Analysis of Zara's Retail Strategy in the UK Market

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Retail Theory and Practice Assignment
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Table of Contents
Introduction....................................................................................................................................................2
Introduction to the company..........................................................................................................................2
Key relevant changes within the UK fashion retail.......................................................................................3
Relevant changes within the micro environment...........................................................................................5
Suggest and discuss strategies and tactics that could be used by the company.............................................7
Recommendations..........................................................................................................................................8
Conclusions....................................................................................................................................................9
References....................................................................................................................................................10
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Introduction
The retail industry in the UK is widely spread with the increase in the global market. In present scenario,
the retail business is also spreading all over the world and doing good business as compare to the
multinational companies. Around 555,000 employees are employed in the UK industry business of
fashion and textile retail. Most of the fashion related industries are in retail sale of clothing business i.e.
75 percent with 414,000 people are employed in this industry. The biggest company in UK are earning
more than a wholesale market business. The Zara is a UK based company, which has value of 15 billion
dollar and revenue of 18 billion in past year. The Zara is a luxury fashion industry, which shares 77% of
the revenue in the retail sales per year (Chu 2016). This report helps in understanding the concept of retail
industry and its impact on the current trends in the market businesses running widely.
Introduction to the company
Zara is a well-known fast fashion retail organization, which was established in the year 1975. According
to the annual report of Zara, it can be stated that the revenue of this organization is approx. $18.9 billion
in 2018 (Okonkwo, 2016). Zara is one of the fast growing retail fashion company in UK. It has its stores
in all over the world at different locations. It has been found that Zara has store more than 10,000 in all
over the world and has spread has retail business worldwide. The Zara manufacturers clothes for men,
women, and children as well. Zara has an efficient supply chain management that delivered the products
and services to the desired customers.
Zara spends 85 percent on its clothes but its industry average is near about 60 to 70 per cent. The
business strategy of Zara helps the company in selling its products at a reasonable price. Zara is growing
its business by using lean inventory management (Anwar 2017). The employees of the company
members are responsible and efficient in making the company a well-organised environment in the
organisation. Zara has increased its brand name among all other companies. Zara is maintaining the level
of efficiency starting from the collection of raw materials to the supply of the products to different stores.
Zara also uses different designs for its products. In addition to this, they also try to interact with their
customers in order to get a better idea regarding their requirements (Zara.com., 2019).
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Key relevant changes within the UK fashion retail
PESTLE analysis is important for a company to grow in the market. There are six important factors that
can influence the business of the company Zara are as follows:
Figure 1: PESTLE or Macro Environmental Factors
(Source: Rastogi and Trivedi, 2016)
 Political environment: Political intervene can affect the business of the company and disturbs the
market economy. Political interference rises to several difficulties for the brands to do business.
The company Zara has overcome from the political disturbance and spread its supply chain to
countries all over the world. The government of the country makes policies for the companies,
which are sometimes not favourable to the brand. Therefore, it is important for the company to
fulfil the necessities of political environment for spreading business worldwide. Zara has speeded
its business in the European countries and increased its exports up to 74% in clothing retail
industry (Laverty et al., 2018).
 Economic environment: The economy of the country is also important for the business of the
company. This factor can help in growing the business. The Zara has developed the strategy and
made its affordable pricing policies for the customers. The people keep on shifting from luxury
brands to normal brands and hence at the time of the cost cutting it is important for the company
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to select price according to the economy of the country (Crampes and Laffont 2016). The
pricing system is according to the demand of the customers so that at the time of the recession the
company would not able to face difficulties and do not switch from the respective brand.
 Social environment: The social factors are also responsible for the growth of the business of the
company. The Zara has to work according to the status and social trends to, meet the demand of
the customers. In present scenario, the customers are more inclined towards the online shopping
and Zara has to open various online mediums for the customers. This has also important as it has
reduced the transportation cost and easily reached to the customers. The company Zara has now
reached to many countries around the globe and it has researched about the cultures and new
markets for spreading its business (Ashworth 2016).
 Technological environment: Technology has spread and developing faster across the whole
world. The retailers company Zara has also adopted the new technologies for the business. Zara is
also a leading among those companies, which is encouraging the online business for customers.
The customers are now able to know about the products deliver by Zara. The customers are more
inclined towards the technologies and prefer doorstep shopping. The company has targeted to the
young customers and there is a facility of the online orders with a sensor order packaging.
 Legal environment: The Company is governed by the legal principles of the nation. The business
is most likely to be affected by the legal environment. The Zara has also focused on the on the
sustainability and ethics in its business all over the world as legal compliance is important for the
company for spreading its supply chain across the globe. The company has to look after the local
laws and local markets of the particular nation when it operates its business. The Zara has focused
on creating a brand ethical image, which has benefited the company in doing business in the other
nations as well (Martino et al., 2016).
 Environmental factors: Environmental issues are also become one of the important factors in
doing business across the world. The company has consumed limited water and less energy
according to the guidelines of the government. The Zara has also invested much more on the
sustainability. The company is using best recycling features and balanced energy for the
manufacturing and production of the products. The clothes made by the Zara used sustainable
technologies and organic material for the products. The company has also guaranteed that the
company uses no hazardous substance, which is harmful for the environment.
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Relevant changes within the micro environment
The important factors in which relevant changes can be made by the company Zara in order to increase its
business are as follows:
Figure 2: Micro Environmental factors
(Source: O'Grady and Morgan 2017)
 Competitors: The important factor for the company is to identify its competitors. The company
Zara has the competitors in the markets such as H&M, Gap, Vero Moda etc, which is also
increasing its business globally. The Zara has to maintain the brand image as well as the
customer’s satisfaction to remain in the market. The company has to maintain and lower its price
from the competitors companies in order to gain attention of the customers. The Zara has to
increase its product value that is popularised among the public and they are bound to purchase it.
 Shareholders: The shareholders of the company are the owners of the companies. The
shareholders must be happy with the earning profits in the business and remain invest in the
company. The Zara has to maintain the value of the shareholders of the company. It is a duty of
the company to pass the benefits of the company, earn more profits, and increase its shareholders.
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The company Zara can increase the profit sharing margin, which can attract more shareholders
towards the company and more investment will increase the more business globally.
 Customers: The customers are the most important part in the business as they are the one who is
ultimately going to purchase the product of the company and provide profits in the business. The
company Zara has to fulfil the demand of the customers and satisfy them with the products. The
competition is increasing due to globalisation and therefore the customers have more choices and
options with the variety of brand. It is important for the company Zara to attract more customers
so that they will not shift it to another brand company. The loyalty of the customers towards the
company depends upon the happiness and satisfaction of the customers. The Zara can receive the
feedbacks given by the customers and maintain the product quality as required by the customer.
 Employees: The Employees are important for the growth and development of the company. The
company Zara has to prioritise its employees in this competitive world. There is a need of
employee retention so that best employees do not go to other competitive company. The
employees participation is lead the company to attain its objectives (Hornibrook et al., 2015).
Therefore, the employees must provide all the necessary facilities, as they are backbone of the
company.
 Suppliers: The suppliers of the company can tell the real demand of the product of the company.
The company Zara has spread its suppliers all over the world. The product is famous with the
customers and therefore demand has increased. The company has increased its supplies more in
past few years.
 Media: The media is important for advertisement and customers must know about the product.
The best ways the company Zara is using to advertise its product through social media. The
customers are getting more aware with the products with the advertisements and popularity of the
brand (Vecchi 2016).

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Suggest and discuss strategies and tactics that could be used by the company
The company Zara can use the Strategies and tactics in order to grow more and increase its profits in the
business are as follows:
 Technological factor: The technologies are growing faster in the world of globalisation and company
are adapting new technologies to meet the need of the customers demand. The Zara has made relevant
change by using the latest technology for popularising its product. The strategy used by the company
to popularise its product on the various platforms of the social media. It has also developed the tactics
to use the latest technology to connect the customers. The company has followed the latest trends to
attract the customers towards the brand (Nash 2019).
 Economical factor: The economy is an important factor. The company Zara has changed the
economic policies in order to attract the customers. Earlier the products if the Zara was costly as
compared to competitive companies, which were not affordable by all the customers. After facing
these difficulties, the Zara has adopted the strategy to sell its product quality at the lower price. The
company has attracted more customers after applying this tactics. The value of the brand has also
increased among the customers (Yang et al., 2017).
 Environmental factor: The environmental factor is important concern of every company. The
company Zara has adopted various policies, which are in favour for the environment. The company
has banned the plastic bags for supplying products to the customers. The company Zara has adopted
environmental friendly machines in the manufacturing factory of the clothing. The company has also
used organic material in making of the clothes. The company has adopted the strategies in order to
gain the customers trust regarding the product. The customers likely to wear comfortable clothes of
the brand company of the Zara. The other tactics used by the Zara in relation to support environment
are it also sells handmade stitched and woven clothes, which has generated the employment and
environment friendly. The less use of the machines in the factories produces less waste that is benefits
the environment.
 Social factor: The social factor is necessary to be examined as it suggests the requirements of the
customers. The company Zara has followed the strategy of making the products, which are socially
trending in the market. The company has also adopted the theme products and clothing in order to
attract the customers. The company celebrates the occasion and festival by launching the clothes
related to that event. The company manufactures products for men, women and kids and according to
the demand, they manufactures and supplies goods to the customers. The Zara has recently launched
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the clothes, which has theme related to beaches for all men, women and kids section. It has gained the
attention and become popularised among the customers (Pantano and Gandini 2018).
 Competitors: The Company Zara has a close look upon its competitors as to maintain its dignity in
the market the competitors must be analysed first. The Zara has tried to make its product differ3ent
from the competitive company with the reasonable and affordable price. The main competitor
company of the Zara is H&M, which has gain the attraction of the customers. The Zara has increased
its sale and rise above the competitors by selling and advertising its product at online platforms. The
company has also provided discounts on the garments and the discounts to the customers on the
special occasions as well. This has attracted the customers and increased the sale of the company. The
company has also provided in store benefits, which gives a positive and friendly environment to
customers on visiting to stores of Zara.
 Employees: The Company Zara has provided the benefits to employees so that it can retain the good
employees in the store. The employees are being trained for welcoming the customers. The company
organise various programs in order to get the feedback from the employees and improve the flaws in
the company. The company also encourages and welcomes employees ideas as the employees gets
the direct contact with the customers and suggest the improvement in the policies accordingly
(Thompson and McLarney 2017).
Recommendations
The following are the recommendations for the company Zara are as follows:
 The Company Zara has to increase its retail business more in the online market as the consumers of
today is most likely preferred to be delivered goods at its doors. The online business is famous in the
world of the globalisation. The customers relax and select the products based on the brands and need
of their choice.
 The Company Zara can make garments and clothing, which can give inspiration to generation and
encourage customer to buy those products. The trends and latest demand of the customers is
followed. The customers get attracted on getting the product at the reasonable price. The company
has to reduce the value cost of its product according to the price quoted by the competitors (Morgan
2017).
 The company Zara can expand its business more by making it popular through advertisements. The
latest source of advertising is social media, which is widely popular among the youth. The company
must attract its targeted customers by providing discounts on the clothing at special occasions.
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 The company Zara has to popularise its brand so that brand attracts the customers emotionally and
bound them to make the purchase of this brand only. This can be made popular by receiving more
goodwill of the company.
Conclusions
It is concluded from the above report that the retail business of fashion and clothing is increasing with the
increase of the globalisation. The companies are reaching more easily to the customers and increasing its
business worldwide. The company in UK market are growing and attracting customers by making various
strategies in order to popularise its brand and gives better opportunity to company to grow in a global
market. The continuous growth in the retail business practice in today world is contributing more
development and growth of the organisation and economy.
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References
Anwar, S.T., 2017. Zara vs. Uniqlo: Leadership strategies in the competitive textile and apparel
industry. Global Business and Organizational Excellence, 36(5), pp.26-35.
Ashworth, C.J., 2016. RELATIONSHIP DEVELOPMENT VIA SOCIAL MEDIA: PURE-PLAY
FASHION RETAIL CASES-BUILDING ECONOMIC VALUE FOR THE SMALL FIRM. Economic
and Social Development: Book of Proceedings, p.378.
Chu, P., 2016. Excellence in European Apparel Supply Chains: Zara (Doctoral dissertation).
Crampes, C. and Laffont, M., 2016. Retail price regulation in the British energy industry. Competition
and Regulation in Network Industries, 17(3-4), pp.204-225.
Fernie, J. and Sparks, L. eds., 2018. Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers.
Hornibrook, S., May, C. and Fearne, A., 2015. Sustainable development and the consumer: Exploring the
role of carbon labelling in retail supply chains. Business Strategy and the Environment, 24(4), pp.266-
276.
Laverty, A.A., Thompson, H., Cetateanu, A. and Filippidis, F.T., 2018. Macro-environmental factors and
physical activity in 28 European Union countries. The European Journal of Public Health, 28(2), pp.300-
302.
Linden, A.R., 2016. An analysis of the fast fashion industry.
Martino, G., Yuce, B., Iannone, R. and Packianather, M.S., 2016. Optimisation of the replenishment
problem in the Fashion Retail Industry using Tabu-Bees algorithm. IFAC-PapersOnLine, 49(12),
pp.1685-1690.
Morgan, A., 2017. A Chronological literature review of Retail Internationalisation: From the 50’s to the
‘00’s-Towards a perspective of current market inclines in retail internationalisation 2010–2015.
Nash, J., 2019. Exploring how social media platforms influence fashion consumer decisions in the UK
retail sector. Journal of Fashion Marketing and Management: An International Journal, 23(1), pp.82-
103.
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