Zara-Case Analysis
Even in the high competitive apparel market in Europe, Zara enjoyed an impressive compound annual growth of 26% from 1995 to 2000. Zara was an exceptional in the downturn market and created a standard for apparel industry. Zara’s target customers were fashion- oriented young and middle age women and men, who came from middle to upper classes and had a rapidly changing style. To meet the needs and wants of this customer segment, Zara built its strengths to enhance its core competitive advantages:
Strengths and Weaknesses of Zara, and the Opportunities and Threats from the competitors: Strengths * Lower-priced; * Most latest fashion; * Manufactured and distributed at high speed; * Leading operation technology; * Zero inventories-JIT; * Strong and distinctive company’s culture * HR Management-building the all-important confidence in the company * 300-strong marketing function * Simple and effective IT system | Weaknesses * Centralized distribution system limits its global expansion; * Minimum advertising limited its brand awareness * Vertical integration increases the fixed cost; * Rapidly changing consumer demands increase the production cost; * High HR cost-Designers & Training * High searching and designing cost for up to date styles. | Opportunities * Hugh market potential in USA; * New distribution centre and production facilities in NA to serve NA market; * Continuous market expansion in Europe; * Other brands’ expansion will increase Zara’s brand awareness; | Threats * Internal threat from other brands of Inditex, such as Bershka outlet, Pull & Bear… * The differentiation of other brands will challenge the local suppliers; * The expansion of other brands will dilute the management attention; * Imitation of incumbents * Domination of hypermarkets and department stores continues to put downward pressure on independent stores |
Zara’s major competitors included H&M-offering low fashion at a
Strengths and Weaknesses of Zara, and the Opportunities and Threats from the competitors: Strengths * Lower-priced; * Most latest fashion; * Manufactured and distributed at high speed; * Leading operation technology; * Zero inventories-JIT; * Strong and distinctive company’s culture * HR Management-building the all-important confidence in the company * 300-strong marketing function * Simple and effective IT system | Weaknesses * Centralized distribution system limits its global expansion; * Minimum advertising limited its brand awareness * Vertical integration increases the fixed cost; * Rapidly changing consumer demands increase the production cost; * High HR cost-Designers & Training * High searching and designing cost for up to date styles. | Opportunities * Hugh market potential in USA; * New distribution centre and production facilities in NA to serve NA market; * Continuous market expansion in Europe; * Other brands’ expansion will increase Zara’s brand awareness; | Threats * Internal threat from other brands of Inditex, such as Bershka outlet, Pull & Bear… * The differentiation of other brands will challenge the local suppliers; * The expansion of other brands will dilute the management attention; * Imitation of incumbents * Domination of hypermarkets and department stores continues to put downward pressure on independent stores |
Zara’s major competitors included H&M-offering low fashion at a