Zara Five Forces Analysis

Topics: Supply chain management, Fast fashion, Fashion Pages: 2 (478 words) Published: October 14, 2012
Five forces :
New Entry (Low to Medium)
* New entrants will have to deal with high and large fixed cost * incentive because of profitability of zara
* newest fashion at an inexpensive price
* Zara as part of the Spanish Inditex Group, can benefit from the micro-economic concept of the Economies of Scale. Hence it gains cost advantages as production (scale) increases * Zara is operating within the market of “fast fashion” hence size as well as economic efficiency matter. Inditex’s superior supply chain management has been consistently built over more than a decade . Thus it would be very costintensive and difficult, for a new entrant to the market to imitate Zara’s operations Rivalry (High) :

* minimal exit barriers:fast paced and no preserving inventory * Large Industry Size
* In more general terms the fashion industry is very fast and the product’s life cycle very short. Furthermore it depends largely on recent trends, prices and the customer’s satisfaction;hence the market is extremely competitive Substitute (Low to Medium) :

* Unique “qiuck fashion” Strategy
* Rivalries do exist H&M, Topshop,etc
* Consumer’s decision to purchase a certain article depends on personal taste (and peer group approval),trend as well as price * A substitute for fast fashion, at least for some wealthy costumers, could always be designer clothes (as they are the creators of trends for “tomorrow”);change of segment as well as strategy. * It is one of the essential consumer goods, It can be argued that there are no real substitutes for clothing products in general. * As a Retailer, it is associated with unique and differentiated products as well as services (fast fashion) whose exact and relevant substitution is near impossible. Buyers (Medium to High)

* High Demand but also High Supply
* Costumer Have a very wide range of fashion to choose from * Retailers have to make sure that they offer whatever their customers are...
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