Retail Marketing: Zara's In-Store Customer Experience Report

This report provides an in-depth analysis of Zara's retail marketing strategies, focusing on its in-store customer experience. The report begins with an executive summary, followed by an introduction highlighting the importance of customer experience in the competitive retail landscape. It then provides context and background on Inditex and Zara, discussing the brand's global presence and financial performance. A comprehensive literature review explores key concepts related to retail experience, customer loyalty, and the impact of technology. The core of the report examines Zara's in-store customer experience, including its use of technology such as AR, self-service checkouts, and RFID systems. The report concludes with recommendations for enhancing Zara's in-store experience, emphasizing employee empowerment, community building, and further exploration of virtual reality. The report is based on an assignment for the MK5011 Retail Marketing module.

Running Head: MANAGEMENT 0
T M TRE AIL ARKE ING
araZ

MANAGEMENT 1
Executive Summary
The way customers shop is rapidly changing and it presented various opportunities to the
retailers to develop personalised customer engagement for driving sales and customer loyalty.
Managing customer loyalty through the retail channel and stores has become the paramount
importance and this report outlines the retail in-store customer experience of Zara together
with the literature review on the concept of retail experience. Zara is one of the prominent
brand operating under Inditex group and known for its disruption in the fashion retail
experience. Based on the understanding of the literature, necessary recommendations are also
presented to the Zara management team.

MANAGEMENT 2
Table of Contents
Introduction................................................................................................................................3
Context and Background............................................................................................................3
Literature review........................................................................................................................4
Zara In-store customer experience.............................................................................................5
Conclusion and Recommendations............................................................................................7
Reference List............................................................................................................................8

MANAGEMENT 3
Introduction
With increase in globalisation and competition, managing customer experience through the
retail channels has become of paramount importance and the focus has shifted from selling
products to selling experiences. Hanagandi and Melo (2018) also revealed that consumer
experience will outdo prices and products as the main brand differentiator by the year 2020.
This will stimulate retailers to discover ways to tie all channels combinedly and build a
personalised and unified experience for the customers. It is also possible with the ever-
evolving technological landscape that comes with a set of new expectations from customers
that outpace companies’ capability to deliver meaningful experiences. This report outlines
various significant literature reviews in context with customer experience and also emphasis
on how the leading retailer Zara manages its in-store experience effectively. Furthermore,
necessary recommendations are also suggested for the management team of Zara to improve
their retail and in-store experience at distinct level.
Context and Background
Inditex is known to be one of the largest and leading retailers turning more than $30 billion in
sales in 2017 (Hanbury, 2018). Zara is known to be the home brand store operating under
Inditex Group founded in 1975. At present, the brand is having 2238 stores in around 96
nations and in 2018, the brand earns total profits of $18.4 billion worldwide (statista.com,
2019). The company 50 per cent, 26 per cent and 24 per cent of all products and items are
developed in Europe, Spain and Africa correspondingly. The company is also providing the
best customer experience with offering both products and services where its products are
consumed and services are experienced. With attracting more and more customers, the
company is also always trying to retain existing consumers that show a willingness to
recommend the services to others. Ultimately, the company also nurtures a highly engaged
workforce that interprets into highly-engaged connections with the consumers while
managing in-store experience.

MANAGEMENT 4
Literature review
Organisations with having a successful new retailing concept tend to have a strong vision that
helps them to connect with the core groups of the customers. According to Sheehan and
Bruni-Bossio (2015), there is more clarity near the offerings, target group identity and the
value proposition. Most successful new retail concepts evolve over time and have a distinct
ability to experiment while going beyond functional benefits to offer self-expressive and
emotional benefits. However, a successful retail concept also required to scale as it can
engage in adapting to a business with higher complexity and also in different geographies.
Higher customer loyalty also marks in effective word of mouth marketing and aid the brand
in attain new consumers via recommending its store.
A customer value to a business is driven by their experiences and it is known to be a
cumulative impact of all their interactions and accordingly conclude their value. The
experiences of customers are broader than simply transacting and various companies are
interrogating data to gain an understanding of the complete customer journey from the time
they started to purchase, read a review, shop online or store, speak to the counter for support
or placing reviewing on social media. Javornik (2016) also stated that the power of data is
unprecedented and many retail brands found customer analytics as a way to transform the
way a retailer operates. While positive customer experience is significant to various
businesses, the most successful retailers are the ones that exploit data to redefine processes
and provide superior consumer experience.
Customer also looks for different experiences reliant on both their individual preferences and
their shopping condition. For example, when a consumer purchases sandwich at breakfast,
they seek and perceive the experience easy and quick and at the same time, when the
customer went to buy clothes in a retail store, he/she requires store assistant that can
understand their needs and give them expert advice. On the basis of what retailer is selling
sandwiches or clothes, the experience to the consumer will be very different and this needs
the retailers to must offer appropriate experience as per their needs and wishes. Ultimately, it
needs brands to tailor such experiences depending on what they play in the retail space.
Bilgihan (2016) also stated that a brand cannot improve or hold consumer experience without
measuring and understanding it. Moreover, customers are now becoming highly demanding
and vocal and in the technological advance economy, there are various personalisation tools

MANAGEMENT 5
(such as in-store sensors) available to the brand which can offer right solutions to the
businesses with offering customers their desired experience and benefits. Kawaf and Tagg
(2017) also stated that every path to purchase is different and retail personalisation aims to
serve each individual depend on their behaviour and needs and thus make feel shopper more
comfortable. However, despite the reality, many established stores fail at personalisation as
they could not make it as the prime driver of their corporate success.
In today’s competitive market, retailers need to do whatever they can to gain new consumers
while keeping the current ones and it is also important for them to have a comprehensive
understanding of customer likes and dislikes so as to build convenient shopping experience
(Hirt and Willmott, 2014). Over the next few years, retailers can also foresee customer
expectations to shift towards more innovation from their favourite brands. To improve
purchasing and store experience, brands use such approaches to gain a competitive edge in
the industry.
Zara In-store customer experience
There are various aspects that backed to the achievements of Zara, however, in relation with
its one of the main strengths, which has lead a major role in it becoming a global fashion
powerhouse as it is currently, is it ultimate fashion stores offering good and stylish clothes
with a lot of experimentation through technological innovations. Up to 2019, there were more
than 2,250 Zara stores and almost 600 Zara Home stores in operation globally (statista.com,
2019a). To improve its in-store customer experience, Zara has made big paces to improve
this, by assimilating digital tech and displaying more of a complete focus on the requirements
of the customers. In the age where players like Amazon are enabling individuals to buy items
with a tap of a key, Zara understands the need for improve shopping experience and
therefore, step up its game and started offer experiences that people could not get online or on
their phone.
Zara knows that one thing that gets customer into a store is the enthusiasm that comes from
viewing great products or offer and this also leads shoppers to be more possibly to transform
on the spot. In addition, the brand also empowers and trains its store managers and employee
to be specifically sensitive to the wants and needs of the consumers and always be at the head
of buyer research while noting down consumer comment, notions for fabrics, cuts or a new

MANAGEMENT 6
line so as to convert it later on, into unique Zara styles (martinroll.com, 2019). Furthermore,
Zara is with technology to gain an in-store edge and offering greater value to the customers.
To raise the shopping experience while helping customers to be not present in the long
queues for the fitting room or to purchase something, the company come up with self-service
checkouts enabling consumers to avoid the queue and purchase for their products via do-it-
yourself kiosks. It also helped customers to skip avoidable human contact as much as likely.
Zara also brings clothing comes to life with AR (augmented reality) – with an aim to
capitalising on the desire of customer to tests products prior to purchase. The brand also
introduces an AR application so as to bring clothes to life in-stores. For instance, the person
can view virtual fashion models by pointing camera at sensors fitted in windows (Gilliand,
2018). At last, the RFID system in Zara stores helps the customers to better find the items
they are seeing for with carrying up stock availability in-store when placing orders. Hence,
with pioneering technological strategy, Zara holds the title for the market leader while
managed to outpace its direct competitors.
While Zara is an outstanding brand of product and also capitalize on the store experience
with constantly providing motives for consumers to visit the provisions and clip the newest
trends at reasonable values. Retail expert Kohan also stated that Zara has refined a loyal
consumer base who goes for nearly six times annually in relation to other shoppers in the
contemporary market place where two to three visits annually are the norm. The brand has a
great understanding of the whole value proposition it converse and interchange with the
customers in it’s all the stores and therefore, have the potential to translate it into great value
at the end. Ultimately, Zara has definitely made various ways to enhance and improve the
consumer experience in stores, with steps helping to offset some of its preceding challenges
and issues. With an improvement in its in-store experience and the brand expansion in the
online market segment, Inditex owned Zara is likely to lift success as well as gain long term
loyalty from the different sorts of customers.

MANAGEMENT 7
Conclusion and Recommendations
In the limelight of above discussion, it is clear that what customers are after more than
anything is a holistic experience and Zara is one of the leading retailer brands who brings
together various physical aspects of the stores with digital aspects and builds long term
relationship with the customers. An in-store visit is one of the best times to encourage
customer and translate them to shop from the store, however, it requires a brand to get in the
heads of their shoppers while fostering a positive customer shopping experience. Zara as a
leading fashion retailer uses technology to revitalize the in-store experience with deploying
AR, self-service checkouts, RFID system and other technological strategies. Furthermore, if
retailers learn how to take full advantage of their stores’ potential and use them to stress their
purpose, the physical experience in the store can develop their brand’s key differentiator.
However, to impact on the bottom line, the management team of Zara required to thing very
different from its key competitors including H&M. Hence, several recommendations are
presented to help the company to put more efforts for enhancing their in-store experience.
 To foster a better in-store customer experience, Zara must empower employees and
incentivize them to give their best as employees are the human element of the store
and giving employees autonomy and training will benefit to provide positive retail
customer employees. Promoting a sense of community and finding means to carry
people together in the store can be another way to improve in-store experience. For
instance, inviting community associates and customers to events where they can learn
new things, interact with like-minded people and with these occasions implant a sense
of community in individuals and they are one of the cause why buyers keep coming
back.
 Zara has enabled AR technology to drive unique experience to the shoppers, however,
the management can also deploy virtual reality (VR) headsets in all of its stores to
allow buyers to go with the brand in a completely unique way. For instance, a VR-
generated store lets consumers virtually browse the store no matter where they are,
and purchase products they discovery. Hence, to raise sales and keep profits high,
Zara needs to create a shopping experience that sets you apart from the competition.

MANAGEMENT 8
Reference List
Bilgihan, A. (2016) Gen Y customer loyalty in online shopping: An integrated model of trust,
user experience and branding. Computers in Human Behavior, 61(1), pp.103-113.
Gilliand, N. (2018) How Zara is using in-store tech to improve its frustrating shopper
experience [ONLINE] Available from: https://econsultancy.com/how-zara-is-using-in-store-
tech-to-improve-its-frustrating-shopper-experience/ [Accessed 27/02/2020].
Hanagandi, R.K. and Melo, F.R. (2018) Customer Satisfaction in Response to Select
Washing-machine Brands-An Empirical Study. Journal of Commerce and Management
Thought, 9(3), pp.429-444.
Hanbury, M. (2018) We went inside one of the sprawling factories where Zara makes its
clothes. Here's how the world's biggest fashion retailer gets it done. [ONLINE] Available
from: https://www.businessinsider.in/retail/apparel/we-went-inside-one-of-the-sprawling-
factories-where-zara-makes-its-clothes-heres-how-the-worlds-biggest-fashion-retailer-gets-it-
done-/articleshow/66403585.cms [Accessed 27/02/2020].
Hirt, M. and Willmott, P. (2014) Strategic principles for competing in the digital
age. McKinsey Quarterly, 5(1), pp.1-13.
Javornik, A. (2016) Augmented reality: Research agenda for studying the impact of its media
characteristics on consumer behaviour. Journal of Retailing and Consumer Services, 30(1),
pp.252-261.
Kawaf, F. and Tagg, S. (2017) The construction of online shopping experience: A repertory
grid approach. Computers in Human Behavior, 72(1), pp.222-232.
martinroll.com. (2019) The Secret of Zara’s Success: A Culture of Customer Co-creation
[ONLINE] Available from: https://martinroll.com/resources/articles/strategy/the-secret-of-
zaras-success-a-culture-of-customer-co-creation/ [Accessed 27/02/2020].
Sheehan, N.T. and Bruni-Bossio, V. (2015) Strategic value curve analysis: Diagnosing and
improving customer value propositions. Business Horizons, 58(3), pp.317-324.

MANAGEMENT 9
statista.com. (2019) Zara's brand value worldwide from 2016 to 2019 [ONLINE] Available
from: https://www.statista.com/statistics/980126/brand-value-of-zara-worldwide/ [Accessed
27/02/2020].
statista.com. (2019a) Number of Zara and Zara Home stores worldwide in 2019, by region*
[ONLINE] Available from: https://www.statista.com/statistics/674434/number-of-zara-
stores-worldwide-by-region/ [Accessed 27/02/2020].