COMPETITIVE ANALYSIS- ZARA

The retail business is commonly an extremely powerful, quick evolving segment. It

comprises one of the fundamental areas in the economy, regarding exchanges and
turnover; accordingly, it is a very focused and modern industry.

As Zara has a global nearness in numerous nations of the World, it is presently mandatory
for Zara to receive a web based advertising methodology to rival its rivals, catch and hold
more piece of the overall industry and increment benefits in this very focused condition
where each client is completely educated and furnished with data about the market.

ZARA has 1,608 stores (including 213 ZARA kids’ stores) in 74 countries, with the company’s
international growth currently offsetting the economic downturn in the domestic Spanish
market.

ZARA has a very strong brand image and the number of outlets can be increased with the
time and growth. Comparatively high product price is a weakness but we have opportunity
to explore markets where we can find customers who want to buy high quality products.
Entry of new competitors and non-availability of sufficient raw material can be a threat in
future.

SWOT Analysis
Strengths

 ZARA has a very strong market Image due to quality, style and availability of
products.
 Product/ Brand Image is also very high because of very high quality, reliable products
for children, women and men.
 Strong financial position of ZARA is also our strength which will help us to invest
adequately to get favorable results.
 Due to strong market position there is availability of finance from other financial
institutions like banks.
 ZARA can benefit in saving the cost from existing infrastructure of suppliers.
 Vast network and store on different main locations all over the UK, Europe and other
regions of the World is also our strength.
 At this time we have availability of suppliers who can provide us required raw
material on good prices and we can build good relations with them for future when
the competition will be higher.
 Online availability of our full catalogue is also our strength and customers can see,
choose and make a final decision by just sitting home.

Weaknesses

 High product price is a weakness but we can not compromise on quality and
customer services.
  Due to no marketing strategy and planning the rate of getting market share is very
low.
 Proper management and implementation of the new system can take time.

Opportunities

 New market search is the next step after capturing our existing market we can go to
US and central Asian markets more deeply.
 More innovation, improved quality and value added products for our customers.
 Adoption of new technology will help us to lower the cost of our products.
 Research and development department can be made more efficient and strong for
product improvement and availability of the products.
 Improved and more focused customers service.
 Continuous training of the staff and labor for cost effective production.
 Strive to exceed the customer’s expectations through quality, innovation and
customers services.
 Increase in promotional activities through online marketing to get maximum market
share.
 Building relations and long term contracts with the suppliers will be beneficial for
future buying.

Threats

 Entry of new competitors is a threat for our product which can be avoided by
building stronger product image in the mind of customer.
 Unavailability of sufficient raw material because of high number of customers for
raw material in the market.
 In the near future there will be high price of raw material due to increased demand.
 Availability of raw material in future is another threat and can be managed by
involving maximum number of suppliers in the beginning with small quantity orders
to all the suppliers. Order quantity can be increased in future as per demand.
 Low buying power of the customers in existing markets is also a threat and can be
managed by searching new markets.

Five Forces Analysis:

Competition in the Industry:

The major competitors of Zara in the market are H&M, Gap and Benton. Zara being the
most reasonable and fashionable beats the sales of Gap and Benton but H&M has a same
standing as Zara in the market. But Zara’s supply chain model is super responsive. Other
retailers usually spend months in launching a new collection but Zara responds to the
constant fashion trends, changes and needs and puts forwards a new line of clothing every
two weeks.
Potential of New Entrants in the Industry:

With the fast growing fashion industry and fiscal crisis, people are looking for economical
goods. Zara addresses that problem by providing reasonable prices with high quality.
However increase in euro rates will consequently increase the selling price for the
customers and the company might lose the advantage of being the economical brand
against its competitors.

Power of Suppliers:

Zara provides its suppliers with licensed contracts so that they are stuck with the
requirements which leave little and no room for variation in designs which lessen their hold
on their market.

Power of Customers:

Zara spends round 0.3% of its budget on advertising. It relies on words that travel from
mouth to mouth. It invests in R&D department to acknowledge the need and wants of the
customer and strive to put that collection from the sketch board to the shelves in 15 days.

Threat of Substitute products:

H&M can compete with zara in terms of quality and affordability however it spends a lot in
its advertising and might take and advantage of the economic crisis.