Zara is a well-known retailer chain. They offer many selections, such as women, men, and kids clothing. Inditex owns the Zara Company, and they are known to be the largest apparel retailer in the world. In order for Zara to keep up with their competitors, they have to have a strong internal analysis, which will consist of core competences, resources, and capabilities.
For Zara to have a strong core competence, they need to have unique strengths that stand out among the rest of their competitors. Zaras main strength seems to be how quick their inventory turnover and lead-time is. Zara stores get in new designs two times a week, and their loyal shoppers know exactly what days the new shipments will arrive. Studies have shown that the average Zara shoppers will visit the stores seventeen times in a year, while their competitors only average three to four times a year. Not only do they average more shoppers, but they have a higher performance as well. Zara carries around 11,000 different styles each year, which is nearly five times more than their competitors would produce. The customers know that the merchandise in Zara will not stay in stores long; so if they want a style, they must get it at that very moment.
One of the Inditexs directors, Luis Blanc, wrote, "We invest in prime locations. We place great care in the presentation of our storefronts. That is how we project our image. We want our clients to enter a beautiful store, where they are offered the latest fashions. But most importantly, we want our customers to understand that if they like something, they must buy it now because it won't be in the shops the following week. It is all about creating a climate of scarcity and opportunity. His statement shows how Zara makes their company unique from their competitors, and in result, gives them an immense strength. The directors and owners know where to have the perfect location, know how to design and display the store, and they refuse to keep the same merchandise for more than a week.
Unlike Zaras competitors, they are able to grant their customers demand wishes almost immediately by having an in-house production. Zara has a huge advantage when it comes to this part of the process. They are able to put out their finished products almost eight months sooner than their competitors could. They can produce the merchandise to the stores within four to five weeks, when their competitors have to wait up to six months for a design and another three months just for manufacturing. With having an in-house production, they also have the advantage of keeping the styles they have at a low volume inventory. If Zara does not have a big selection of a style, that keeps them from having to mark the merchandise down to a lower cost. Another advantage is being able to quickly cut off the products that are not selling and instead of producing new trends that will sell. An in-house production resource is valuable because it exploits getting their merchandise out as quickly as they can, and this resource is rare because not many retail stores use this type of strategy. At the moment, Zara has an effective organizational structure with their in-house production, but this could futuristically cause problems. Since they are successful in other regions besides Spain and Europe, they could face higher expenses with transportation if they do not expand their distribution centers.
Zara made it clear that there was not any need for them to advertise because their brand spoke for itself on the supply chain. They figure out what their customers needs are, and from there, they use a market-oriented business strategy to satisfy those needs. Zaras strategic plan is to figure out what sells and what do not in each individual store. They will receive the feedback from the customers, and then proceed to tell the workers producing the merchandise. Zaras turnaround time is essentially what makes them as successful as they are. The customers can see the latest trends from celebrities and magazines, and Zara can produce the merchandise and have them in stores within two weeks. They can keep up with the fast fashion more than any of their competitors ever could.
Expanding to other different countries is an important thing for Zara due to different reasons gaining of a larger market, developing new competence as well as access to low-cost input factors but this endeavor needs a clear research and analysis so as to correctly pick the right county to expand to. The CAGE framework helps guide which countries to entire. It stands for Culture, Administrative and Political, Geographic and Economic. For Zara, the type of fashion that they provide to their customers may differ in relation to culture hence picking a country to enter it is important to consider the countries culture.
The country's culture needs to embrace the fashion provided by Zara fast fashion. This is to avoid bring a particular stoke into a country and does not match the countries culture. Administration and political factors are also other things to consider, what are the legal requirements of the country that they need to meet so as to enter the country's market. This is very important so as to ensure they can meet these demands. A country with administration that embraces investment is way better considering as compared to a country with unstable governance. Zara has its own legal structure which is responsible for determining whether its operations in the country will be compatible its structure.
The geographic location of the county also matters a lot; this will determine the kind of fashion that suits the country and also helps calculate the cost Zara will incur while opening its branch in the country. The geographic location of the country determines the trends that the people within the country wear and is Zara Fast Fashion in a position to deliver these fashions also the cost of operation in the country how it affects the pricing of the companys products. The economy of the country also plays quite a huge role in the operation of any company in the country. As Zara fast fashion looks for a country to expand into the economy of this country needs to be stable so as to avoid bad investment. Zara has to consider the cost of human resources within the country along with other different factors. Also, the countrys consumer income has to be considered so as to establish whether the consumers are in a position to afford Zara fast fashion products. A country that it should consider entering is South Africa
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