DQ4 Zara
Mary Rose Batoon
Fashion Retail Branding and Promotion
Professor Dena Strong
March 3, 2015
Zara
1. What are the Main Challenges in the business model adopted by Zara?
Based on weaknesses and threats on Zara SWOT analysis, the main challenges they are facing today are the high dependence on European Markets, Intense completion in the retail market, Rising labor wages, especially in Europe, and the risk of foreign exchange fluctuations. Others also include the problems faced by management in the organization and allocation of inventory, and the pricing coordination. Moreover, according to one article, Zara (along with other Fast Fashion companies), faces weaknesses and threats such as increasing production costs, and new market entries.
Currently, Zara depends on their European markets for their profit. According to MarketLine SWOT Analysis, it is where they are getting most of their revenues. Nowadays though, the European economy is in slow motion that the company might not get enough profit for years unlike their other competitors who are guarded in such risks (6).
Another problem faced is the intense competition in the retail arena. Their competitors are great in their chosen strategy that it is hard to compete with. Other retailers from fast fashion to specialty retailers to department stores, are stepping up their game in order to survive a highly competitive market. There are also the emergence of new market entities and that consumers and getting thriftier and more selective in their purchases. Unable to stay ahead of the competition will surely dampen their earnings. Thus, as a result, they should be able to continually offer a variety of products while managing their pricing strategy right ("SWOT Analysis: Industria De Diseno Textil, S.A." 7-8).
Probably the most important problem they are facing is there pricing strategy. Pricing their products right despite the rising production cost, foreign exchange fluctuations, the rise of labor cost and
Fashion Retail Branding and Promotion
Professor Dena Strong
March 3, 2015
Zara
1. What are the Main Challenges in the business model adopted by Zara?
Based on weaknesses and threats on Zara SWOT analysis, the main challenges they are facing today are the high dependence on European Markets, Intense completion in the retail market, Rising labor wages, especially in Europe, and the risk of foreign exchange fluctuations. Others also include the problems faced by management in the organization and allocation of inventory, and the pricing coordination. Moreover, according to one article, Zara (along with other Fast Fashion companies), faces weaknesses and threats such as increasing production costs, and new market entries.
Currently, Zara depends on their European markets for their profit. According to MarketLine SWOT Analysis, it is where they are getting most of their revenues. Nowadays though, the European economy is in slow motion that the company might not get enough profit for years unlike their other competitors who are guarded in such risks (6).
Another problem faced is the intense competition in the retail arena. Their competitors are great in their chosen strategy that it is hard to compete with. Other retailers from fast fashion to specialty retailers to department stores, are stepping up their game in order to survive a highly competitive market. There are also the emergence of new market entities and that consumers and getting thriftier and more selective in their purchases. Unable to stay ahead of the competition will surely dampen their earnings. Thus, as a result, they should be able to continually offer a variety of products while managing their pricing strategy right ("SWOT Analysis: Industria De Diseno Textil, S.A." 7-8).
Probably the most important problem they are facing is there pricing strategy. Pricing their products right despite the rising production cost, foreign exchange fluctuations, the rise of labor cost and
Cited: Caro, Felipe, et al. "Zara Uses Operations Research to Reengineer Its Global Distribution Process." Interfaces 40.1 (2010): 71-84.Business Source Complete. Web. 3 Mar. 2015. Cortez, Michael Angelo, et al. "Fast Fashion Quadrangle: An Analysis." Academy Of Marketing Studies Journal 18.1 (2014): 1-18.Business Source Complete. Web. 3 Mar. 2015. Hameide, Kaled K. Fashion Branding Unraveled. New York: Fairchild, 2011. Print. "Inditex And H&M: Very Different And Very Similar." Black Book - Inditex & H&M: Very Different & Very Similar (2011): 1-142.Business Source Complete. Web. 3 Mar. 2015. "SWOT Analysis: Industria De Diseno Textil, S.A." Inditex SWOT Analysis (2014): 1- 8. Business Source Complete. Web. 3 Mar. 2015.