Detailed SWOT Analysis of Zara - 2023 Update | IIDE 29/12/2023, 15:57

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CASE STUDIES > SWOT ANALYSIS

Detailed SWOT Analysis

of ZARA – World’s Largest
Fast Fashion Brand
By Aditya
Shastri Updated on: Feb 18, 2023

Hey there!

My name is Aditya Shastri and I have written this

case study with the help of my students from the
online digital marketing course at IIDE - India's #1
digital marketing institute.

Practical assignments, case studies & simulations

from Harvard Business Review helped the students
from this course present this analysis.

If you find this case study helpful, consider leaving a

comment below.

This would really motivate us.

Previously we looked into the SWOT Analysis of the world’s

most famous sports apparel brand, Nike. This time, we will
tackle the SWOT Analysis of ZARA in-depth.

ZARA is one of the largest fashion apparel companies in the

world. They opened their gates during the late 1900s, in
Spain, followed by a speedy global expansion. Their market
focuses is on minimal and party fashion for women and
men. They have created their name in the market for their
non-toxic clothing.

Another aspect supporting ZARA’s successful stance is its

marketing efforts. Marketing changes over the years,
catering to the needs and trends of the current times, and
now, the majority of successful campaigns have moved on
to various digital platforms. If you are interested in learning
how to create successful digital marketing strategies today,
check out our Free MasterClass on Digital Marketing 101 by
the CEO and Founder of IIDE, Karan Shah, to learn more
about today’s successful marketing.

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Do you want to learn about the key to ZARA’s success in the

fashion apparel industry? In this case study, we will learn
about the SWOT Analysis of ZARA and answer the same. To
gain a better understanding you can also check out ZARA’s
Business Model. Now, let us learn more about ZARA, its
founding, products, financial status, and competitors.

About Zara
Zara is a Spanish brand, based in Galicia, Spain. It is one of
the leading fashion apparel merchants in the world. Since
1975, Zara has expanded globally and has maintained its
supremacy in the fashion industry.

They manage to bring up to 20 clothing collections and

fashion trends as of the research done in 2017. Zara is very
popular for the “instant fashion” they bring to the market.
These improvements were because of the new technologies
and group of new-age designers.

Zara is also known for its fast-fashion approach, with new

designs hitting its stores every two weeks! They are
located strategically in prime shopping districts, often in
historic buildings that have been renovated to match the
brand’s aesthetic. With its innovative approach to fashion,
it’s no wonder that Zara has become a beloved brand.

Zara is one such reputed clothing brand that is very much

loved by its consumers. Thus, they capitalize on the market
expansion. Zara contributes up to 70% of Inditex’s Revenue.

Quick Stats About Zara

Founder Amancio Ortega and Rosalia Mera

Year Founded 1975

Origin Artexio, Spain

No. of 75,000
Employees

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Company Type Public

Market Cap $115.09 Billion

Annual Revenue €18.021 Million

Net Profit €14.129 Million

Products of Zara
Zara has been successfully rising in the fashion apparel
market for half a century by selling –

Clothing
Accessories
Footwear
Swimwear
Beauty

Competitors of Zara
They are a boatload of fashion brands in the industry.
However, the top 5 major competitors are as follows –

H&M
Forever 21
Boohoo
Mango
Marks and Spencers

Now that we have tackled the areas that give us insight into
the company’s core business. Let’s look into the SWOT
Analysis of Zara

SWOT Analysis of Zara

SWOT Analysis of a brand is a study of its Strength,

Weakness, Threat, and Opportunities. Learning the SWOT
Analysis of Zara will help you in upgrading your knowledge
about their business and increase your own regular

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problem-solving skills.

Let’s get into the details:

1. Strengths of Zara
Starting off the SWOT Analysis of Zara, we have its
Strengths. In this sub-section, we will learn about the
organization’s unique capabilities that give it an advantage
in capturing more market share, attracting more customers,
and maximizing profits.

Pioneer Advantage: The focal point of instant fashion is

to design, produce and sell at a fast rate. Conventionally,
this procedure is lengthy; but for Zara, it is only a matter
of 3 weeks. As pioneers, Zara has the most developed,
strategic practices in supply network management.
Stores: Zara has outlets in 96 out of the 202 countries it
sells in. Zara has the most fashion retail stores in the
world, with 2249 locations. The number of retail stores is
about double that of Nike, which has the second-highest
number of retail stores.
Supply Chain: Zara’s supply chain updates its online and
retail collections twice a week. Zara’s ten logistic centers
deliver within 48 hours to any region on the planet. Inditex
also has an in-house software development team that is
working to increase the company’s order fulfillment speed.
Team of Designers: Zara has a design team of 700
trained designers who turn customers’ desires into
designs. Each year, the design team produces 50,000
pieces of work. It also takes them only three weeks to get
the designs from the drawing board to the shelves.
Investing in Online Retail: Inditex is investing $3 billion to
boost its online sales. The money will go into creating a
fun online shopping experience and integrating the
current physical infrastructure. By 2022, the corporation
wants to generate a quarter of its income from online
sales.

Zara’s success can be attributed to its mastery of the digital

marketing game. Fast fashion, however, is proving to be a
double-edged sword as environmental and ethical issues
mount. In our next part on Zara’s weaknesses, we’ll go over
this and more.

2. Weaknesses of Zara
Zara’s commitment to revising its collection every three
weeks sets it apart from other fashion houses. Zara’s
dedication has earned it a spot on the top of the industry.
However, the advantage comes at a cost. Here’s some more
information on Zara’s weaknesses:

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Instant-fashion Trends: Surprisingly, the movement that

propelled Zara to the top is also the source of its most
serious flaw. Zara’s issue is to find a way of balancing
sustainability with instant fashion, which is becoming
more popular among buyers and policymakers.
Physical Store Dependence: Zara’s efforts to reduce the
number of physical stores were pushed by the pandemic.
Zara was able to recover from a large reduction in sales
due to COVID-19-related issues thanks to online sales.
Even with the increase in online sales, sales are still only
89% of what they were in 2019.
Expansion to the US and Asia-Pacific: Zara has a total of
99 stores in the United States, out of the total 2249
outlets, US stores only account for barely 4.4% of the
total. However, the United States is the world’s largest
apparel market. In addition, Asia-Pacific accounts for 38%
of the global apparel market. Zara has a little presence in
both geographies.
Ethical Workplace Standards: Inditex works with 1520
different suppliers across 7108 different plants. Although
Inditex deserves respect for developing a strict code of
conduct, there is a significant gap in its enforcement. This
gap is highlighted by an article in Buzzfeed about the
treatment of employees in Myanmar.
Prediction Aided by AI Systems: Zara is actively working
with AI and Big Data companies to develop an AI-enabled
market trend prediction system. On the other hand, the
current system is still being tested. Once such a system is
in place, Zara will have an unrivalled ability in forecasting
and satisfy client wants.

3. Opportunities For Zara:

Zara’s ability to quickly capitalize on fashion trends is one of
its most significant assets. Zara is in a good position to take
advantage of upcoming changes because of this edge.
These are some of the opportunities:

Rapid Cycle: Customers visit Zara’s stores an average of

17 times each year, indicating a rapid delivery cycle. This
is due to the company’s proclivity for reacting to trends as
soon as they emerge. Zara currently creates a trend from
start to finish in about two to three weeks. The brand
should be able to continue these cycles even further in
the future.
Personalization: Thanks to AI, collecting data and
segmenting the client base after evaluating it is easier
than ever before. This enables clients to receive
customized recommendations. Zara should use this
technology to its advantage.
Sustainability: More than a third of Millennials and Gen Z
look for “sustainable” and “environmentally friendly” labels

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Detailed SWOT Analysis of Zara - 2023 Update | IIDE 29/12/2023, 15:57

on clothing, according to the Sourcing General. The two

groups together account for half of the population. As a
result, Zara must pay attention to and respond to this
expanding need.
Reselling: The resale market, which is currently worth
$28 billion, is expected to expand to $64 billion in the
next five years. Customers would be able to buy more
with less waste if they included a resale plan into their
present platform. This promotes consumerism while
promoting environmental sustainability.
Influencer Marketing: Influential marketing is the most
effective technique for promoting lifestyle companies,
according to Unbox Social. Zara’s #DearSouthAfrica
campaign, which involved 60 micro-influencers, reached
an audience of 8 million people. This should serve as a
blueprint for the future. They can always go bang by
investing in social media marketing for their brand. Here
are a few SMM strategies they can opt for as fashion
brand.

Social Media Marketing For Fashion Brands | …

4. Threats For Zara

In the last segment of SWOT Analysis of Zara, we will delve
into the problems the brand might face. In the traditional
sense, Zara’s largest competitor is H&M, on the other hand,
the brand is now also facing a slew of internet-based
competitors. But these rivalries are only part of Zara’s
problems.

Competition: Shein, the world’s largest apparel shop with

an entirely online presence, is China’s fast-fashion
behemoth. The Shein app received 10.3 million downloads
Quick Links [ hide ] in September while Zara got only 2 million downloads in
the same period, spelling danger for the brand’s future.
About Zara
War of Prices: Zara’s core niche is fast-fashion, which
SWOT Analysis of Zara offers the latest runway trends to clients swiftly and at a
Conclusion low cost. Imitators are conducting pricing wars to drain off
Zara’s line, but the sector is vulnerable. First Name*

COVID-19 Pandemic: Inditex reported a 44% reduction in

Last Name*
revenues in the first quarter of 2020. According to
Inditex’s report, the closure of 88% of its outlets due to
Mobile*
the Coronavirus was the primary cause of the reduction in

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sales. Email*
Regulations And Restrictions: In Spain, Inditex has 13
factories. Only three of the 13 factories were operational
REGISTER FOR FREE
in the early months of the epidemic due to the Spanish
government’s lockdown efforts. The company can expect
similar restrictions as Europe and India prepare for a Third
wave.

With this, we come to the end of the SWOT Analysis of

Zara. Let’s conclude this case study in the section below.

Conclusion
Zara’s current focus is on recovering from the COVID-19
situation and strengthening its web presence. Inditex’s
financials are improving, and the company’s management is
hopeful about increasing online sales. For the time being,
we can say Zara has everything under control. But what
about outside influences?

Zara uses multiple channels of digital marketing such as

SEO, Emailing, and Content Marketing, and uses it to
promote and educate its clients about newer products. Zara
benefits from Digital Marketing because it is cost-effective
and helps it connect to its target audience of young adults
(18-30 years)

Getting the right knowledge about Digital Marketing and

Completing Certified Courses may get you a chance of
working with top companies including Zara. IIDE offers
training in certain digital skills through individual courses,i.e,
Short Term Certification Courses, which helps you get up to
speed in just 5 days. Check out IIDE’s short-term
certification courses include courses on Social Media
Marketing, Media Planning, Search Engine Optimization, and
more.

If you like such in-depth analyses of companies, find more

such insightful case studies on our IIDE Knowledge portal.

Thank you for taking the time to read this, and do share
your thoughts on this case study in the comments section
below.

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Aditya Shastri
Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert
and has trained 6000+ students and working professionals on various topics of Digital
Marketing. He has been a guest speaker at prominent colleges in India including
IIMs......[Read full bio]

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