Retail Theory and Practice Retail of Zara

Running Head: MANAGEMENT 0
RETAIL THEORY AND
PRACTICE

MANAGEMENT 1
Contents
About Retail...............................................................................................................................2
Background to Zara....................................................................................................................2
Key significant changes within the UK fashion retail...............................................................3
Significant variations within the microenvironment..................................................................5
Tactics and Strategies.................................................................................................................6
Recommendations......................................................................................................................8
Summary....................................................................................................................................9
Reference List..........................................................................................................................10

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About Retail
Retail concerns with the sales of products from a single point (such as supermarket, malls and
departmental stores) directly to the consumer in small quantities for meeting the purpose of
end use. In retailing, there is direct interface with the customer and the synchronisation of
business activities from end to end – right from the design or concept stage of an offering or
product, to its delivery service to the consumer (Beck and Rygl, 2015). Globally, retail
industry is one of the fastest growing and vibrant industries that have contributed to the
economic growth of many countries. For instance, the economic output of the retail sector in
2017 was £92.8 billion and it represents 5.0 per cent of the UK total GDP. The retail industry
is the UK major private sector employer with nearly 3 million peoples and in 2019, it has
generated £394 billion worth of retail sales. Furthermore, Growth in UK retail sales in 2019
was 3.4 per cent (retaileconomics.co.uk, 2020).
Background to Zara
Zara is one of the leading home brand store and a part of Inditex Group founded in 1975 with
its first store in Spanish coastal city. From its commencement of business, Zara is always
committed to its core values and put customer at the heart of their unique business model.
Furthermore, the brand has established its store and online network in more than 96 countries
globally and with its 2238 number of stores. The company brand value is also increasing
parallel to the revenue as in 2019, its brand value comes out at nearly 18.4 billion U.S. dollars
(statista.com, 2019). One of the unique things about the company is its manufacturing
development and supply chain. As per the research, 50%, 26% and 24% of Zara products and
accessories are developed in Europe, Spain and Africa.

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MANAGEMENT 3
Globally, Zara has also maintained a network of 1,800 suppliers and the company also have
implemented various cost effective measures such as assigning 57% of its product facilities in
close proximity to their main markets such as Spain, Portugal, Morocco and Turkey
(inditex.com, 2018). In the evolving fast fashion industry, Zara also maintaining its pace with
digital and technological innovation. For instance, Zara comes up with self-checkout stores in
2016, placing RFID technology in stores (Gilliland, 2016) and also using cutting edge
systems to track down the place of products and match the demand and supply instantly.
These developments of the company have been enriched by increasing competition from both
offline retailers like H&M and online retailers like Amazon.
Key significant changes within the UK fashion retail
The UK fashion and clothing sector has been undergoing a significant change in response to
globalization, shift in consumer demand and also the changing business activities in relation
with strategic market decisions. The fashion retail industry of UK needs to keep moving to
stay alive and here collections come and go with the periods while carrying a renewed wave
of trends, however, in recent years, there has been seen a basaltic shift in the sector driven by
technological progressions and rising pressures from customers for greater transparency and
developed social and ethical standards (McCormick et al, 2014). To better analyse the UK
fashion environment, PEST tool has been used to analyse the industry and business
environment on a macro level with identifications of its impact on Zara.
Political Factors – With the UK exists on the EU, the fashion companies including Zara
have to face various uncertainties like increase in tariffs. The UK and Spain before being a