The middle-aged mothers buy dresses at Zara chain because theyre discounted, while the generation aged in the mid-20s buys Zara clothes because its fashionable. Obviously, Zara has strong retail shops, low price, being in fashion. Zara was and still an interesting case study for lots of other retailers and fashion traders in the world.
Zara History and Background
The founder of Zara, Amanico Ortega, opened his first Zara in 1975 in Central Street in downtown of Spain. The first store featured is low-priced and look like popular products, higher clothing fashion. The shop proved to be success, and Amanico began opening more Zara shops in Spain. During 1980 Ortega started to change the designs, producing and the distribution process to reduce times and respond to new trends rapidly, in what he known as (Instant Fashions). Zara built its improvements after developing its information technologies in fashion field and they’re using groups of fashion designers instead of individual ones.
In 1980 Zara started international expansion through Porto. In 1989, Zara entered France and United States in 1990. International expansion increased in Mexico 1993, Greece 1995, Sweden and Belgium 1995, till getting over 70 countries by 2001. Zara runs 500 shops around the world and all the shops are company owned.
Zara is one of the international retailer that manufactures, designs and sells clothing, accessories and footwear for men, women aged 15 to 45 and children. Zara is one of the leading internationalized retailers, (Zara ,Massimo Dutti ,Pull & Bear ,Bershka)
Zara company controls the supply chain and designing. Zara built its own manufactory and they established business model, called JIT system.
Zara could design new products and completed goods in 4 to 5 weeks, also can modify the existing products in as little as 2 weeks. If any design does not sell good in a week, it will be withdrawn from all shops, added orders will be canceled and new design will be pursued as shortening products life cycle means better success in customer preferences. Besides, Zara has a series of standard designs that is coming over every year.
Zara is also becoming the worldÃ¯¿½s leading fashion company and its brand has exceeded expectations. As they have strong design team.
Zara Business model
Zara business models can be divided into three components: Value drivers, capabilities and concept. Zara concept is maintaining design, producing that will allow Zara to react rapidly to changes in customer demands.
SOWT ANALISYIS [ZARA]
Analysis is strategic planning method used to evaluate the Strength, Weaknesses, Opportunities and Treats .Zara marketing strategy is very effective.
1) Normally, retails industries take about 3 to 5 months to obtain new seasonal fashion collection. Zara is able to distribute products within 2 weeks to the customers, because goods are moving rapidly through Zara shops, buyers worry to buy a product that it might no longer be available other time.
2) 70 countries with 500 shops positioned in the best shopping center, More than 350 cities in Americas, Europe, Africa and Asia.
1) Zara is different than its competitors such as Benetton and Gap, doesn’t use Asia outsources. 70% of ZaraÃ¯¿½s controlled facilities in Galicia of Spain. The competitors of Zara have outsources to low-cost Asian countries such as china for low cost labor and production
2) Zara spends 0.3% of total incomes on marketing and advertising. This concept is lesser than its competitors which their average spend 3-4% on advertising
1) Zara Company concentrates in strategy on the close cooperation with customer by use the new technologies, such as online shopping
2) Zara competitors, such as Gap and Benetton, but the key of success of Zara is more fashionable and the price is less
1) Protection laws are 1 of the threats that Zara face in the potential market, disasters in the Galicia region of Spain and government instability.
2) The profits will be affected if the oil price rises as weekly distributions and that will charges high cost transportation.
PorterÃ¯¿½s Five Forces [ZARA]
There’re few fast-design fashion shops like Zara around the world as this unique feature allows Zara to get high profit without spending a lot of money on advertisements to reach the market share.
2. Treat of new Entry
Profitability and unique feature attract traders with investment to enter the fashion market. it could be very difficult to collect all the labor force needed in a short time. If traders want to enter this market, they should have sufficient time to be prepared.
3. Supplier Power
Zara and any fashion shops usually have weak supplier power because of the purpose that their objective is to attract all potential buyers to buy their goods.
4. Threat of Substitute
Generally, fashion industries are very changeable in many existing competitors as they want to control the next big tendency. However Zara is still different from other fashion shops in terms of creative designs and constant innovation.
5. Buyer Power
There’re many people who have loyalty to Zara. Regardless of the brand name, Consumers purchase what they like.
Segmentation & Target market-Zara
Who is the customer?
ZaraÃ¯¿½s target audience is youth, price awareness, and extremely sensitive to latest fashion designs. They have competitive advantage over old-fashioned retailers because they don’t describe their target by segmenting lifestyles and ages giving them broader market.
Zara segments their products line by women (60%), men (25%) and the fast growing children (15%).
Targeting specific segment of the market, this could be a great strategy. Market segmentation is the process of targeting groups of consumers who have common needs. There’re many different ways to segment Markets such as segmenting products, segmenting service requirements, segmenting geographic locations “demographic segment”, or segmenting lifestyles. To create successful segmentation, we need to understand what customers need, how customers decide between products, and how group of consumers demand different things,
Zara targeted a wide-ranging gap in retail market as it targets consumers who interested in fast fashion to be updated with latest fashion designs. In order to target the market, Zara’s strategy runs its shops in important locations and provides its customers with turnover time of 3 to 4 weeks for its new fashion collections. Besides, the strong brand name, the collection of fashion dresses, accessories and marketing campaigns which pulls target markets to Zara shops.