarding the retailing companies also
discussed and also there are different competitive challenges that help in promoting goods that
generate awareness regarding brand (Taufique and Vaithianathan, 2018).
Introduction to Company
Zara is considered as a well known company of fashion clothing that is situated in Spanish
and they provide superior quality goods to its customer at relatively less price. They focus on
increasing share market in which there are male as well as female among the age of 2245 and
they offer fashionable clothes to its user. This organisation was situated in the year of 1975 by
Amancio Ortega. It is the biggest retailing company across the world in which 7475 outlets
operate their business across the globe (Song, Song and Sun, 2019). They operate their business
in Germany, Italy as well as France and so on. They operate their business in UK also and they
have 51 outlets there. The company focuses on providing goods as per the behaviour ore attitude
of the user at market place.
Main significant changes at UK fashion retailing sector
Retailing industry is considered as a biggest sector that offers employment opportunity to
an individual person at UK. It helps in increasing or used in globalisation and provides the goods
as per the demand of user and also cope up with the fashion retailing sector. This company
focuses on assessing internal as well as external environment that help in assessing alteration
within fashionable industry and also help in providing goods as per the need of user. For
assessing these kinds of changes the PESTEL analysis is used by ZARA that is given below:
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PEST
Political factor
Political factors are those which are directly related to rules and regulations of the
government in the area where the organisation is working. Zara home market of organisation is
UK and outside market is whole world. In the current time, free trade agreements with in the
Europe are helping this Zara to boost the sale. By the help of free trade agreements, Zara can
easily move its goods and services between European countries as well as other countries
without any tariff and no restrictions on the quality and quantity of import and export. This factor
is helping his organisation in improving its function as well as becoming a great importer and
exporter of production services outside the UK. New tariff also improve cost of the organisation
in help in achieving cost effectiveness within the market.
Economic environment
Zara determine inflation rate, interest rate as well as economic growth for taking effective
decision in future period of time. It has been analysed that there is a very changes within
economic environment due to increase in inflation rate that decreases the purchasing power of
individual person. Therefore the Zara focuses to offer goods at relatively less price in order to
attract large number of customer at marketplace.
Social environment
Due to enhance in the requirement of its user for broader goods it is necessary for
organisation to provide online platform to its customer for attracting them it also help in boosting
level of productivity at broader scale. The organisation focuses on assessing the requirement of
fashion clothing at UK and they offer well as per the culture. For instance ZARA run their
business and also assess the different culture and provide the goods accordingly. There are very
social changes at UK that enforces the company to offer qualitative product to its customer for
satisfying them.
Technological environment
It is necessary to implement innovative technology within the fashion industry at UK that
helps the company in providing latest design to its user. The current technology also helps in
providing online platform that attract large number of customer towards company. Due to current
changes in the technology it help in promoting and enhancing goods by using online sources that
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imposes direct influences on Profit margin of Zara. Therefore the current changes which is
adopted by Zara to work on online store and enhance their goods by using various social media
techniques that help in growth and development of organisation (Allmendinger, 2017).
Legal factor: It includes laws, legislation as well as various regulations that impose
direct impact on fashion retailing sector. There are various alterations involving legal factor at
UK like they introduce minimum wage rate and avoid discrimination in term of gender. And also
their focus is on offering extra rewards or incentive to its worker for increasing profit margin.
Environmental factor: As per the Government of UK they mainly focus on various
natural resource, quality or standard of living to its user. Zara also focuses providing paper bags
rather than Polythene bags to provide friendly environment to its user (Hayes, 2018).
SWOT analysis
SWOT analysis can you define a Framework which is used by the organisation to identify
the strengths weaknesses opportunities and threats within the current market so that it can make
effective decisions according to the requirements.
Strengths
 Global market expansion is a major strength of Zara where companies operating more
than 2200 stores in 93 countries.
 One more strength of Zara is that organisation is operating on online shopping platforms
which helpful to the form in reaching large number of customer in different countries and
enhancing the sales.
Weakness
 The major weakness of Zara is that organisation is lacking in utilising the digital
platforms to advertise and market its products and services. In comparison to competitive
brands like Nike and Adidas. They are developing organised technology and using the
changing technology for marketing digitally and achieving a separate market base in
comparison to Zara.
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Opportunities
 The online shopping to increase its market share with the greater positive for the firm. In
current time, because of covid there is increase in online shopping. This is helpful to the
Zara in achieving more market share by selling the products and services.
Threat
 Economic instability is a major threat in front of Zara this is because organisation is
operating in various countries where the home country of the firm is Britain. Due to
impact of BREXIT and other changes in policies organisation has to face some kind of
difficulty in relation to economic and political instability.
Significant Changes in Micro environment
It is necessary to make necessary changes within internal environment that help in
identifying the behaviour of consumer in order to gain competitive edge at marketplace. Zara
determine numerous factors to assess the attitude of consumer, supplier as well as competitors
and provide the goods as per their needs of user. There are various internal environmental factors
that are given below:
Customer attitude and behaviour it is necessary to provide changes within behaviour or
attitude of user by offering qualitative goods at relatively less price. The main purpose of
organisation is to provide higher quality product to its customer as per the change in fashion.
Supplier behaviour the organisation focuses on providing raw material to its supplier
and focuses on optimum utilisation of resources by supply without any disturbance as well as
fulfils the requirement of its user. If the supplier provides goods to its user at a relatively higher
cost than they lost its quality and enforce the Zara to lose its share of market and erode profit.
Competition level: There are various competitor of Zara such as Gucci, Mango as well as
many more therefore they assess the strategy and tactics of competitors for providing product as
per the need of user. They assess the strategy which is made by competitive firm and take
appropriate decisions in respect of manufacturing procedure. If the rivalries firm make the
strategy in relation to customer then they offer goods as per the needs.
Strategies and Tactics in Adopting Changes
There are various changes which is implemented by the fashion retailing sector therefore
they consider internal as well as external environmental factor for satisfying the need of
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customer. By analysing the external environment it has been said that there is a need of boost in
technology by using internet and offer clothes as per culture requirement of its customer. The
main purpose is to increases share of market and also boosts its level of productivity.
Technological Change
It is necessary to assess the external environment for implementation of innovative
technology for increasing rate of growth factor for cope up with the alteration the Zara use
different strategy that is mentioned below:
 Zara focuses on providing online platform to its customer and also offer superior quality
product to its customer in order to gain competitive edge at market place.
 Zara launch machineries that help in cope up with the current changes and also offer
latest design of goods to its user for increasing productivity level and satisfy the need of
its user.
Social Change
Due to enhancing globalisation consumer focuses on requirement of product as per the
belief, culture and also there is a frequent change in the behaviour of user and they adopt
qualitative product as per the trend and fashion. Therefore Zara use different strategy that is
given below:
 Zara adopt differentiation strategy for providing unique product with customer in order to
gain competitive edge at marketplace They provide the product that satisfy its customer
and also it help in achieving it is leading position at market place.
 For cope up with social changes the user focuses on adopting strategy that is related to
the consumer and offers the goods and services for attracting large number of customer in
order to gain competitive edge at Marketplace.
Strategies in order to meet micro environmental changes
There are different changes or alteration that is assessed in behaviour or attitude of
consumer and also addresses the behaviour of supplier because of increasing in the level of
competition that is confronted by the fashion retailing industry and also there are various changes
that is adopted by organisation because of increasing level of competition and also the
organisation use the pricing strategy in respect of brand they offer superior quality product to its
customer by offering quality products to them. It helps in capturing largest share of market in
order to earn more and more profit margin for providing goods as per the demand of customer.
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The Zara emphasized on the strategy in relation to the consumer that helps in satisfying the
requirement of user. It also increases profit margin and sales during the particular phase of time
period (Kuruzovich and Etzion, 2018),
Use of appropriate theories
There are various changes or alteration which is needed in changing business
environment and also it is important for the organisation to adopt concept related to fashion
clothing company and also it help in achieving leading position at market place (Shaikh and
Gandhi, 2016). There are various theories which is adopted by Zara name the cyclical theory
that is given below:
The wheel of retailing theory
The wheel of retailing theory was given by Philip Kotler that provide the retailer to offer
the proper cycling for maintaining sustainability at market place for a longer time period. In
reference of Zara, there are various levels or steps that are given below:
Step 1: fewer prices, less profit margin and reputation are going to be low.
Step 2 if the price is higher than it increases the reputation of organisation.
Step 3 in this step the retailer focuses on increasing profit margin by adopting necessary
changes.
Herein the theory focuses on follow and focuses on increasing or boosting profit margin
and also increases the largest share of market share. Zara focuses on assessing the competition
and also adopt the necessary changes at Marketplace. This theory help the organisation in
assessing the condition of market in proper manner and also focuses on cope up with these
internal environmental alteration for capturing largest share of market and also the company
focuses on follow step for offering retailing services to its user (Han, Meng and Kim, 2017).
Accordion theory
This theory offers an opportunity to retailing company to bring the necessary changes that
help in increasing profit margin. Therefore, in given theory it has been analysed that taking
appropriate decisions on the basis of these theories in future period of time. It is also necessary
for Zara to assess the external environmental factor for cope up with these external
environmental changes and take appropriate action and use the strategy for attracting large
number of customer at Marketplace. It also helps in increasing share of market during the
particular phase of time period (Edwards, 2017).
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RECOMMENDATIONS
On the basis of given report it is the analyses that for increasing the productivity levels as
well as profit it is necessary for Zara to use the necessary changes for a survival and maintain
themselves in changing environment of the business at market place. There are various
recommendations which are adopted by Zara Company that is going to be mentioned below:
 Zara focuses on providing online platform and also implementing advanced technology
in order to provide the fashionable goods to its user. They also offer the convenience to
purchase product and also increases the user to make comparison of goods in respect of
competitive goods.
 The company also focuses on increasing awareness regarding the product by using
various social media technique likes Instagram, Twitter as well as Face book and then
focuses on influencing or promoting the products of the organization.
 Zara also focuses on partnership with other organization that is deal in similar kind of
goods and also they focuses on providing superior quality goods for capturing largest
share of market that is profitable for the company in future period of time.
CONCLUSION
On the given report it is analyzed that retailing fashion industry focuses on expanding or
boosting their organization and create a employment opportunity for its employees within a
country. They focus on satisfying the need and requirement of consumer by providing goods as
per their need and it also increases the profit margin and also boost to the customer base. The
company adopts the micro as well as micro environment and use the strategy for cope up or
handling the changes of the organization.
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REFERENCES
Books and Journals
Taufique, K.M.R. and Vaithianathan, S., 2018. A fresh look at understanding Green consumer
behavior among young urban Indian consumers through the lens of Theory of Planned
Behavior. Journal of cleaner production, 183, pp.46-55.
Allmendinger, P., 2017. Planning theory. Macmillan International Higher Education.
Hayes, J., 2018. The theory and practice of change management. Palgrave.
Dewar, D. and Watson, V., 2018. Urban markets: developing informal retailing (Vol. 8).
Routledge.
Kuruzovich, J. and Etzion, H., 2018. Online auctions and multichannel retailing. Management
Science, 64(6), pp.2734-2753.
Shaikh, A. and Gandhi, A., 2016. Small retailer’s new product acceptance in emerging market: a
grounded theory approach. Asia Pacific Journal of Marketing and Logistics.
Edwards, C., 2017. Turning houses into homes: a history of the retailing and consumption of
domestic furnishings. Routledge.
Han, H., Meng, B. and Kim, W., 2017. Emerging bicycle tourism and the theory of planned
behavior. Journal of Sustainable Tourism, 25(2), pp.292-309.
Song, G., Song, S. and Sun, L., 2019. Supply chain integration in omni-channel retailing: a
logistics perspective. The International Journal of Logistics Management.
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