ZARA FAST FASHION PRESENTED BY

LUQMAN AHMAD

Institute of Management sciences peshawar pakistan

What is Zara?

– Zara sells both Men's and women's clothes. They also sell shoes, cosmetics and accessories. Recently they started with children's clothes as well.

– Zara is a Spanish clothes and accessories brand, it is the flagship brand of the Inditex group. Few clothing brands keep up with the latest fashion, are of high quality and yet, affordable. It is probably the amalgamation of all these qualities that made Zara, the Spanish clothing brand become the go-to fashion brand for all.

History and Founders

1963-1974 Amancio Ortega Gaona founded Inditex

1975 The first zara store was opened in Spain

1976-1984 Spreading of zara store in Spain

1985 Zara started to enter the overseas market (in Portugal)

1989 Entering New York City, in USA

1990 Entering Paris, in France

1991-2004 Spreading to the whole world including Japan(1998)

2007 Entering R.O.Korea in 30, April at COEX Mall and Lottte Young Plaza 

Inditex

Head Quarters

InditexChair man: Amancio Ortega GaonaLocation of Headquarter: Coruña in SpainAnnual profit: €94billion

Locations of Stores

– Zara has stores in over 88 countries, with just over 2100 worldwide. Zara has flagship stores on Fifth Avenue in New York, Oxford Street in London, Calle Serrano in Madrid, Via del Corso in Rome, Champs-Élysées in Paris, Nevsky Prospect in Saint Petersburg, GUM in Vladivostok, Shibuya and Ginza districts in Tokyo, Myeongdong in Seoul, amongst many others. 

– Zara also sells online through their own website.

ZARA’s Success Factors

1) Active Use of Stores

Changing the store layout in every 2weeks

2) Located in the very center of the city

3) Using the store to advertising

4) Collecting the data of customers

SWOT Analysis

STRENGTHS

– Zara possesses 90% of its stores in 88 countries including United States, Europe, Asia, Middle East and many, and the rest is the joint ventures or franchises.

– It boasts in-house production factories within proximity of the headquarters.

– Zara itself control raw material selection, production, distribution etc

– Zara is called “fashion imitator” because instead of predicting trends, it imitates the trends of the season and provides such fashion trend to its customer at the minimum amount of time possible.

STRENGTHS cont….

– It introduces new clothing models within few days only.

– It reacts quickly, designs new styles, gets tDelivers new products twice each week to its stores, which adds up 10,000 new designs each year.

– Zara produces more designs than all its rivals. As we mentioned earlier it produces about 10,000 designs annually as opposed to only 2000 designs for its rivals.

– hem into stores in few days.

STRENGTHS cont….

– Fast response to its customers’ demand enables Zara to meet customer’s expectations and ultimately that lead them to success.

– Zara has 1923 stores across 88 countries in Africa, America, Asia-Pacific and Europe. Higher number of stores means greater distribution network and greater reach to the customers.

WEAKNESSES

– Centralized distribution system is the biggest problem of Zara.

– If there is any technical snag occur in the distribution network then the whole system can collapse.

– But in other apparel companies, the distribution networks are decentralized and not self-contained like Zara.

– Zara controls its production, suppliers, distribution system, retails stores, unlike its rivals that make it prone to unpredicted problems.

WEAKNESSES cont…

– Imitator, not Creator:

– Zara can never be one of the premium luxury brands in the fashion world because it is considered as the great fashion imitator since it usually imitates fashion rather than predicting the styles of the season .

– Its designers play smart trick by copying designs of fashion week, rather creating some original on their own.

– Spends zero revenue on advertisement: Zara does not spend much money on advertising. It has a zero advertising policy unlike its rival Benetton, H&M and GAP .

OPPORTUNITIES

Scope for Global Expansion: The company has market presence in all the four major continents. However, it still needs more expansion in Africa and Asia.

Another area is online marketing where the company needs to concentrate. The reason is most of the other companies like Benetton and GAP do not have good online marketing channels.

It needs to invest more revenue in e-commerce sector in giving their products more exposure in front of their customers.

THREATS

– Fierce Competition: Zara experiences fierce competition, not only locally but also globally. Locally Zara faces competition from Sweden’s H&M and in-house brands like Massimo Dutti and Stradivarius, whereas, on the global platform, it faces competition with international brands such as in the US, the toughest competition is from the US based GAP.

THREATS

– No Collaboration with International Designers– Zara shares no collaboration with international designers unlike H&M, which

has collaborated profitably with international designers like Karl Lagerfeld, Lanvin, and Alexander Wang.

– This can be a serious threat to the company. When a company collaborates with an internationally noted designer, young generations get interested in buying designer labels.

BILATERAL Trade

– Islamabad Chamber of Commerce and Industry he said both countries should focus on diversification to improve trade and identified IT as another potential area of mutual cooperation.

– Between Pakistan and Spain was on rise and the two-way trade was expected to reach $1 billion mark during this year.

– Pakistan as it improved 43 percent during 2014 and 25 percent during 2015.

BILATERAL cont….

– Spain was the seventh largest trading partner of Pakistan in the European Union and it wanted to further enhance trade with it as both countries

– He said that $46 billion China Pakistan Economic Corridor was a highly positive development, as it has generated a lot of interest in foreign investors to look at Pakistan with more interest.

Strategic analysis

Pricing strategy – Low price strategy

Product offering footwear , accessories for women , men and children from new born to adults 45.(approximately 22% of sale) women’s clothing (about 25%)

Import policyProhibitions and restrictions:

1: Import of Goods - Import of all goods is allowed from worldwide sources unless otherwise elsewhere specified to be banned, prohibited or restricted in this Order

– Goods of Israeli origin or imported from Israel.

– 2: Restrictions.– National quality standards

– List of such standards and regulations notified by the PSQCA.

Market entry strategy

– Franchising

– Indirect entry

PESTLE ANALYSIS

– POLITICAL – Pakistan’s regulatory environment is among the most investor-friendly in the

world. There are no restrictions on foreign ownership.

– Pakistan offers low corporate tax rates and tax incentives for strategic investments.

– Historically, foreign investment returns in Pakistan have been high.

– large infrastructure-related investment projects (especially under the China-Pakistan Economic Corridor), and a largely export potential. 

SOCIAL CULTURAL

– culture is diversified.

– Social change involves changing attitudes and lifestyles. Cultural Change (clothing and their lifestyle). Different consumer taste and lifestyle.Zara has to develop effective strategies to match with pakistni life style. Product or services can’t be successful until company has enough knowledge . Zara take consider social and cultural factors in order to achieve their strategic objectives.

ECONOMICAL

– GDP………………………………………………………………………………………………$270.96 B

– GDP (purchasing power parity)…………………………………………………….$928.43 B

– GDP (per capita income) …………………………………………………............$1560.7

– Revenue Collection …………………………………………………………………….$2.65 Trillion

– Export (2013-2014)……………………………………………………….………………$30.414 B

– Foreign reserves ………………………………….……………………………………….$20 B

– Foreign Direct Investment ………………………………….……………………….$ 0.709 B

– Development Program………………………………………………………………… RS : 758 B

TECNOLOGICAL

– Technological change.– New plants – Smart technology, material innovation, connective

fabrics,– Internet , Facebook, instagram, twitter, etc – Effective supply chain

LEGAL

– Duty rates 20 %

– Import regulatory duty (10% CIF)

– Fulfill the standards of the pakistan.

– Proper tagging.

– Raw material information.

– Usage patterns.

– Copy rights.