Zara's Business Model and Success Factors

This assignment delves into Zara's successful business model, examining its strategies, technologies, and competitive advantages. It analyzes the brand's SWOT (Strengths, Weaknesses, Opportunities, Threats), highlighting key factors driving its success in the fast-fashion market. The analysis also considers Zara's environmental impact and future prospects.

Inquiry Based Report
Trends In Retail Industry

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Retail trends in United Stated (UK).............................................................................................1
Analysis of Zara...........................................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Retail refers to the activity of selling goods and services to the customers through various
intermediaries. It has its own industry which is on 5th position. It has various companies that are
running its business. Report will highlight the retail industry & its trends in UK, Zara's retailing
& its trends and recommend and action plan of Zara.
MAIN BODY
Retail trends in United Kingdom (UK)
In UK, retail industry has vast area with the largest industry to provide higher
employment opportunities. With more than 3 million workers, this industry is earning
increasingly profits. In year 2017, the total value of UK retail sales was around £395 Billion. It
also increased its growth in 2017 by 4.3%. There are around 319000 retail business in year 2018
in UK. There are top 10 UK retailers whose sales is high in year 2017-2018 -
COMPANY SALES
Tesco £38.7 bn
Sainsbury's £27.9bn
Asda £22.2 bn
Morrison's £17.3 bn
John Lewis £10.2 bn
Aldi £10.0 bn
Marks & Spencer £9.6 bn
Co-operative £9.5 bn
Amazon £8.8 bn
Boots £6.8 bn
(UK RETAIL STATS & FACTS, 2019)
Here, a list is shown below in which annual revenues of Total UK retail company in 2017
are as follows -
Company Revenue in %
1

Tesco 12.50%
Sainsbury's 6.8%
Asda 6.60%
Morrison's 4.40%
Amazon 4.20%
John Lewis 3.30%
Marks & Spencer 3.30%
Aldi 3.00%
Boots 2.60%
Dixons Carphone 2.30%
(Amazon now 5th largest retailer in UK. 2017)
Here, a list is shown below in which market shares of Total UK retail company in 2018 are as
follows -
Company Market Share
Tesco 27.40%
Sainbury's 15.50%
Asda 15.20%
Morrisons 10.40%
Amazon 16.00%
John Lewis 23.30%
Marks & Spencer 3.30%
Cooperative 6.60%
Aldi 7.60%
(Market share of grocery stores in Great Britain from August 2012 to August 2018, 2018)
Current Trends of UK Retail Industry
Faster e-commerce shipping
2

The focus of online retailing company is on faster shipping of orders from customers
which now become a trend in Retail industry. As the share market and demand of online retail
companies continued to increase which lead them to face a lot of challenges. One of the major
challenge is Slow shipping. Thus, to attract more and more customers, companies are now doing
faster shipping with lower costs. The effective rise in the e commerce trends have also improved
the overall performance of the local and international level offline fashion stores like ZARA
(Duhan and Singh, 2019). The online and digital based operations which are taken in knowledge
will help in improving the quality of service measures and operations which will help in setting
up of operations in significant manner.
Rely on Messenger Robots
This is a major current trend which is being used by every company in their websites,
online stores and application on mobile. Messenger Robots talks to the customers when they
want to do and whenever they want to do. It also helps customers to track their delivery status
and order details (Kolassa, 2019). The instant messenger robots will play a significant role in the
setting up of operations and guidelines which will help in proper assessment of operations related
to an inquiry or doubt by a buyer or customer. This measures will help in enhancing the overall
performance to a significant level.
Collaboration
To reduce the competition in retail industry and to gain competitive advantages, two
retailing company are doing collaboration with each other in the form of merger or takeover or
acquisition or strategic alliance or joint venture. It not only help both companies to gain revenue,
but it also helps company to earn synergies as well (Wang, 2018). The collaboration approach
that is been carried out by the fashion based organization's will not only improve the
organization's accessibility towards its customers but also improve the sales and profit of the
fashion based enterprise. This will help in improving the quality of products that are taken in
consideration by the fashion industry enterprises and improve the inquiry resolution measures
that are undertaken by the firms in this industrial sector.
In Store Experiences
Customers starting value experiences over material possessions. When customers started
possessive for the materials, they lost their interest in them and ended up with replacing them
with another materials. Thus, retailing company are started selling in store experience. Because it
3

serves happiness and memorable experience to the customers (Duhan and Singh, 2019). As the
positive perception of the organisation will be carried out and developed by a fashion based
organisation like H&M. This will help in proper development and implementation of operations
which will help in carrying out of services helping in improving their mindset towards the
product and pursuing the buyers or customers to make out the purchase of suitable good or
service that is been offered by fashion based organisation, H&M (Meeker and Wu, 2018.).
Future Trends of UK Retail Industry
Digital Mobile Wallet
Today's era is mobile era. There are so many changes in mobile technologies that
customers don't need to keep cash in hand. They have their cash in their mobile. That's it,
company are now using its own mobile wallet which make customers comfortable in payment.
For example Amazon launched its own mobile wallet which help customers to pay anything for
amazon order from amazon pay wallet.
Data Based Decision Making
Slowly slowly, Data role in decision making of retailing company is increasing which
help them to collect and leverage the data in the context of sales, marketing, strategies,
operations and customer services. For example – Aldi get to know about the new strategy which
is being used by another company for the quality improvement by data collected through
research so Aldi can also prepare its own quality improvement strategy. Like this data will help
company to take accurate decisions which might help company to earn more profits (Meeker and
Wu, 2018).
Personalization
To attract more and more customers towards brands, company is all set to bring
customized products in near future which will become trend in industry. In this, company will
make products according to the choice and preference of customers in order to make them loyal
customers. It will not only fulfill the demand of customers, but help company to grow more in
competitive environment (Dimitrova, Rosenbloom and Andras, 2017).
Analysis of Zara
BACKGROUND OF ZARA
Zara is a multinational company which is dealing in fast fashion (clothing & accessories)
under retail industry. It was founded in year 1975 by Amancio Ortega and Rosalia Mera. Its
4

headquarter is in Arteixo, Spain. It serves its products and services worldwide. It has 10000+
stores. Zara's revenue was £14.68 bn annually. Currently its CEO is
Oscar Perez Marcote. Zara operates its business across 88+ countries around the world. In year
2010, Zara launched its online store (Lala, 2018).
After opened a small store in Spain, in year 1988, Zara started expanded its business in
various countries such as Portugal and in year 1989, United Stated. In the 1990s , it entered into
France(1990), Mexico(1992), Greece, Belgium and Sweden (1993). In the 2000s, it opened its
store in Japan and Singapore(2002), Russia and Malaysia(2003), China, Morocco, Estonia,
Hungary and Romania(2004), South Korea(2008), India(2010) and South Africa &
Australia(2011) (OUR STORY, 2019).
Zara has become popular in a short spam of time due to its distribution strategy. Zara new
collection reach at its stores within 14 days and its other competitors' collections take 6 months
to reach at its stores (Brenot and et.al., 2019).
PRIMARY AND SECONDARY DATA ON ZARA
It will include the developing of a close ended questionnaire which will help in execution
of primary and secondary data analysis on fashion retail enterprise, ZARA.
Q1. Is the customer care services that are undertaken by ZARA effective in resolving inquiry of
customers?
 Yes
 No
 Not Sure
Q2. How much time on an average does an query of customers takes to be process out?
 Within 24 hours
 Within a week
 About 15 days
Q3. Are the Inquiry management operations which are taken by the firm helps in improving
customer satisfaction and retention level?
 Yes
 No
 Not Sure
5

PERFORMANCE OF ZARA
Strength 1 of Zara – Investment in Technology
Zara has been making huge investments in advance technologies in order to bring
efficiency in production and distribution of products and improve the performance in compare to
the previous one. Zara is the one who introduce RFID technology which help company to
analysis its sales trend (Zara SWOT Analysis, Competitors & USP, 2011-2019).
Strength 2 of Zara – Strong Supply Network
Zara has strong supply network as compared to its competitors. Zara's new collections
reach its stores within 2 weeks as compared to its competitors whose collections reach its stores
in 6 months. This network help Zara to grow more and attract its customers (Moutinho and
Phillips, 2018).
Weakness 1 of Zara – Lack of Marketing Strategies
As compared to its Competitors, Zara is less focus on its marketing and advertising
strategy which make Zara to face less brand awareness issues, which creates high competition
for Zara.
Weakness 2 of Zara – Low presence in Emerging Market
Zara is not making its presence in some fast growing and emerging market. Zara has 20
stores in India, 10 in Malaysia, 11 in Thailand and 1 in New-Zealand. This lead company to earn
less profit in comparison to its competitors in these market (Wang, 2018).
RECOMMENDATIONS AND ACTION PLAN
It has been recommended that -
Zara should focus on its marketing strategies. Because Zara has strong supply and
distribution strategies with economically pricing strategies which make Zara's sales and profits
increase. Thus, Zara should focus on its marketing strategies. For that Zara can use the
combination of various mediums such as Advertising, Personal Selling, Ambassadorship and E-
marketing. For E-marketing, Zara can use social media marketing, email-marketing, video
marketing etc. for the purpose of increase its brand awareness so that customers can attract
towards Zara and Zara can beat the competition and gain competitive advantages.
Zara has low presence in growing and emerging market. Growing and Emerging market
means that market where customers are ready to consume the products but the quality should be
good and price should be reasonable. Zara fulfills conditions of emerging market because it has
6

extremely good quality and its products price are reasonable which can attract the consumers and
through this Zara can earn more profit. Thus, Zara should open more stores in that markets and
aware the customers with marketing strategies. Also Zara can use corporate strategies such as
merger, acquisition, takeovers, joint ventures etc. with another good company who has good
presence in that market which can be beneficial for both company as Another company will gain
technology advancement and good quality products and Zara will get market and customers.
Zara has limited quality and many errors regarding clothing products, which make their
loyal customers disappointed. This lead company to lost its loyal customers which is not good
for them. Thus, Zara should focus on the new designs and new qualities which can attract the
customer. For that Zara can carry various actions such as Participating approach, hire experts and
making customers center of business. Company should involve their customers in decision
making process and brain storming meetings and encourage them to think something new. For
that they can use motivational incentives such as bonus, commissions, bonus shares,
participating in profits etc. Company can also hire experts who have expertise in new designing
products and quality. Company can also ask from their customers about designs, styles and
qualities. These all lead company to produce new products and attract customers.
Zara should make its interface user friendly and make its sites appealing and attractive so
that customers can attract towards Zara. For that Zara can hire IT specialized employees and
keep updated with the trend of Site development and Interface development.
Zara should focus on the market research so that they can get to know more about the
market, industry and fashion trends in different market and accordingly plan strategies and
actions in order to win the heart of customers and beat the cut-throat competition.
Zara has its own unique brand. It means Customers are aware of its brand. Thus, Zara
should expand its business in different industry. Zara has huge funds, advancement technology,
market share, which can help Zara to enter into another industry successfully. For that Zara can
conduct market research, hire specialize employees and experts in order to get to know more
about the industry.
CONCLUSION
From the above study, it has been summarized that Zara has its own unique journey
which inspire so many businessmen to open and run its business effectively. Zara has invested in
7

technologies which make Zara a successful brand. Zara should focus on its weaknesses in order
to gain more market share and increase its profitability.
8