Retail Theory and Practice: Zara's Adaptation to Market Changes

This report provides a comprehensive analysis of Zara's retail strategies within the UK fashion industry. It begins with an introduction to Zara, highlighting its global presence and target market. The report then examines key changes in the UK fashion retail landscape, including globalization and evolving customer demands. A PESTLE analysis is conducted to assess the political, economic, social, technological, environmental, and legal factors influencing Zara's operations. The micro-environment is explored, focusing on customer behavior, competition, suppliers, and market trends. Strategies and tactics employed by Zara to adapt to these changes are discussed, including pricing strategies, customer-centric approaches, and the use of technology like RFID. The report concludes with recommendations and emphasizes the importance of continuous adaptation and investment in technology and sustainability for long-term success in the dynamic retail environment. The report highlights Zara's approach to maintain a competitive edge in the retail market.

Retail Theory and
Practice

Contents
INTRODUCTION...............................................................................................................................4
Introduction to Company...................................................................................................................4
Key relevant change within the UK fashion retail.............................................................................5
Relevant Changes in Micro environment...........................................................................................7
Strategies and Tactics in Adapting Change.......................................................................................7
RECOMMENDATION.......................................................................................................................9
CONCLUSION....................................................................................................................................9
REFERENCES..................................................................................................................................11

INTRODUCTION
Retail is considered as an important procedure of selling goods and services to the
people with the use of various multiple channels of distribution that directly supports in
maximizing the profitability level. In addition of this, it also an effective activity that used by
business organization to sell its products and services to the people in a small quantity. One
of the main advantage of retailers is to directly satisfy customers needs and wants by
providing them best quality products and services as per their needs and wants by using
effective supply chain. Thus, it is crucial for company to analysis their actual needs so that
they can easily keep them satisfied towards its offerings (Bowen, 2016). Current research is
based fashion retain industry that is the manufacturer to the customers and deliver them
fashionable products. This can be improving the overall performance of company. This report
is based on the ZARA, is one of famous apparel retailers that operate their business in over
the world with the aim of increasing their sales and profitability level. The main focus of
this company is to analysis all the changes by evaluating both micro and macro environment.
By this company easily adopt all the current changes that arise at market place. This report is
going to discussed about how company adopted changes and also discussed about various
strategies that help them in meeting all the challenges faced by company at market place.
Introduction to Company
In retail industry, ZARA is one of the leading companies that run their business in
over the nation. Mainly, it is Spanish fashion clothing and accessories brand that serve high
quality products to its customers at an affordable cost. In addition, company target all the
customers men and women between 18-40 years that assist in fashionable clothes and
accessories in order to increase their profitability level. Along with this, company was
founded in 1975 by Amanico Ortega and Rosalia Mera. Mainly, company has around 7445
stores in entire world. One of the biggest strengths of this company is that it has good
presence in the market that directly contributes in inviting more and more consumers over
there. Company operate their business in UK, Italy, Germany and many more other countries.
The main focus of this organization is to expand their business in over the world with the aim
of generating larger profitability. Furthermore, firm also include more stores in UK and also
having biggest market along with around 563 stores. In this, the first store of ZARA was
opened in Spain and the company also focus on analysing behaviour at the time of deliver
quality products and services. For sustaining in market for longer period of time, company
analysis environment of company to determine all the current changes that arise at market

place. This will directly contribute in increasing market share by reducing the changes of
arising any kind of issues. Company face high and strong competition through Mango, Gucci
and another international brand. By performing effective performance company can easily
improve their brand image and compete their competitors as well.
Key relevant change within the UK fashion retail
Retail industry is one of growth sector wherein company operate their business with
the aim of generating larger profitability level. As it remains the largest sector that provide
huge employment to people that positively contributes on economic condition of the nation.
Due to globalisation, there are hire changes in customers demand and lifestyle that also
influence their expectation towards the company and its offerings. This is the reason that
company is responsible for analysing customers’ needs and wants before providing them
products and services (Brigham and Ehrhardt, 2013). With the assistance of this, firm can
easily improve their positive performance and competitiveness at market place. Zara is one of
the renowned companies across the world dealing in fashion and for its excellent design. in
recent years organisation has seen lot of success and heading towards expanding its business
internationally. While operating its business in corporate world company has adopted many
tools and PESTLE is one of them. This will help corporation to know what are the forces that
is putting some kind of effect on business directly or indirectly.
Political: As company is operating its business in different parts of the world so
political impact on organisation will be financial regulations because different country has
different laws and norms. Some of the nation might have easy local laws for entering into the
market whereas some of them might have difficult entry option. In context with Zara because
of Europe’s free trade agreements they get biggest export market of around 74% for textile
and clothing. As a result, Zara has an option of reaching to maximum number of customers
without any kind of extra border tariffs. Therefore, it will result in higher sales and profits.
Economic: According to the recent times Spain’s have the fast-growing economy and
this is favouring Zara for increasing its sales. Reason behind this is cost of labour resulted in
low production cost but high product quality. As a result, it is providing commodities at low
price which is in turn grabbing attention of more and more customers. Whereas if compared
with Britain, after the exit from European Union and deprecation of pounds and increase in
inflation rates lead to less disposal income of consumers. Therefore, Britishers cut their

expenses from new clothes which dramatically decreased the sales of the products and overall
profitability.
Social: With the change in course of time, online shopping has increased the urge of
customers to buy products 24/7. This has enabled Zara to reach out to different countries
belongs to different cultures. Therefore, Zara has concentrated on this factor and have
developed online websites and outlets in various countries. Social culture itself have an
impact on business because people prefer buying clothes that belongs to their culture.
Henceforth, Zara before entering into the market conduct primary research and manufacture
clothes that are somewhat connected with local culture so as to attract more and more
customers.
Technology: Technology has played a crucial role in providing companies with
maximum profits. Now customers of Zara can see how their outfits will look if they wear
such clothes. Application of JIL and Lean Facilities after the collaboration with Toyota in the
year 2014 has provided company with a push in manufacturing operations and helped them in
maintaining a better coordination between its supply chain and logistic activities (Combs,
Ketchen Jr and Short, 2011). therefore, this has enabled Zara in giving quick respond to its
customers wherever from the globe. Apart from this, Zara has implemented an RFID system
through which they can track inventory or products in different stores and ZARA’s websites
in order to provide better customer experience.
Environmental: In this changing scenario, sustainability has become one of the main
concerns for the companies who are operating its business globally. Zara is also showing its
effort by making its stores 100% eco efficient by 2020. Under this company will use less
water and energy in comparison with ordinary stores. Zara will also implement better
recycling features so that products that are wasted can be used one more time. Along with
this, company has invested money in manufacturing clothes made from organic material like
recycled wools and Tencel.
Legal: While operating business in large area, it is strongly important that corporation
has copyright laws before going to launch their products this will help them in eliminating
issues and problems like sustaining their brand image. Rules and regulations also come under
this which are required to be followed for example: providing appropriate living wages to its
labour force.

Relevant Changes in Micro environment
In Micro environment, there are various changes that directly affect the company and
its products and services. In this regard, it can be related with the change in customers
demand towards the company and its specific offerings. In context of ZARA, there are
various factors that directly contributes in analysing the consumers behaviour, competition in
market, suppliers and market trends as well. All these can be effective for company in
improving their customers and profitability level as well. Apart from this, there are some
factors of micro environment that may define the relevant and current change in business
environment are as follows:
 Change in customers behaviour: There is an incredible change in shoppers' conduct
and disposition as they began requesting quality items once again the cost. As the
customers are more concern about having quality items just as they need branded and
fashionable clothing items which are present in the market place (Dalkir and
Beaulieu, 2017). This driving change in clients' conduct has made the design retail
businesses to give excellent items just as gives items which are high in pattern and
trend at market.
 Increase competition: Zara is confronting serious rivalry from Christian Dior, Gucci,
Prada and some more. Brand ought to break down contender's items and techniques
and ought to in like manner produce merchandise so as to pull in more clients. Zara
ought to explicitly dissect contenders' system and innovation utilized so as to take
choice with respect to their creation procedure. As its rivals are embracing client
cantered technique in which individual organization are creating items as indicated by
clients' interest. This has made ZARA to break down such contenders' methodology
and gives items likewise in order to capture larger market share.
Strategies and Tactics in Adapting Change
In market place, retail industry is confronting dynamic changes from the different
large-scale condition and miniaturized scale condition factors which have constrained
retailers to want ease for its items just as adaptability in its plan and quality are the key
techniques to keep up a beneficial situation in an undeniably requesting market. As by
investigating the full-scale ecological elements it has been resolved that there is tremendous
increment in innovation with the wide spread utilization of web alongside this it has
additionally been examined that expanding request of garments as indicated by singular
culture, convictions and mentalities. Organization needs to embrace such changes so as to

catch bigger piece of the pie and improve its efficiency and benefit. Different procedures and
strategies received by ZARA so as to embrace and adapt to changes viably.
There are different changes distinguished in buyers' conduct and demeanour too in providers'
conduct and due to the serious rivalry looked by the particular business and with these
progressions organization has embraced to ongoing procedures, for example, as a result of
winning rivalry in advertise, separate organization ought to receive to estimating system in
which regard brand can bring down the cost of its items yet ought not forfeit with quality
(Dant, Grünhagen and Windsperger, 2011). This would help them to catch bigger piece of the
pie and in this manner gains more benefit and so as to deliver items as indicated by shoppers
requests Zara centres around client cantered procedure as this system centres around giving
products agreeing clients wants.
Utilization of Appropriate speculations
As there are noteworthy changes in complex business dynamic condition it is essential for the
organizations to appropriately comprehend the idea of retailing and keep up a critical
situation in advertise. This could be clarified with the assistance of Cyclical hypotheses
The wheel of retailing hypothesis
Philip Kotler has found wheel of retailing hypothesis in which it is examined that retailers
need to follow a legitimate cycle so as to keep up maintainability in advertise for longer
timeframe (Theories of Retailing - • Retail life cycle hypothesis Wheel. 2018). Right now,
stages and steps are referenced beneath
• Step 1-Lower costs, lesser edges and lower notoriety.
• Step 2-Heavier cost and expanded notoriety for firm
• Step 3-In this stage retailer watches expanding benefits with receiving change.
This hypothesis sees that retailers need to follow bit by bit cycle so as to build its benefits and
catches bigger piece of the pie. ZARA needs to deliberately examine its rivals and in like
manner receives to change (Jones and Murphy, 2011). This retailing hypothesis would help
the separate organization to investigate the market appropriately and adapt to small scale
natural changes and catch bigger piece of the overall industry by following bit by bit of
rehearsing retail.

RECOMMENDATION
As per above discussed report it can be recommended to the company that, to increase
its growth ZARA needs to includes as well as adopts effective strategies and alternative ways
that support them in sustaining in market place from longer period of time. As business
environment is complex in nature thus, company should analysis the same before expanding
their marketing and functional activities. This can be effective in improving the overall
performance company and make it more competitive at market. In this context, there are
some effective recommendations which ZARA needs to be applied and adopt within their
functional activities. All these can be understood by following points:
 For increasing its profitability and customers base, ZARA needs to spread its
awareness by increasing online presence wherein customers easily get attracted. In
this company provide services as per customers needs and wants that allow them in
developing its competitive image at market place.
 ZARA should increase its awareness by using various online platform like social
media, Facebook, Twitter, Instagram and many more. By which company easily
communicate with their large number of customers and promote its products as well.
With the help of this, firm easily capture larger marker share from its competitors and
established its positive brand image.
 In addition of this, company needs to analysis customers needs and wants so that they
can easily understand their choice towards its services. This can be beneficial in
increasing customers satisfaction over its offerings. Satisfied customers always
contribute in making positive image that also influence other customers to buy
company products and services.
 Company should use advance and digital technologies and tool to make customers
aware about what company offer and deliver in market place. this will directly
contributes in developing competitive and famous brand image.
CONCLUSION
From the above-mentioned report, it has been concluded that, in globalised world
retail industry are one of the fastest growing sectors that help in generating revenue within
the country by generating employment opportunities. In addition of this, one of the main aims
of retail companies is to capture customers attentions towards its products and services that
assist in increasing profitability level of company at market place. along with this, companies

that operate in retail sector needs to analysis macro and micro environment in order to
determine all the current changes. With the help of this, firm can easily maximise the positive
impact by reducing any kind of negative impact over the company and its brand image. In
addition of this, business organization also implement as well as adopted various strategies
that help them in managing or cope up with all kind of changes arise at market place. This
will directly contribute in increasing market share and at the same time also assist in
establishing its competitive image as compare to its rivals.

REFERENCES
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