Growth Opportunities for Zara in Online Retail Sales

This report discusses the growth opportunities for Zara in the online retail sales market. It explores strategies to increase market share, barriers to growth, and the resources contributing to Zara's growth. The report also provides recommendations for Zara to compete in the highly competitive fashion and beauty industry.

Running Head: ZARA
ZaRA
Report
MAY 4, 2019
ZARA

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Table of Contents
Introduction......................................................................................................................................2
Key Growth opportunities of Zara...................................................................................................2
Barriers in Future Growth................................................................................................................2
Resource that contributes in Firm’s Growth....................................................................................3
Possible solution of the problems....................................................................................................4
Best selective solution (Focus on Online Market)...........................................................................5
Tactics to implement the solution....................................................................................................5
Recommendations............................................................................................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

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Introduction
Zara is a leading Spanish company in lifestyle and retail sector, which was founded in 1975 by
Amancio Ortega Gaona and Rosalia Mera. Zara is available in more than 180 countries and
having more than 2000 stores all over the world. Zara is famous for its fashionable clothes and
beauty products. Zara is known for its marketing strategies and tactics (Anwar, Tariq 2017, 26-
35). Zara is a flagship brand of the Inditex Group. Inditex has more than 8 brands and
subsidiaries brands. This report is based on the growth opportunities for Zara in world market.
This report explains the possible growth strategies for Zara, which can help to increase its market
share in lifestyle and retail sector. The present report focuses on online sales opportunities for
Zara. The report also provides strategies and tactics that how Zara can be successful in online
retail sales and increase its market share in all over the world.
Key Growth opportunities of Zara
Zara is one of the famous brand in costume (fancy and modern clothes) and beauty product
markets. Zara is known for its marketing strategies. There are some key growth opportunities for
Zara in beauty markets are as follow:
Online E-commerce: Customer are now searching everything on internet and mobile phone.
The buying trend is shifting every day from offline market and physical stores to online market.
Zara can definitely utilize this opportunity of online buying trend. Zara can make its product
available for online customers in its own online stores. Although, some online channels such as
amazon, Flipkart, and Myntra are selling its product online but if Zara is focusing on this
concept, it will hike its sales (Alberto 2018, 48-56). If Zara opens its online stores in various
countries, it acquire large number of customers of other competitors as well, who have not
reached Zara stores ever.
Backing some flagship design: Every big brand has an advantage of flagship brands design in
their stores. But Zara is somewhere lacking in providing top or star products design. Zara should
focus on a particular design that should be sold on exclusively on Zara stores (Leire 2016, 18-
22).

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Growing market potential: Beauty products and costume market has huge growing potential.
The demand of these products is increasing every day with increasing population. Zara can focus
on future market and focus on some segmented market.
Barriers in Future Growth
There are some barriers in attaining these market opportunities:
Large number of online Retailers: There are large number of online retailers already exist in
beauty product markets. Therefore, Zara may face strong competition in the market. Apart from
this, the digitalization age provides opportunities to customers to make their own choice while
choosing their products. A small difference in price may leads to decrease in numbers of online
customers (Byoungho, Moudi, and Naeun 2018, 70-81).
High Product Cost: Zara is already charging premium cost for its product and only target those
customers who are ready to spend huge amount on beauty products. Thus, there is no meaning of
introducing flagship brands, if price is not controlled by the Zara.
High-Inflation Rate: The high inflation rate in the world may affect the demand of Zara
products. Zara already charging premium price for its products and target upper middle class and
higher income class for its product. Therefore, high rate of inflation may affect its growth to
expand its market worldwide. The potential market will increase in size but inflation affect the
demand of the Zara products (Ziying 2015, 217).
Resource that contributes in Firm’s Growth
Zara is one of the leading brand and it has plenty of resources to attain the growth opportunities
in beauty product markets.
Financial Resource: Zara have strong financial backup from its parent group organization.
Although, the profitability of Zara is increasing day by day and it spends huge amount and
research and development of its products as well. Although, to introduce online retail stores of its
own required less financial capital, while utilizing market growth needs huge capita to fulfil the
demands of customers (Shardul and Fine 2015, 15-18).

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Limitation: The parent Company of Zara has many brands, which create problem to allocate
huge financial resources to a single brand.
Human Resources: The need of human capital is very less in online stores, but Zara should
work on appointing new people for delivery jobs. This requires huge funds and human capital.
Although Zara has strong supply chain network in every metropolitan city of the world. Thus, it
can solve this problem easily. Apart from this, to full fill increasing future demand of customers
Zara needs large number of people in production house, while it also requires maximum retain
chain stores to fill the market demand and supply gap (Yuriy, Viacheslav, and Oleksandr 2018,
1764-1811).
Limitations: Zara manufacturing its product from machines and it has needed very less human
capital. Therefore, company have more bargaining power in terms of salary and working
conditions with workers. Even large number of delivery boy already involved in other delivery
services as well.
Technology: Spanish retail companies are known for the technological upgradation and
advanced customer experience by introducing new technology. Zara had already introduced
modern technology in its manufacturing and sales process. Zara focuses on it concept of eco-
friendly stores that shows its responsibility towards society and world. Zara using two processes
in its product manufacturing; first product manufacturing is done by the machines and then it is
assembled by the workers (Ulrike, and Claire 2016, hal-01316137).
Limitations: Technology is changing every day. Therefore, a change in technology or a better
technology adopted by competitor may affect the strategy of Zara.
Regulatory Resources: Zara fulfill all its obligation towards the laws and taxation policy in
every country where it operates its business operation. Zara pays heavy taxes in those countries
where it operates. Conducting online business in different countries also impose some financial
burden on Zara, but it has capability to do so as company is doing it from last few decades.

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Limitations: Every government has own policy and every government has different taxation
policy. Apart from this, using single currency in business also create problems in different
countries, where people deals in their own currency only.
Partners: Zara has strong supply chain network in all over the world for its physical sale.
Although, to sale its product online and deliver the product to customer is a long process and it
requires serval logistic and supply chain partners for Performing these activities. Although the
online channel like Amazon and Alibaba has its own supply and logistic company. Zara can also
adopt the same practice.
Limitations: The heavy demand of logistic and supply chain partners need a huge investment
and strong collaboration. If Zara is not picking right logistic company for its online operation, it
may affect the customer experience. The late delivery of products is also a major concern for
customers. Although, Company has strong financial backup by Inditex and strong supply chain
network all over the world, but doing business online requires totally new type of logistic and
supply chain strategy in this industry.
Possible solution of the problems
Fashion industry is very competitive and subject to rapid development and change because of
change in fashion and customer needs. People all around world are looking for best products in
cheap prices and quality service with instant speed. However, Zara is facing many problems
related to its brand and its business operations and which have multiple solutions:
Using Multiple Currency: Zara is using single currency in its business, which is not successful
in very country. Although Dolor is a strong currency in the world and accepted in almost every
country. But dependency of Zara on single currency may affect its sales. Zara should deal in
multiple currency and sold its product according to the economic situation of every country. For
example, if Zara wants to expand its business in China, it should accept the currency of China
Yen, while if it is operating its business in India, then it should consider Rupees (Ulrike, and
Claire 2016, 14-21).
Uniqueness in Brand design: Zara should focus on some unique design and products. In
modern days, everything is imitable and if Zara will offer something different from others. For
example, perfume, which fragrance cannot be copied by other competitors or people. IF Zara

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focuses on online sell of its product it helps the company to expand its market globally.
However, to survive in cutthroat competition Zara should focuses on providing best services to
its customer and should offer unique product quality and design to its customers.
Opening of online stores: If Zara wants to compete in beauty product market then it should be
available and within the reach of everyone customer who want to buy Zara products in all over
the world. Zara should focus on its own online retail marketing and online retail stores that
provide variety of product choices to its customer (Stefania 2016, 177-188).
Outsourcing of Logistic and Supply chain partners: For the success of online retail stores and
delivery of products to customer on specific time, Zara should make some business partner in
supply chain and logistic department. If Zara outsourcing logistic partners for its supply chain, it
may reduce the cost of overall business operation and that further leads to lower product pricing
(Shardul and Charles 2017, 2305-2322).
Zara Should charge low product prices for its product: Zara is known for premium pricing
strategy and it targets upper middle-income class and higher income class customers. If Zara
enters in online market then it can target all segment people and then it should focus on reducing
its product cost. Although success of Zara depends on those customers segment that focuses on
fancy and modern clothes and designing products (Eric, and Petra 2017., 334-354).
Best selective solution (Focus on Online Market)
If Zara wants to expand its sale in future then it should focus on online retail sales and provide its
product to those people who are not in a metropolitan city, but using smart phones and they can
access the Zara products through mobile app and online retail channels. Most of these new
Markets are in Asian countries like China and India, African countries like Angola, Ivory coast,
and Ghana etc. The strategy of opening online sales in different market of different countries
make it popular and create its brand image in those countries where people have no idea about its
product quality and its brand name (Saloni 2018, 68-80).
Tactics to implement the solution
Zara needs to increase its reach tremendously and it is only possible if Zara make itself available

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for its potential customer in all over the world through internet based services. Zara believes in
its own retail stores and does not have shop in shop kind of stores, rather it presents only in few
countries and in few metropolitan cities by its own Zara retail stores. Here Zara is facing strong
competition because other competitors like Chanel, Gucci, Louis Vuitton, Hugo Boss, Burberry
etc. are covering the market with large volume and huge number of customers. If Zara want to
remain and competitive in the market, it should focus on online retail sales and if does not,
competitors of Zara eventually affect the brand equity of Zara because of their complete control
of penetration (Oliver, Karolin, and Michaela 2016, 51-53).
Recommendations
To compete in high competitive market of fashionable clothes and beauty product market, Zara
should focus on following things:
1. Focus on opening of online stores and provide its product to those people who cannot
visit the Zara retail stores.
2. Should deal in multiple of currencies rather than a single currency, because it will help in
facing inflation threat.
3. Zara should outsource logistic and supply chain partners for online services and hire
delivery boys for delivery of Zara products to its customers.
4. The number of competitors in the beauty products and Fashionable clothe industries are
very high. To compete in the market, Zara should revise its premium pricing, otherwise
the penetration pricing strategy of competitors will decrease the market share of Zara.
People are more price sensitive and it should be understood by Zara.
5. Zara Should focus on some flagship design products that create uniqueness for Zara
customers and for potential customers as well.
Conclusion
Zara is one of the leading fashionable clothes and beauty products company that has beaten the
competition in this industry. Zara is enjoying the leadership in latest fashions. The founder of
Zara is the richest person of Spain and having no problem of finance. As per study, to enter in
online market and for increasing its market share, Zara should focus on online sale of its product.
However, the parent company of Zara Inditex Group can help the company for financial help.

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However, Zara should outsource logistic and supply chain partner for its online sale of its
product. To encounter the huge competition in the industry, Zara should also focus on lowering
its product prices and should target the Asian and African countries, where there is a huge
growth opportunity for Zara products in online market.

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