Did you know? The founder of the company initially named the Zara as Zorba after the classic film Zorba the Greek.
We well know the company for its elite style at amazing prices, as Zara always keeps its customers coming back for years, and still, people just can’t seem to get enough of their most favorite brand. It’s been 45 years since Ortega launched Zara, the company now specializes in fast fashion and includes products to sell like clothing, accessories, shoes, swimwear, beauty, etc.
This can only be achieved through a firm with extensive knowledge, experience and innovative strategies. To determine the strengths of the company potential, weaknesses, opportunities and threats, it is necessary to conduct a SWOT analysis by Zara.
Zara At A Glance – Zara SWOT Analysis
Company: Zara SA | The Inditex Group
Founders: Amancio Ortega | Rosalía Mera
Year of establishment: 24 May 1974, A Coruña, Spain
CEO: Óscar Pérez Marcote
Headquarters: Municipality of Arteixo, Spain
Employees (Dec 2020): 75,000
Ticker Symbol: IDEXF
Annual Revenue (Dec 2020): US$750 million
Profit net income (Dec 2020): US$254 million
Products & Services: clothing | Accessories | Shoes | Swimwear | Beauty | Perfumes
Company Website: www.zara.com
Competitors: Chanel | Christian Dior | Burberry | Ralph Lauren | Prada | Gucci | Louis Vuitton | Hugo Boss
Zara SWOT Analysis – SWOT Analysis Of Zara
SWOT Analysis Of Zara analyzes the brand based on its strengths weak points, weaknesses, opportunities, and threats. With Zara SWOT Analysis it is clear that the advantages and disadvantages are internal factors, while threats and opportunities are external elements. Here we are going to talk about Zara SWOT Analysis. Below Is The Detailed SWOT Analysis Of Zara.
Zara Strengths – Zara SWOT Analysis
1. Unique designs: Zara’s greatest advantage lies in its design capabilities. Zara has many designers who are familiar with the brand and the needs of Zara customers. They are exquisite, high quality, and beautifully finished. There are many options available, including casuals, party wear, office wear, casuals, and for children. Zara wear includes accessories. Zara continues to expand its global presence. It had 2100 stores around the world in 2015 with an average annual sale of 15.9 billion. It has grown even more in 2016. Zara must continue to grow its retail presence if it wants to survive. It is encouraging to see that Zara is doing just that.
2. Brand value: The brand ranks 53 in Forbes’s brand ranking. It is valued at 10.7 billion dollars. The excellent brand equity at Zara is due to several positive factors. In recent years, the brand has received a boost due to its performance and consistent quality. The brand has also avoided controversy and tried to remain humble in all situations. This healthy culture has made the brand adored by its customers over and over.
3. Superb Supply Chain: Zara’s designs are delivered to stores within 2 weeks. This is a significant advantage over other stores that take at least 6 weeks. Zara is the most fashionable store with the latest fashion. Zara designs an average of 450 million products each year. This encourages customers to return to Zara’s store to see the most recent designs.
4. Design advantage: Zara is known for launching thousands of new designs each year around the world. A customer might visit another store twice or three times a year to view the latest fashions, but Zara might be their only option. Zara clothing is fashionable and trendy, so customers continue to buy Zara clothes. Zara clothing is a staple in many customers’ wardrobes. Zara clothing is loved by its customers for their elegant and trendy designs.
5. Lower cost and higher profits: Zara has a hard time advertising its products. To attract customers to its stores, Zara relies solely on its fashionable image. Zara’s operations are very cost-effective and have high margins. It invests more on backward integration and supply chain than on advertising.
6. Store physical evidence: Zara’s service also has excellent physical evidence. You will feel more open-minded when you enter the store than if you are in other showrooms. Zara has a large and deep store layout that allows customers to enjoy a walk through the store and try out their favorite designs.
Zara Weaknesses – Zara SWOT Analysis
1. Absence of advertising: Although it might lead to a cost benefit, and cost is one strength of Zara’s brand, the brand can double its profits and turnover by advertising its collections. It is a well-known fashion outlet that can attract more customers through advertising, which will result in positive word-of mouth for Zara.
2. Low safety stock: Zara stores regret that stocks that are rapidly moving seldom have a safety buffer. Zara stores keep low inventory to encourage customers to visit the stores and check out the latest products. This also means that even if a design is popular, there is not enough stock to keep it safe.
3. Designs: Zara is selling unique designs and does not follow a standard design concept. This can be a weakness of the store.
Zara Opportunities – Zara SWOT Analysis
1. E-commerce: Zara can take advantage of the online shopping trend and offer its clothes not only in its stores, but on other E-commerce websites as well, thereby increasing sales.
2. Supporting flagship designs: One common trait of top brands is having some flagship designs in their stores. Zara does not have this feature, so there should be some Zara designs that can be sold in Zara stores. This will bring in great demand and help build a brand identity.
3. Growing Market Potential: Zara’s brand is growing in popularity wherever Zara is present, which leads to a growing Market potential. Consumers are more likely to be earning more, which leads to a greater demand for status symbols. Zara is a status symbol that consumers love to wear in the clothing industry. Zara is needed in order to take advantage of the increasing market potential for existing markets.
4. Market expansion: Zara will always be able to tap new markets and bring in more business. It must keep an eye on emerging markets where there is more spending power and where people are able to spend on Zara semi-premium brands like Zara. This will allow them to offer better and more fashionable clothing. This market expansion protects Zara’s clothing brand from being over-subscribed in countries with too much competition.
5. Backing certain flagship designs: One of the common features of top labels is that they have some designs that are their stores’ flagship designs. In Zara, something is missing and thus there should be certain designs that should still be available from a Zara shop, generating great demand for these designs and developing yet more market identity for the brand.
Zara Threats – Zara SWOT Analysis
1. Low advertising: Zara is not promoting its products through advertisements and other competitors who are promoting their products can drive customers away from Zara Stores by offering promotional discounts and offers. Promotional strategies of competitors can be a major threat to the company.
2. Intense Competition: H&M, Vero Moda, and Mango are giving tough competition to Zara. H&M, Vero Moda, and Mango have a wide range in their product line. These products are eating up the profitability of Zara.
3. Currency Fluctuations: Zara is a multinational company and operating its business in many countries. Any fluctuation in currency can directly affect the pricing and business of the company. This currency fluctuation can be a major threat in the SWOT Analysis of Zara.
4. Allegations: Company can face litigations in various markets. Laws related to product standards can cause litigation in the country of operations. This can be a major threat to the company. Zara has previously faced litigations related to child labor and Copyright Infringements. Thus the company has to keep track of the laws in the country of operations and maintain product quality.
5. Government Initiatives for Local Products: The government of India is encouraging local brands and the Make in India initiative. Many Foreign countries are also promoting their own infrastructure and local manufacturers. This can be a major threat to Zara because of local competition.
6. Imitation: The imitating of counterfeit and low-quality products is also a threat to the company particularly in the emerging and moderate markets.
7. New Product Development: New Innovative low-cost product development by the competitors can also affect the profitability of the company. This innovative product development can create market pressure by influencing the sales of the company. This can be a major threat.
Zara SWOT Analysis Template
This is the SWOT report that Zara has done. Please let us know if you have additional suggestions to add.
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