Zara: Analyzing Current Retail Trends and Their Impact

This report provides an in-depth analysis of Zara, a leading fashion retailer, examining its response to three key retail trends: the impact of COVID-19, the adoption of sustainable fashion practices, and the integration of artificial intelligence. The report begins with an overview of the fashion industry and Zara's position within it, followed by an exploration of the reasons for choosing the theme and the research questions. The methodology includes an analysis of Zara's strengths, weaknesses, opportunities, and threats (SWOT), a PESTLE analysis, and an application of Porter's Five Forces model to understand the competitive landscape. Primary research, including a questionnaire distributed to Zara employees, provides insights into the company's internal perspectives on these trends. The report concludes with recommendations and a summary of the findings, highlighting how Zara is navigating the evolving retail environment and adapting to consumer demands for sustainability, technological innovation, and resilience in the face of global challenges like the COVID-19 pandemic. The report aims to analyze current trends in the retail industry, with a specific focus on Zara's adaptation and response.

Inquiry-based
Learning

Table of Contents
To study the three retail trends in Fashion Industry in respect to Zara..........................................3
Theme and Background...................................................................................................................3
Reasons for Choosing the Theme....................................................................................................3
Aim of the report....................................................................................................................3
Research Questions................................................................................................................3
How the Aim will be achieved: Current retail trends.............................................................5
Analysis of the Company.......................................................................................................6
Primary Research.............................................................................................................................9
RECOMMENDATIONS...............................................................................................................13
CONCLUSION..............................................................................................................................14
REFERNCES:................................................................................................................................16
Books and Journals:..............................................................................................................16
Appendix........................................................................................................................................18

To study the three retail trends in Fashion Industry in respect to Zara
Theme and Background
Inquiry based learning is a form of learning which includes research about a topic. It
helps to gain knowledge about a concept by gaining primary and secondary sources. The report
is based of study of current retail trends in respect to Zara (Zain, 2018). It is one of the successful
company is fashion industry of retail sector. The trends of fashion industry will help Zara to
operate effectively and use them to attract more customers. The three trends are discussed in the
report that is COVID 19, sustainable fashion and artificial Intelligence. All this will help the
company to work according the trends in the industry.
Reasons for Choosing the Theme
Zara has its operations around the world. It has around 2270 stores at various locations.
The revenue earned by company in 2018 was around €18,021 million. The company is largest
apparel retailer in the world (Yan, 2020). The company is able to adapt the changes quickly and
that is the reason behind success of the company. The company regularly innovates its products
and services so as to attract more and more customers. The company is also famous for
providing quality services to all its customers. As fashion industry is at boom and there are
various recent trends that are important to study.
Aim of the report
“To analyse the current trends in retail industry.” A study on Zara.
Objective of the research
“To study the impact of the three current trend on Zara.”
Research Questions
 What is the impact of COVID 19 on Zara?
 How do the sustainability in fashion industry impacts the working of Zara?
 What is the impact of Artificial Intelligence on Zara?

How the Aim will be achieved: Current retail trends
According to the past records it has been observed that retail industry of UK comprises of
more than half of the total value earned and for this purpose it is significant to be observed. The
one third of consumer saving portion is spent in the retail industry which creates an impactful
focus on the growth of economy of United Kingdom (Zahara and Syukri, 2020).
COVID- 19
The retail industry of makes the respective firms in it faces a lot of challenges. To fulfil
these, there is high requirement of bringing dynamism and these factors can be seen as
operations through sustainable development in fashion trends, implication of artificial
intelligence techniques which can raise customer involvement (Von Briel, 2018). Along with this
the recent trend of COVID- 19 has proved to be a very complex situation for retailers.
In the view to overcome this they have brought several changes in operations which can
renew consumer focus. The primary and major focus of the industry is to divert focus of
consumers back to shopping. Due to COVID- 19, employees are restricting themselves from
offline buying; rather they are shifting to online trends which are reducing retail involvement
(Verburg, 2018). It is seen the COVID 19 has impacted the sales as well as performance of the
organisation. There are various measures that are taken by the company like digital marketing
and use of online mode to sell the goods and services. It is seen that the efforts of Zara were to
sell the goods by enhancing the online mode and delivering the goods to the customers safely.
Sustainable fashion
Along with this to enhance focus of consumers, fashion retailers are focused on bringing
sustainable fashion through inculcating clothes which can be recycled and reduce harm on
environment. Sustainability is an important concept and should be adopted by business to
achieve success. It is an approach that means optimum utilisation of resources. That helps to
attract more customers and establish a strong image in the market. Zara is focusing to become
100% eco efficient (Ma and Han, 2019). That means the company will use the resources in such
a way that is efficient and will not harm the environment.
They can manufacture the clothes that are recyclable and do not harm the environment.
The company will use the material that is used for long time (Pantano and et. al., 2017). In
fashion industry also it is important to use sustainability approach. The company is focusing to
provide high quality product to its customers. As the customers have become conscious about the

quality of the product and services offered it is important for the company to adopt the same.
Zara has stated that by 2025 the company will use 100% sustainable fabrics. Along with that
Zara has understood the trend and importance of sustainability and will use renewable sources at
its factories, headquarters and all the stores. This will help the company to gain to gain more
customers and also support of government as they are serving customers and taking care of
environment (Stender and et.al., 2018).
Artificial Intelligence
Another trend that is important nowadays is that of artificial intelligence. It is use of
human minds in the working of machines. It helps the company to work more effectively and
efficiently. It is seen that if the company is able to take effective decision making. Zara has
understood the need of customer assistance and the way the customer's are served (Irawan,
Syahrial and Sofyan, 2018). The benefit associated with artificial intelligence is that the
company is filling the loopholes of and will help the company in demand forecasting. It is vital
for a company to know about the needs and wants of customers and the demand.
It helps to analyse the taste and reference of the customers (Chandrachud and Rajagopal,
2020). By which company can read the minds of customers and then serve them according their
likes and dislikes. As the company is facing problem of maintaining safety stock artificial
intelligence will help them to know and managing the demand. This also helps to forecast the
demand in fashion industry. It also helps Zara to gain advantage over the competitions (Franz,
Katzlinger, and Stabauer, 2018).
Analysis of the Company
Zara is a retailer in fashion industry in Spain. The products offered by company are
clothing, accessories, swimwear, shoes, perfumes, and beauty. The company was founded 46
years ago in 1975 by Amancio Ortega and Rosalía Mera (Hutapea, Copriady, and Rasmiwetti,
2020).
SWOT Analysis
Strengths
 The first and foremost advantage that
Zara has is that of unique designs. The
company has provides quality and
designer products to all it clients.
Weakness
 The major drawback of the company is
that they do not spend much money in
advertisement (Nair, 2019).
 It is the weakness of company. As by

 Another major strength of Zara is that
company has established a brand image
in the market. Along with that expands
its business gain success (Septyastuti,
Sutrisno and Widarti, 2021).
advertising Zara could double its
revenue.
 The company focuses on providing
latest stock to its customers and that
also impacts the company in a way that
they do not have safety stock for the
customers.
Opportunities
 As the use of e-commerce is
enhancing. Zara has also taken
advantage and used digital platforms to
attract more and more customers. The
company has its own online sores.
 The company conducts proper research
about the market and expands its
operations to earn more and more
profits.
Threats
 As there are various firms operating in
fashion industry it is a threat for the
company. The major competitors of
Zara are Mango, H&M and Vero Moda.
 The company is spending less in
advertising as it is important to remind
the customers about the brand and
advertise the products and services
offered by them (Schmidt-Wenzel and
Rubel 2019).
PESTLE Analysis
It is the study of macro economic factors that have impact on the working of an
organisation. The PESTLE Analysis of Zara is mentioned below:
Political Factors: The Company has its operation around the globe. The company
exports its goods in European markets with low cost and little efforts. As the financial
regulations of the business are in such a way that company is able to operate smoothly (Fang and
Hang, 2017).
Economic Factors: As Zara is a Spanish Company and Spain has problem of
unemployment. This is reason company is able to take advantage of low cost labours. Also the
company has served the customers in such a way that they have gain loyal customers.
Social Factors: There is direct impact of social factors on the supply and demand of the
products offered by the company. Along with that Zara takes advantage of the social factor and

conducts proper research. That helps to know about the current trends and serve the customers
accordingly.
Technological Factors: Zara uses the updated technology. The company has its own
website and has presence over digital platforms (Peláez-Ruiz, and Piedrahita-Ospina, 2017).
Legal Factors: The Company follows all the rules and regulations and take sustainability
and ethics as priority.
Environmental Factors: Zara is planning to develop the stores as 100% eco efficient.
The company is planning to be eco-friendly (Rundgren and Chang Rundgren, 2018).
Porter 5 Force's Model
It helps to identify the competition in the market. Porter Five Forces Model in respect to
Zara is mentioned below:
Competition in the industry: There are direct competitors of the company in the
industry. The major competitors of the company are Vero Moda, H&M and Mango.
New Entrants: The Company has earned a strong image in the market. There is
requirement of huge capital and it will take time for anew player to enter in the industry (Yuni,
Alghadari and Wulandari, 2019).
Power of Supplier: Zara always maintains goods relations with the suppliers as there is
high switching cost if the company wants to switch to another supplier.
Power of buyers: There are various competitors of the company. Also the company has
established a strong and loyal customer base. This shows there is moderate fear of competitors.
Threat of substitute products: As H&M provides the same products so there is threat of
substitute products for the company (Amallia, and Advinda, 2019).
Primary Research
It is a method of collecting first hand data and then collecting information. There are some
tools of collecting data through primary method that are questionnaire, interview etc. For this
report questionnaire has been sent to 30 employees of Zara through online mode. It helps to
know about the trends that are followed by Zara.
Q1. According to you, is it important to know about the trends in the
market?
Frequency
Yes 20
No 10

Interpretation: From the above graph it is analysed that 20 out of 30 employees believe that it is
important to have knowledge about the current trends in the market. The rest 10 out of 30 say
there is no need to study these trends.

Q2. What are the current trends that have impact on the performance of
Zara?
Frequency
Artificial Intelligence 10
Sustainable Fashion 10
Digital Marketing 10
Interpretataion: It is seen that 10 employees said that artificial intelligence is in trend, 10 said
that sustainable fashion is in trend and the rest 10 out of 30 believe that digital marketing is in
trend.

Q3. What is the impact of COVID 19 on Zara? Frequency
Increase in performance 8
Decrease in Performance 15
No Impact 7
Interpretation: 8 out of 30 employees believe that COVID 19 has enhnaced the performance of
Zara. While 15 believe that it decrease the performance. Rest 7 out of 30 believe that it has no
impact.

Q4. According to you why Zara uses the concept of Sustainable Fashion? Frequency
To recycle the clothes 10
To reduce wastage 5
For benefit of environment 5
To increase the profitability position 10
Interpretataion: It is evaluated that 10 out of 30 sustainable fashipon is used by Zara as it helps to
recycle clothes. 5 belive that it is used to reduce wastage, other 5 believe it is used for benefit of
employee. 10 out of 30 employees think it helps to increase the profitability of company.