Zara SWOT Analysis- And Competitors

Zara SWOT Analysis & Competitors

Introduction Paragraph- The ZARA company was founded in Arteixo, A Coruna, Galicia, Spain in the early 1980s as a retailer of clothing. Fast fashion is the company’s specialty, and products include clothing, footwear, swimwear, perfumes, cosmetics, and accessories. The index is the world’s largest clothing retailer and is the largest company in Inditex. According to Zara, there are 20 new collections every year as of 2017. Today’s article- Zara SWOT Analysis and competitors.

Answer Paragraph- ZARA analyzes its strengths, weaknesses, opportunities, and threats using a SWOT analysis. Zara’s SWOT Analysis’ internal components include its strengths and weaknesses. whereas, opportunities and threats represent Zara’s external factors.

SWOT analysis provides a business & performance benchmark for brands, such as Zara, by benchmarking themselves against their competitors. In the retail and lifestyle space, Zara is a leading brand.

Our objective in this article is for you to learn how Zara’s SWOT analysis compares with its rivals. The world’s biggest fashion retailer, Zara is owned by Inditex. Zara was opened in Spain by Inditex Founder Amancio Ortega in 1975. Zara has emerged as a dominant fashion brand since 1975. Zara’s 2240 stores in 96 countries delivered 19.5 billion euros in 2019 alone. In 2019, Zara’s Inditex’s crown jewel, contributing 70% of the company’s revenue.

The Reason of Zara’s popularity

The following are the topics that a SWOT analysis would cover:

  •  Zara’s Strength: Zara’s growth is enabled by internal factors.
  •  Zara’s Weakness: There are internal factors preventing Zara from progressing.
  •  Zara’s Opportunity: Factors outside of Zara’s control boosting its success.
  •  Zara’s Threat:  Zara is being pulled down by external factors.

Major Strengths Of Zara’s 

The pioneer advantage of fast fashion is the speed at which outfits are designed, produced, and sold once they identify a trend. Zara does this process in just three weeks, rather than months as is normal in traditional fashion. Zara is a leader in managing and developing supply chains.

  • Zara Stores: 

There are 202 Zara stores located in 202 markets. Zara operates 2249 stores worldwide, the most of any fashion retailer. This number is almost double the number of retail stores that Nike has, which is ranked second in terms of numbers of retail stores.

  • Chain of Supply: 

Online and in-store collections at Zara are refreshed twice a week. In less than 48 hours, Zara reaches any part of the world from its 10 logistics centers. Furthermore, Inditex develops software to speed up the process of dispatching orders.

  • A Team of Experienced Designers: 

The designers at Indotex are trained to transform a customer’s vision into reality. 50,000 pieces of creative work are produced every year by the design team. From the time the designs are designed to the time they are sold, it takes just three weeks.

  • Online sales:

 Online sales are to be boosted by $3 billion by Inditex. A significant amount of investment will be made in integrating the existing physical infrastructure with online purchasing experiences. A quarter of the company’s revenues will be generated by online sales by 2022.

Zara has mastered the game of fast fashion, which is why it has been so successful. The practice of fast fashion, however, is becoming less popular due to growing environmental and ethical concerns. As we continue on our journey through Zara’s weaknesses, we’ll cover this issue and more.

Weaknesses of Zara

Zara’s commitment to revising its collection every two weeks makes it unique in the fashion world. Zara’s commitment to quality places them at the forefront of its industry. Edges come with a price, however.

  • The Fast-Fashion Industry: 

It’s interesting to note that Zara’s most pressing weakness actually helps propel it to the top. Zara’s weakness is its inability to balance sustainability and fast fashion as customers and policymakers are becoming increasingly focused on sustainability.

  • Reliance on Physical Stores: 

Zara’s plan to close its stores was accelerated by the pandemic. Zara was able to recover from a massive sales drop caused by COVID-19 due to online sales. Despite an increase in online sales, the sales are only 89% of what they were in 2019.

  • Expanding into the U.S. and Asia-Pacific: 

Zara has 99 locations in the U.S. There are 2249 Zara stores in total, which means 6.4% of them are for Zara. It’s still the largest market for apparel in the world. The apparel market is dominated by Asia-Pacific with a 38% market share. Both geographies make it difficult to locate Zara.

  • Practices of Ethical Working: 

With 1520 suppliers at 7108 factories, Inditex works with over 1520 suppliers. The code of conduct Inditex created is rigorous, but enforcement of the code suffers from a large gap. Several bloggers have highlighted the fact that workers in Myanmar are treated unfairly, as reported by Buzzfeed.

  • Prediction using AI:  

As a result of the collaboration between a company in the AI space and one in the Big Data space, Inditex is creating a system capable of predicting consumer behavior. This system is currently undergoing testing, and it is only in its infancy. After such a system goes online, Zara will have unmatched capabilities for predicting and delivering customer needs.

Possibilities presented by Zara

Zara’s expertise in capitalizing on fashion trends quickly is one of its greatest advantages. Zara is well-positioned to take advantage of future opportunities because of this advantage. The following are some of the possibilities:

  • Customer Visits: 

Each year, Zara’s customers visit its stores 17 times on average. Zara quickly reacts to trends because it responds to them as soon as they emerge. The current delivery time for Zara trends is between two and three weeks. But Zara might be able to shorten the cycles even more in the future.

  • Customization:

 By taking advantage of artificial intelligence, companies can now more easily gather and segment customer data after analyzing the collected data. Customer suggestions can be personalized this way. This technology should be capitalized on by Zara.

  • An Eco-Friendly Product: 

Sourcing General reports that over a third of Millennials and Gen Zers want clothing with “sustainable” or “environmentally friendly” labels. These two groups represent half the population in total. To meet this growing demand, Zara must listen and respond.

  • Reselling: 

It is predicted that the resale market will grow to $64 billion within five years, from $28 billion today. Customers would be able to purchase more with less waste if a resale strategy was incorporated into their current platform. Consumption is encouraged while sustainability is supported.

  • Marketing with influencers: 

In Unbox Social’s opinion, influencer marketing is the best method for promoting lifestyle brands. With #DearSouthAfrica, Zara engaged 80 million people through 60 micro-influencers. Future models should be modeled after this.

Zara’s Biggest Threat

In a traditional sense, Zara has a big competitor in H&M. On the other hand, Zara is competing with several other businesses in the online space. Zara faces many threats, including competition.

  • The Competition: 

Shein, China’s leading fast-fashion chain, is the world’s biggest online-only retailer. There were 10.3 million downloads of Shein during September. Only 2 million downloads for Zara during the same period, the company should be wary of its competitors.

  • The Price War:

 Zara’s fast-fashion segment brings the latest trends straight from the runway at low costs and quickly to customers. The industry is susceptible to imitation, however, as imitators battle for market share.

  • Towards The Implementation of COVID-19: 

The first quarter of 2020 saw Inditex’s sales slow by 44%. This drop in sales can be attributed largely to the closure of 88% of Inditex’s stores following the Coronavirus outbreak.

  • Laws and Regulations: 

Spain is home to 13 factories of Inditex. The Spanish government was enforcing lockdown measures in the early months of the pandemic, so only three factories were operational. Europe is moving into its second wave of austerity measures.

  • Fashion Sustainability: 

In the past, people tended to discard their clothes after they used them. The environmental and human impacts of fashion are being increasingly recognized. Zara must therefore strive for sustainable development in fast fashion – from an economic and ecological standpoint.

How Does Zara Measure Up to its Strengths, Weaknesses, Opportunities, and Threats?

Using its SWOT analysis, Zara identifies its strengths, weaknesses, opportunities, and threats. External factors include threats and opportunities, while internal factors include weaknesses and opportunities. Management of Zara can use a SWOT analysis to develop its strategic plan.

Which Companies Compete with Zara?

The following are Zara’s top competitors:

  • Louis Vuitton.
  • Hugo Boss.
  • Chanel.
  • Christian Dior.
  • Burberry.
  • Ralph Lauren.
  • Prada.
  • Gucci.

Zara’s Competitive Vulnerabilities, What are They?

It’s interesting to note that Zara’s most pressing weakness actually helps propel it to the top. The balance between sustainability and fast fashion has become more important among consumers and policymakers.

Conclusion

Its current priority is to recover from COVID-19 and to strengthen its online presence. It is clear that Indotex’s finances are improving, and the management is confident that online sales will increase in the future. Zara, therefore, is in control of the situation for the time being. Aren’t there other aspects to consider?

Online shopping has grown due to the pandemic. Zara must solidify its physical and digital footprint shortly. When it comes to fashion retail, Zara has nailed many of its moves. Zara, can she do that online as well?

As you can see from this SWOT analysis for Zara, customer loyalty can strengthen a brand during times of adversity. Become familiar with your audience, build trust with them, and give them what they want.

Frequently Asked Questions

  1. Are there any differences between Zara and its competitors?

To compete with its competitors, Zara offers a greater number of products than they do. Compared to other clothing retailers, Zara produces and sells many more different items of clothing, with over 10,000 produced per year, compared to 2,000 to 4,000 different types of clothing. 

  1. Can Zara compete with H&M in terms of quality?

H&M has some better designs and fits, but Zara’s products are not enough to overtake them. Qualitative aspects are subjective and hard to quantify. The Zara brand lasts a bit longer than H&M, but it isn’t always true since H&M products are also of high quality.

  1. Zara’s success can be attributed to what?

As a result of Zara’s agility, it has achieved success. Zara reacts to the environment in a matter of weeks, unlike many clothing brands whose designs stagnate for the season. During the peak of a trend, the brand designs and releases new styles.

Zara SWOT Analysis- And Competitors

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