Zara vs. Uniqlo

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Clothing Industry

 
 

ZARA

vs.

UNIQLO

Team
 J:
  Bingbing
 Ge
  Lei
 Du
  Sophia
 Maduka
  Salman
 Syed
 Azim
  Thanadol
 Boonyaviwat
  Tanya
 Goel
 
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Index

Content

Page Number

Executive Summary………………………………………………………………... 4 Introduction………………………………………………………………………… 5 Industry Analysis……………………………………………………………………5 Competitive Environment……………………………………………….5 Strategic Groups………………………………………………………...6

ZARA……………………………………………………………………………….7 Critical Success Factors…………………………………………………7 Strategic Issue: What should ZARA do next?......................................... 9 Strategic Options for ZARA and Inditex………………………………. 10

UNIQLO…………………………………………………………………………… 11 Critical Success Factors…………………………………………………11 Strategic Issue: Should UNIQLO compete with ZARA……………….. 12 Strategic Options for UNIQLO and Fast Retailing……………………..13

Conclusion…………………………………………………………………………..14

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Appendices Index

Content

Page Number

Appendix 1 : Porter’s Five Forces..............................................................................15 Appendix 2 : PESTEL Analysis.................................................................................17 Appendix 3 : Risk Factors..........................................................................................18 Appendix 4 : Strategic Groups...................................................................................19 Appendix 5 : ZARA Business Model ........................................................................20 Appendix 6 : CAGE Framework............................................................................... 21 Appendix 7 : ZARA’s TOWS Matrix………………………………………………22 Appendix 8 : Clothing retailers’ sales and profits..................................................... 23 Appendix 9 : Case of UNIQLO failing to compete with ZARA............................... 24 Appendix 10 : Customer Analysis............................................................................. 26 Appendix 11 : UNIQLO Business Model..................................................................27 Appendix 12 : Detailed Strategies for UNIQLO....................................................... 28 Appendix 13 : Comparison Between ZARA and UNIQLO...................................... 30 Appendix 14 : UNIQLO’s TOWS Matrix................................................................. 31 Appendix 15 : Inditex and Fast Retailing Ansoff Matrices....................................... 32

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Executive Summary

This report aims to provide a comprehensive analysis of two major players in the clothing industry: ZARA and UNIQLO. The clothing industry is highly segmented with several sub markets, ZARA targets at customers who need high fashion, whereas UNIQLO positions itself in the low fashion low price segment. Different from most retailers who adopt a mass production for strategic positioning, ZARA implemented a mass differentiation strategy to compete in the market by vertically integrating its value chain. With full control of all its all activities, ZARA has successfully gained large market share and established good brand awareness by providing customers with fashionable, highly exclusive, fast changing products. For further expansion, ZARA chose to keep penetrating existing markets rather than entering into a new segment. The long distance between Spain and America has brought ZARA with a strategic issue as it cannot take full advantage of its effective business model, which means ZARA has to change its business model or establish a new centralized production and distribution centre for further performance improvement. Moreover, UNIQLO follows the traditional strategy adopted by most retailers that is to reduce cost by outsourcing production regions with low labour cost. UNIQLO also succeeded in gaining market share by offering...
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