Challenges faced by Zara in US
Challenges Faced by Zara in the United States
In the United States, fast fashion accounts for only 1% of the $181 billion U.S. apparel market, compared to 10% in the EU1. Although they are running 1000 retail stores efficiently, only 44 of them are located within the U.S.2. Zara has emerged as a global fast fashion leader as they are able to get up to the instant trends on their shelves within 2 weeks compared to their competition’s 6 weeks to 4 months, while still operating on a low-cost model.3 However, Zara is facing unique challenges in the U.S. market. The low cost, fast fashion model that is successful in Europe and Asia is facing challenges in the U.S. due to a lack of North American infrastructure combined with the demographics, preferences and obesity problem of the United States
Zara's vertically integrated model is a threat to Zara's success in long run in the United States. The model will not work once Zara scales its operation. Currently, Zara's designing, production, distribution and retails stores are tightly coupled together and operate very closely. Expanding operations in the U.S. requires addressing different fashion trends at a time. Zara's business model is based on ever changing fashion. For countries like US, where people are less fashion forward, it may be a challenge for Zara to sustain its presence. With changing time, advertisement is becoming an important part of the business and it reflects directly to the sales. Zara's in-store advertisement model may not work going forward due to the intense competition in the United States and the saturation of advertisements for the 17-26 year old female demographic4. As other fashion companies attempt to replicate Zara’s fast fashion model, advertisement is key to differentiating themselves for the competition. Zara’s centralized logistics model may not be able to supply more stores in U.S. The major threat of Zara for their sales in U.S. is lack of distribution facility in America5. Zara
In the United States, fast fashion accounts for only 1% of the $181 billion U.S. apparel market, compared to 10% in the EU1. Although they are running 1000 retail stores efficiently, only 44 of them are located within the U.S.2. Zara has emerged as a global fast fashion leader as they are able to get up to the instant trends on their shelves within 2 weeks compared to their competition’s 6 weeks to 4 months, while still operating on a low-cost model.3 However, Zara is facing unique challenges in the U.S. market. The low cost, fast fashion model that is successful in Europe and Asia is facing challenges in the U.S. due to a lack of North American infrastructure combined with the demographics, preferences and obesity problem of the United States
Zara's vertically integrated model is a threat to Zara's success in long run in the United States. The model will not work once Zara scales its operation. Currently, Zara's designing, production, distribution and retails stores are tightly coupled together and operate very closely. Expanding operations in the U.S. requires addressing different fashion trends at a time. Zara's business model is based on ever changing fashion. For countries like US, where people are less fashion forward, it may be a challenge for Zara to sustain its presence. With changing time, advertisement is becoming an important part of the business and it reflects directly to the sales. Zara's in-store advertisement model may not work going forward due to the intense competition in the United States and the saturation of advertisements for the 17-26 year old female demographic4. As other fashion companies attempt to replicate Zara’s fast fashion model, advertisement is key to differentiating themselves for the competition. Zara’s centralized logistics model may not be able to supply more stores in U.S. The major threat of Zara for their sales in U.S. is lack of distribution facility in America5. Zara