Zara's Dilemma: Investigating Ultra-Fast Fashion's Impact on Retail

This case study investigates the impact of ultra fast fashion on traditional fashion retailers, focusing on Zara. It examines the challenges and strategic issues arising from the rise of digital fast fashion firms like Fashion Nova and Boohoo, which leverage efficient supply chains and digital capabilities. The research identifies the need for Zara to undergo digital transformation and develop a robust digital corporate strategy to compete effectively. It explores the importance of adapting to changing social media trends and enhancing supply chain efficiency. The study uses both primary and secondary data, employing a positivism research philosophy and a deductive research approach to determine the influence of ultra fast fashion and propose solutions for Zara's strategic issues, highlighting the necessity for digital capabilities to thrive in the evolving global fashion industry. Desklib provides similar case studies and solved assignments for students.

Corporate Strategy
and Governance

Table of contents
Table of Contents
Table of contents........................................................................................................................2
Title: An investigation into the threat of ultra fast fashion to fashion retailers. A case study of
Zara ............................................................................................................................................3
Introduction................................................................................................................................3
Background ...............................................................................................................................3
Challenges, opportunities and strategic priorities......................................................................3
Problem Statement ....................................................................................................................4
Review of the literature..............................................................................................................4
Research objectives and methods ..............................................................................................4
Research findings.......................................................................................................................6
Conclusion..................................................................................................................................8
References..................................................................................................................................9

Title: An investigation into the threat of ultra fast fashion to fashion retailers. A case
study of Zara
Introduction
This research focuses on corporate governance and strategic issues faced by fashion
retail firm Zara. The first section of the research provides brief overview of the company and
challenges faced by the company. The second section includes literature review in order to
identify research gap. The next section includes information about research aim, objectives
and questions along with the research methodology used. After this section including
research findings is provided including critical review of research outcome.
Background
Zara is one of the leading fashion retailers in the world. The company was formed in
the year 1974 and is currently headquartered in Artexio, Spain. Zara is present in 2259
locations around in 96 countries and has workforce of 75,000 employees. The primary
corporate strategy issue faced by Zara is rise of Ultra fast fashion and threat of digital fashion
retailers negatively affecting survival of the company.
Challenges, opportunities and strategic priorities
Porter's five forces analysis of Zara
 Bargaining power of consumers: This refers to the ability of consumers to inflence
prices of products. Zara faces high braining power of consumers because of high
price sensitivity and presence of various alternatives.
 Bargaining Power of suppliers: This is defined as the power of suppliers to
manipulate prices of the products. Low switching costs for retailers and liberalization
of international trade have lowered this competitive force for Zara (Viswanadham,
2018).
 Intensity of competition: Thus includes the level of competition in the industry. The
firm faces high intensity of competition from digital fashion retailers Nova Fashion
and Boohoo along with physical fashion retailers such as H&M.
 Threat of new entrants: The ability of new entrants to easily attract consumer base
of established firms. The threat of new entrants for Zara is low because entry in retail
sector requires high investment and Zara appeals to large audience with changing
trends which increase trade barriers and lowers this competitive force.

 Threat of Substitutes: The threat of substitute products to replace products offered
by enterprise and act as alternative for consumers is defined in this part of the
analysis. The threat of substitutes for Zara is high because of presence of large
number of competitors.
Problem Statement
The problem that will be identified in this report is related to identification of threat of
digital competition faced by Zara. It is important to understand the role of digital disruption
in changing the competitive landscape of Zara as it has changed the global fashion industry.
Review of the literature
The need of digital transformation for Zara
According to Goselin (2020), the business model of Zara needs to undergo digital
transformation from brick and mortar store in order to face challenges created by changing
times. The brand gained success during the pandemic because of digital responsiveness of the
company. This highlights the essential nature of digital transformation of the firm as it would
not have been able to survive COVID-19 crisis without digital presence (How can Zara
maintain its leadership in fast fashion thanks to Artificial Intelligence?, 2020). Th new fast
fashion competitors of Zara such as Fashion Nova and Boohoo are befitting from ore efficient
supply chain, lack of physical store loans and agile capabilities. It is important for Zara to
enhance digital capabilities and develop digital corporate strategy in order to meet this threat.
Rising threat of Ultra fast fashion for Zara
As per the views of Hanbury (2017) Zara needs to build digital corporate strategy in
order to survive in the fast fashion industry. Online stores such as ASOS, Misguided and
Boohooo specialize in offering affordable and trendy fashion to consumers have gained
success in short time period. These companies have streamlined their supply chain and
increased the speed of design and manufacturing process resulting in creation of Ultra-fast
fashion. This is an issue for Zara and which need to be addressed in order to survive in the
fast fashion industry for long-time period.
Research objectives and methods
Research Aim: To determine the influence of Ultra fast fashion on brick and mortar stores
and understand the impact strategic issues created by rise of digital fast fashion firms on Zara.

Research Objective
 To examine the rise of Ultra fast fashion firms in te global fashion retail industry.
 To understand the role of digital capabilities in success of fast fashion firms.
 To identify strategic issues created by rise of digital fashion on Zara.
 To determine solutions for strategic issues faced by Zara.
Research Questions
 How did Ultra fast fashion firms emerged in the global fashion retail industry?
 What is the the role of digital capabilities in success of fast fashion firms?
 What are the strategic issues created by rise of digital fashion on Zara?
 What are the solutions for strategic issues faced by Zara?
Research methodology
 Data Collection; The present research will utilize both primary and secondary data.
This is justified as it will improve the authenticity of the research and assists in
gaining reliable research findings (Williams and Reddish, 2018).
 Research Philosophy: There are two types of research philosophy interpretivism and
positivism. The selected research philosophy for this research is positivism because it
helps reach objective outcome.
 Research approach: There are two types of research approach which are deductive
and inductive. The research approach for this research is deductive research approach
as it provides authentic results.
Gantt Chart

Research findings
The research suggests that there is need for business firms in the fast fashion industry
to develop digital capabilities in order to survive in the future. The digital fast fashion firms
are firms are able to gain competitive advantage by improving their supply chain efficiency
and increasing speed of production of new fashion lines. This helps the firms follow various
changing social media trends quickly and attract large number of continuously. Zara is
primarily dependent on large network of physical stores to sell fashion products to business
firms and has been able to succeed in pandemic because of current digital capabilities of the
company. The research findings relate to the research aim and research objective as they
provide reason behind success of Ultra fast fashion brand and importance of building digital
capabilities in order to succeed in the current fashion retail climate.

Conclusion
From the above study it is determined that fast fashion retailers need to create digital
corporate strategy in order to adapt to changing landscape of the global fashion industry.
High competition from online retailers and creation of Ultra fast fashion supply chains are the
main forces affecting sale of physical fashion retailers. This has created need to gain digital
capabilities

References
Books and Journals
Viswanadham, N., 2018. Performance analysis and design of competitive business
models. International Journal of Production Research, 56(1-2). pp.983-999.
Williams, L. C. and Reddish, M. J., 2018. Integrating primary research into the teaching lab:
benefits and impacts of a one-semester CURE for physical chemistry. Journal of
Chemical Education, 95(6). pp.928-938.
Online
How can Zara maintain its leadership in fast fashion thanks to Artificial Intelligence?, 2020.
[Online]Available through
<https://www.heuritech.com/blog/company-analysis/zara-leadership-artificial-
intelligence/>
Zara is facing a massive threat that could jeopardize the business, 2017. [Online]Available
through <https://www.businessinsider.in/zara-is-facing-a-massive-threat-that-could-
jeopardize-the-business/articleshow/58814258.cms>