Zara Swot Analysis
Strengths (3 examples)
1. Zara’s young “fashion-conscious” staff of Store Managers. The Managers decide which merchandise to order and discontinue, and also transmit customer data and their own sense of inflection points to Zara’s design teams.
2. Zara’s product cycle was much better than its competitors. Zara was able to originate a design and have finished goods in stores in 4-5 weeks for entirely new designs. The industry model was 6 months for design and 3 months for manufacturing. Zara produces 11,000 items a year as compared to 2,000-4,000 by competitors.
3. Zara’s quick product cycle created a sense of scarcity and a “buy now or miss it” mentality among customers. Zara shoppers visited the chain 17 times a year, compared with an average figure of 3-4 times a year for competing chains and their customers.
Weaknesses (3 examples)
1. No way for consumers that aren’t close to brick and mortar stores to buy merchandise without traveling to and visiting the store.
2. Only have warehouses/distribution centers in Spain.
3. Inditex is heavily dependent upon Zara. Zara generates 76% of Inditex’s sales revenue and 85% of the EBIT during fiscal year 2001. Zara also had 86% of Inditex’s international sales.
Opportunities (3 examples)
1. Advertising. Zara spent just .3% of its revenues on media advertising as compared to 3-4% for most specialty retailers.
2. E-Commerce or selling more clothes through a website.
3. International Expansion. 46% of sales were in Inditex’s home country as compared to 12% by H&M. 60% of stores were in home country as compared to 15% by H&M and 40% by Benetton.
Threats (3 examples)
1. Partnerships/Franchises risk brand equity.
2. A lot of capital is in brick & mortar stores.
3. Competitors (The Gap, H&M, Benetton)
SO Strategies (3 examples)
1. Zara could offer some clothes only online through a website. This would be consistent with the sense of scarcity and achieve selling goods through E-Commerce.
2. Zara could use
1. Zara’s young “fashion-conscious” staff of Store Managers. The Managers decide which merchandise to order and discontinue, and also transmit customer data and their own sense of inflection points to Zara’s design teams.
2. Zara’s product cycle was much better than its competitors. Zara was able to originate a design and have finished goods in stores in 4-5 weeks for entirely new designs. The industry model was 6 months for design and 3 months for manufacturing. Zara produces 11,000 items a year as compared to 2,000-4,000 by competitors.
3. Zara’s quick product cycle created a sense of scarcity and a “buy now or miss it” mentality among customers. Zara shoppers visited the chain 17 times a year, compared with an average figure of 3-4 times a year for competing chains and their customers.
Weaknesses (3 examples)
1. No way for consumers that aren’t close to brick and mortar stores to buy merchandise without traveling to and visiting the store.
2. Only have warehouses/distribution centers in Spain.
3. Inditex is heavily dependent upon Zara. Zara generates 76% of Inditex’s sales revenue and 85% of the EBIT during fiscal year 2001. Zara also had 86% of Inditex’s international sales.
Opportunities (3 examples)
1. Advertising. Zara spent just .3% of its revenues on media advertising as compared to 3-4% for most specialty retailers.
2. E-Commerce or selling more clothes through a website.
3. International Expansion. 46% of sales were in Inditex’s home country as compared to 12% by H&M. 60% of stores were in home country as compared to 15% by H&M and 40% by Benetton.
Threats (3 examples)
1. Partnerships/Franchises risk brand equity.
2. A lot of capital is in brick & mortar stores.
3. Competitors (The Gap, H&M, Benetton)
SO Strategies (3 examples)
1. Zara could offer some clothes only online through a website. This would be consistent with the sense of scarcity and achieve selling goods through E-Commerce.
2. Zara could use