Retail Industry Trends: Zara's Business Model Analysis and Growth

This report provides an analysis of Zara's business model within the context of current retail industry trends. It begins by outlining key trends such as online selling, social media advertising, sustainability initiatives, direct customer relations, and multi-option payment systems. The report then delves in...Read More

Project

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Current trends in retail industry...................................................................................................1
Analysis of an organisation on the basis of business models .....................................................2
Recommendations........................................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
Online...............................................................................................................................................8
Appendix:.........................................................................................................................................9

INTRODUCTION
There are various kinds of trends in retail industry which help the company to grow well
among their targeted customers (Bodolica, Spraggon and Soueid, 2019). Inquiry based learning
is the way of collecting and analysing those data which are relevant and valid to make a
appropriate conclusion about a topic. This will help individual to learn the ways to solve specific
business problems by providing recommendations. Zara is the chosen organisation for this
assessment. The following report covers trends in retail, analysis of organisation and
recommendation.
MAIN BODY
Current trends in retail industry
Retail industry is one of the fastest growing industry at global level level because the companies
in this industry follow the trends and fulfil the needs and wants of their targeted customers.
There are few of the trends in retail industry and these trends are mentioned below-
 Selling products through online- Earlier when internet and e-commerce are not much
popular than at that time customers prefer to go out of their home and reach to the retail
stores to buy their needed products (Petersen and Pedersen, 2021). But now, when e-
commerce is helping retail industry to grow well then most of the retailers including Zara
delivering their products to their customers through online mode. Customers enjoy their
shopping habits through online mode because they do not need to travel any -place and
they can buy any retail product while sitting at home with good amount of discounts.
 Social media advertising- Most of the retailing company have social media accounts and
they promote the product and brands to attract customers at global level (Piedrahita
Orozco, Ochoa-Zezzatti and Delgado Lechuga, 2021). Social media platforms such as
Instagram, Facebook and many others are having global reach which means followers of
one brand can track the promotional activities of their followed brand or company. For
example, if Zara introduces any new design of their dress and they upload pictures and
videos of that new dress on social media channels then their customers in Asian countries
or any other country can also get to know about their new design launch because they are
connected through social media accounts.
1

 Adoption of sustainability activities- Sustainable activities are those activities which are
done with the main purpose to utilize resources in such a manner which will help to fulfil
the needs of current generation as well as future generation. In context of retail industry,
there are many companies which are using organic fabric to manufacture the dresses
(Ying and et. al., 2021). They also offer paper bags instead of plastic bags to handle the
clothes to their customers. CSR activities not only help the retail companies to utilize
their resources in better ways but it is also help to develop brand image of their
organisation. Customers can easily trust the companies who are ethical toward the
environment and society.
 Direct relation of brand and customers- Earlier whenever customers are having any
complaint or any doubts then they need to communicate with middle chain distributors
and wait for a longer period of time to get response from main company (Aftab and et.
al., 2018). Nowadays, companies are having their official websites and they provide
direct contact detail to their customers so that their customers will directly communicate
with the company and the company will resolve the issues and complain of customers as
quick as possible (Deutch, 2022). This will also help the brand to gain the feedback from
customers that which all factors are helping the company to gain the trust of their
customers and which are not so that they will majorly focus on positive factors in gaining
high customer experience.
 Multi-option for payments- Retail companies are giving various options to their
customers for their bill payments like they allow cash, credit cards, digital payments
through any digital payment app and many others. This is happen to provide flexibility to
customers so that if any customer did not carry cash with them then they can use digital
form of money to pay their bills. This option also help the retail stores to release their
large queue at payment area as soon as possible to avoid over crowding at the store.
Analysis of an organisation on the basis of business models
Zara is one of the most popular brand at worldwide level. This company was founded in
the year 1975 by Amancio Ortega. The company is having aproximate 2,200 stores in over 88
countries across the globe. The company is headquartered in Arteixo, Spain. As per the statistical
report of Zara, the total number of employees of this company is 165, 042 in the year 2021
(Number of employees of the Inditex Group worldwide from 2010 to 2021, 2022). When the
2

company initially started then the name of this company is kept as “Zorba” which is based on the
name of a film “Zorba the Greek” but when the owner of this company get to know that the same
name is kept by nearby bars then they decided to modify the name for their shop and stay with
“Zara” till now. At the initial days, the company sold their clothing products at low prices but
when they get to know that fashion industry is switching to quality over quantity then they start
focusing to provide high quality of products at high prices to maintain their brand image. During
1980s more shops are opened in Spain and hiring of new employees took place. With the help of
globalization, company also adopted high quality of tools and machines to manufacture their
dresses for their customers. They are now more focused to target large segmented group from
fashion market and now they are having clothes for male and female as well as for children.
Their main targeted customers are from the age group of 18-35. They are not only dealing in
clothes but they also sell footwear, accessories, perfumes and beauty products. In May 2021,
Zara launched its first beauty line which is called ZARA Beauty.
Analysis of Primary data
Primary data is that data which is going to collect first time by investigator. In context of
Zara, they majorly use questionnaire to analyse the preference of their customers toward their
brand and products. A questionnaire is formed for the targeted customers of Zara and 50
customers are chosen by the company to distribute the questionnaire. These customers are from
both who prefer to shop through online mode as well as from offline mode. From the responses
collected through questionnaire, it is analysed that most of the customers are happy and fully
satisfied from the brand Zara because their quality is good. Huge number of customers are also
satisfied regarding the services at Zara stores.
Collection of secondary data-
Secondary data are those data which are collected from books, journals, government's website
and many others. SWOT analysis of Zara is mentioned below-
Strengths-
Brand value- Zara is having high brand
value and high brand recognition among
their customers (Duoyan, 2021). Due to
their high brand value they can also attract
new customers.
Weaknesses-
Limited advertising- Zara is having limited
advertising activities as compared to other
brands. They rely on their brand image and
word of mouth technique of promotion.
Lack of ethical support to employees-
3

Supply chain management- According to
a report, Zara is having good supply chain
management all across the globe. They
deliver their products within two working
days at required location.
According to a report and employees
reviews on internet it is analysed that
employees are not having good working
condition at Zara and they are treated bad by
their seniors (Chen, 2022).
Opportunities-
Customized clothing- It is one of the
biggest opportunity for Zara to grow that
they must analyse the need and wants of
their main customers and then design their
clothes as per their customer's will.
Expanding business- Asian countries and
US are having less stores as compared to
other countries (Liu, 2021). They must
analyse their demand and must open new
stores at those locations where they are
having high demands.
Threats-
High competition- The main competitors of
Zara are H&M, Gucci, Burberry and few
others. These brands are having high brand
image and high customer base which help
them to gain competitive advantage.
COVID 19 Pandemic- This is the global
pandemic due to which government restricts
the local citizens to move out of their home
to protect them to get infected with Corona
virus. Due to this pandemic customers are
spending their income less on fashionable
products and spend more on healthcare
facilities.
Impact of current retail trends on organisation's performance
It is seen that Zara grow with rapid speed with the current trend of their industry. They
adopted digitalization and use various digital ways to make their work easy. Selling through
online mode helps the company to enhance their sells and help them to earn good amount of
profit. They are working with all current trends and they also adopt high standards of
sustainability within their stores and organisation. They also prefer to keep good relationship
with their customers so that they will analyse their preference and offer them accordingly.
Recommendations
There are various kinds of recommendations for Zara to enhance their productivity and
profitability and these recommendations are mentioned below-
4

 Use customer analytics tools- It is recommended to the Zara managers to use customer
analytical tools to analyse the success of business in terms of buyer engagement. This
tool will help them to analyse which product from their company is having more sales
than other products so that the company will improve their least selling products. Few of
the best customer analytical tools are Mixpanel, Google Analytics, Woopra, Brandwatch
and many others. These analystical tools measure customer experience and help the
companies to improve those factors which will improve their brand image.
 Digital trolley- Every customers use trolley while entering any retail store. Zara is
recommended to use digital trolley which means whenever customers put items in the
trolley then it will automatically billed at billing area and in case customer want to
remove the item from trolley then it will deducted from the list automatically. When the
shopping is get finished by customers then customer can avoid to stand at big queues and
directly pay their bills and leave the stores.
 Must ask for feedback- It is also recommended to the Zara that they must ask their
customers to provide feedback for their products as well as services on timely basis so
that they will make modifications on those products and services which will help them to
grow well.
 List out the complains and customer issues- A team must be hired by the Zara to list
out the complaints from both customers as well as from their employees so that they will
analyse which is the biggest problem for them to grow well. This team should not only
have the responsibility to list out the complaints but it must have the alternatives of
solutions to solve the issues after analysing the depth of the problem.
5

CONCLUSION
From the above information it is concluded that there are various trends in retail industry
and these trends get changes over time. The companies who adopt these trend as soon as possible
will grow better than those companies who avoid to adopt current trends. In context of fashion
retailing industry, the current trends are digitalization, social media advertisements, direct
communication between company and customers and many others. A good relationship between
customers and company will help the company to analyse what are their main strengths to satisfy
their customers.
6

REFERENCES
Books and Journals:
Aftab, M.A. and et. al., 2018. Super responsive supply chain: The case of Spanish fast fashion
retailer Inditex-Zara. International Journal of Business and Management, 13(5), p.212.
Bodolica, V., Spraggon, M. and Soueid, M.A., 2019. Innovation drivers and trends in the retail
industry: an application to emerging markets and the case of the Gulf
region. International Journal of Comparative Management, 2(1), pp.51-66.
Chen, Y., 2022. How ZARA Should Improve Guest Satisfaction After the Xinjiang Cotton
Incident. Frontiers in Business, Economics and Management, 3(3), pp.137-143.
Duoyan, H., 2021, April. Research on ZARA Strategy from the Perspective of SWOT Analysis
Method. In 2021 6th International Conference on Social Sciences and Economic
Development (ICSSED 2021) (pp. 201-205). Atlantis Press.
Liu, Y., 2021, December. Analysis of the Marketing Strategies of Fashion Brands in the
Economic Environment of Social Media. In 2021 3rd International Conference on
Economic Management and Cultural Industry (ICEMCI 2021) (pp. 707-711). Atlantis
Press.
Petersen, E. and Pedersen, C., 2021. Securing Successful Omni-Channel Logistics: An
Investigation of Required Competencies to Adapt to the Trends and Challenges of the
Retail Industry.
Piedrahita Orozco, S., Ochoa-Zezzatti, A. and Delgado Lechuga, G., 2021. Using Machine
Learning to Predict Online Buying Behaviour, Wholesale and Fashion Marketing at
Zara, an Analysis Including Z Generation. In Technological and Industrial Applications
Associated with Intelligent Logistics (pp. 357-403). Springer, Cham.
Ying, S. and et. al., 2021. Managing big data in the retail industry of Singapore: Examining the
impact on customer satisfaction and organizational performance. European Management
Journal, 39(3), pp.390-400.
7

Online
Zara, 2022 [Online] available through:
<https://www.businessoffashion.com/organisations/zara/>
Deutch K., 2022. The Top Retail Trends in 2022 [Online] available through:
<https://squareup.com/us/en/townsquare/retail-trends/>
Martins A., 2022. The Future of Retail: Trends for 2022 [Online] available through:
<https://www.businessnewsdaily.com/9836-future-of-retail.html/>
Number of employees of the Inditex Group worldwide from 2010 to 2021, 2022 [Online]
available through:
<https://www.statista.com/statistics/456384/global-number-of-employees-of-the-inditex-group/>
SWOT Analysis of Zara, 2022 [Online] available through:
<https://www.edrawmind.com/article/zara-swot-analysis.html/>
8

Appendix:
Questionnaire
1) What is the main reason to choose Zara over other brands?
a) Quality
b) Price
c) Services
2) Do you think Zara use sustainable practices in their operations effectively?
a) Yes
b) No
c) Not Sure
3) Do you think Zara fulfil your needs and wants appropriately?
a) Yes
b) No
c) Not Sure
4) Do you agree that Zara is having good services than their competitors and their
employees solve your problems and issues related to brand?
a) Agree
b) Neutral
c) Disagree
9