Zara report

I confirm that this work has gained ethical approval and that I have faithfully observed the terms of the approval in the conduct of this project.

This submission is the result of my own work. All help and advice other than that received from tutors has been acknowledged and primary and secondary sources of information have been properly attributed.

Should this statement prove to be untrue I recognise the right and duty of the board of examiners to recommend what action should be taken in line with the University’s regulations on assessment contained in its handbook. signed .................................................................................................................... date .......................................................................................................................

Word Counts: 3,368

Fig 1 Zara Women’s Wear SS 2013 Campaign

Marketing Strategies for the International Expansion of Zara

MA International Fashion Business FASH 40081 Course Leader: Alexandra Hanford Student Name: Katherine Chen T2051778

C

ontent

Executive Summary 5

Company Profile 7

Introduction 9

Methodology 11

The Market 13

Recommendation 25

Fig 2 Zara S/S 2013 : Cara, Jon, Raquel & Sean by David Sims

Executive Su

ummary

T

he main purpose of this paper is to critically analyze Zara under the big background of the global fast fashion industry focusing on concluding constructive suggestions to improve its e-commerce and offer a better level of shopping experience as well as engagement with its potential and current consumer within the global market. This paper will put emphasis on discussing the effects of the micro and macro environment within which Zara operates and offer an explicit SWOT analysis especially the threats and opportunities that the company is currently faced with. Two sets of questionnaires, business models, and secondary research of the industry have been employed to analyze the organization. Based on the conclusions that are drawn several solutions responding to relevant problems and the opportunities that have been identified will be proposed at the end of this paper.

Having a clear position among its competitors, Zara consistently utilizes its highly responsive supply chain and integration of information systems which pave solid foundation for development of customer relationship. With reference to retail stores, a strong commitment should be maintained within fast fashion industry which is expected to establish brand with more recognition amongst consumers.

Comprehensive considerations should be taken into consideration for a better future even with in-store digitalization and strong retail theatre developing over time. Constructive suggestions are put forward assisting with putting the instore digitalization into practice and improving brand communication via social media, as well as enhancing classic look from throwaway fashion.

6

Evaluation Report 2013

Fig 3 ZARA is opening in Sandton City

Com pany Profile

Zara is one of the leading fast fashion brands and provides a wide range of apparel for women, children, men and the home, which forms part of the retail group ‘Grupo Inditex’ that is the third largest brand in the garment industry. In 1975, Zara launched first flagship store in Spain, while the original Zara’s store in Spain, today it has stores throughout the Middle East, the Americas, Asia and Europe. There are 1,751 stores across 86 countries in the world.

(Mintel, 2013). In 2013 August the company has opened their first store in Russia.

Zara’s key success is based on a vertical integration system, quick response, own production team, centralized distribution centre and low spending on advertising,(Appendix 6, Porter five forces) although fashion clothing companies spend large amounts of revenue on advertising, Zara believes visual merchandising represents the product itself. ‘’The parent company Inditex group spends just 0.3% on advertising while most of the fashion retailers spend their revenue on advertising on an average of 3.5%’’ (Cnn.com, 2013)

8

Evaluation Report 2013

Zara has been a pioneer of fast fashion industry and many of its ranges are up-to-date. (Mintel, 2013). ‘’ Zara’s fashion design is closely linked to its customers.

Constant flow of information from stores which conveys shopper’s desires and demands inspires the strong creative team with 200 persons. Zara is in tune with its customers, who help it give shape to the ideas, trends and tastes developing in the world. This is the secret to its success among a wide range of people and generations who, despite their differences, all share a special fondness for fashion’’ (Inditex.com, 2013). Zara’s clothing design mostly resembles high end designer wear but sells at a much lower price, with frequent and small shipments to keep inventories scarce and fresh. Therefore when Zara displays its stock and items they are brought instantly by their consumers. Zara operates by creating a feeling of scarcity and customers rush to buy items, as they would very quickly be sold out (Ferdows, 2004)

Introduction

Fig 4 Zara Opens Chadstone Store

As an international company, Zara faces many fast fashion competitors (Fig 4), such as Gap, H&M, Uniqlo and Benetton and many others (Barnes, 2006).

Fig 5 Fast Fashion Perceptual Map

‘’Although a global online platform has been already rolled out since 2010 for Zara, the other brands are gradually following suit, Zara is now facing a problem of the lack of e-commerce. ‘’Spain is not at the forefront of e-commerce, multi-channel and social media developments and Inditex still has some catching up to do with the frontrunners in the digital world.’’ (Mintel, 2013) 10

Evaluation Report 2013

Fig 6 Freja for Zara F/W 2012 Campaign

Methodology

A

dopting both quantitative and qualitative research, this paper is dedicated to obtain comprehensive insight in relation to customers. The study is mainly conducted through searching related articles about Zara and the fast fashion industry of global market.

Further studies have been conducted by academic authors concentrating on marketing and business processes. A critical analysis of the micro and macro environment is performed by means of a PESTLE Analysis (Appendix3), a SWOT analysis (Appendix4), perceptual maps of fast fashion competitors (Fig5) and fast fashion online competitors (Fig14), and Porters 5 forces (Appendix 5) to understand the market, competitors and brand performance.

To demonstrate the community of Zara customers and its relationship with sales, this study has employed Maslow’s Hierarchy of needs. Besides, the S-O-R model has been employed to illustrate customers’ emotional responses to a physical environment that serves as mediation between the physical environment and their behaviors.

There are two separate sets of questions in the questionnaire. The Zara questionnaire is done to gain insight into consumers perspectives and views over the company, another set of the questionnaire is done to gain an understanding from consumer’s perspectives towards shopping experience and both of the questionnaires are multiple choices and detailed questionnaire information and

related responses answers are circulated online by means of social media including Facebook, Weibo, Blogger involving 43 voluntary customers of Zara to answer the questions. (Appendix 1&2).

58 participants volunteer to answer shopping experience questionnaire.

Elaborated on the discussion of previous research, the results of the questionnaire are critically analyzed. One important point to be noticed lies in that these findings might be lack of objectivity limited by several aspects: the limited respondents and time constraints, as well as restricted results derived from the questionnaire promulgated only online at specific time and not covering common customers.

12

Evaluation Report 2013

Throw way fashion launch ‘classic’ look

As an organization in the fast fashion industry literature that requires high demand and short lead time, H&M is pretty distinguished in guaranteeing strong commitment to ethical manufacturing. In spite of that Zara declared a code of conduct by supporting organic farming and making some of its garment out of organic cotton (Zara.com, 2013), which with reference to manufacturing H&M attached to the big trend of employing transparent

Fig 7 Zara’s August/September 2013 Lookbook

The Market

reporting, namely, generating sustainability report offering stakeholders as well as the public to access the company’s crucial information in which way help to perform CSR.

I

t is better for Zara to put this strategy into practice and guarantee the quality of its products.

Hojsik exerts every effort to push Zara to operate well stating Zara which is the world’s biggest clothing retailer demands to take the leading position and realizes this as quick as possible, adopting ambitious and transparent measures to update its clothes and supply chain (Chilvers, 2012). Through creating its own report, the organization is able to outline specific things and priorities associated with corporate responsibility strategy that need to be fulfilled, which in turn assists with improving overall performance of the company.

Fig 8 Fashion Curve Diagram

Besides, CSR for the organization, Zara is often viewed as a store that provides extremely trendy clothes, which will not in fashion for long; hence customers have to throw away the items after a few uses. This could result in decreasing market share in the long run (Anonymous, 2012). As environment consciousness increases, more individuals may opt of purchasing clothes for a few uses and may opt for more classic look, thus causing a drop market share for the brand.’ (Appendix 4) When research participants are asked any suggestions for Zara to change or do differently, in some responses customers would like to see more classic looks along with ‘trendy’ collections. (Appendix 1) This which indicates fashion curves diagram of how ‘classic look’ last longer and this could increase market share in the long term.

However, this implies that more people are seeking for more classic looks in order to ensure that they do not use their clothes only once or twice, so there may be an opportunity for Zara to gain greater level of consumers.

14

Evaluation Report 2013

Market Leader in Fast fashion Innovative information technology Diversification into life style range (Zara Home) Lack of E-commerce

Fashion Clothing inspired from Cat-Walk Afforable price and Stylish International Expansion

Fig

9M

aslo w

’s h i

era

rch

yo

f ne

eds

(Za r

a) D

iag

ram

‘Just in time’ system Information system monitoring customers purchase

Zara € 210,541million EUR sales

Fig 10 SHORT JACKET WITH SILVER BUTTONS from Zara

Zara’s development process can be explained and demonstrated by the Maslow’s hierarchy of needs which can also illustrate business functions. Zara has fulfilled its fiscal needs at 2012 reaching a record number of € 210,541million EUR sales (Inditex.com, 2013). Safety needs are fulfilled as the organization is expanding international width, over 6,000 stores in 86 markets around the world including Europe, America, Asia and the rest of the world. Zara fulfills the need of belonging with fashion clothing inspired from cat-walk with much lower price, fast response from current trends and frequent and small shipments which creates a high level of exclusive community and indicates consumers’ desire for fashion. The esteem needs of status are satisfied due to the prestige associated with the brand among peers (Chapman, 2007). Zara is a market leader in fast fashion with very innovative business system, but need to be cautious of the lack of e-commerce.

16

Evaluation Report 2013

Fig 11 Zara chicago store

Future trends of Retails

‘’The battlefield between traditional retailers and e-commerce- only players is no longer about volume, but who can provide the best customer experience.’’

Said Hari Shetty, Wipro Technologies (WGSN, 2013)

When the organizations sell products internationally, climate and culture have to be considered. As one of the key factors on future trends of retails, E-commerce is now becoming the more popular method for luxury brands to make sales, ‘’digital sales are set to power so much of the luxury industry’s growth in the next five years, it is a connection that luxury goods companies have to get right’’ (Doran, 2013) Social media have become the main method of advertising and promoting products,’’ The rise of a global social media platforms such as Facebook, Qzone

(China only), twitter and Weibo have boosted the ease and dropped the cost with which brands can reach global’’(Daily.J, 2013)

Fig 12 International Largest Social Networks diagram

18

Evaluation Report 2013

A

Any suggestions for Zara to change or do differently?

social media! post more things and more regularly nah its too cool

More classic look

the quality of clothing, especially shoes.

I'd like to see a Pinterest account and some bloggers featuring in YouTube videos for Zara Offer discounts time by time

Fig 13 Zara questionnaire

What is your mode isof purchase fashion from Zara, else weakness of Zara the lack from Online reviews Beyond may be lessclothing fashionable thanwhat social of e-commerce; when research shoppers Zara?participants are asked media, but they carry does it much attractmore you toweight come intowith Zara? any suggestions for Zara to change or do differently, – consumers are more interested in what their peers 75% nothing price in response. Customers are dissatisfied with the lack 18% have to say than what brands want to communicate.

7% more of updates via social media‘. ’Social media! Post (E-commerce, Mintel, 2013)Affordable Classy things and more regularly’’ (Appendix 1) and ‘’I’d like I also shop for clothes for my to see a Pinterest account and some bloggers featuring boyfriend in Zara, he really likes in YouTube Videos for Zara’’ (Appendix1). This suggests it as the menswear is very poputhat social networks and recommendations on blogs are In-store Online Both lar making consumers more clearly on what product they colours, a sense of originality and decent prices want, when they want it and how they want it, hence just a chioce of clothing increase the customers with specific requirements. Social Do you think digital shopping experience is media is widely used at the recent London Fashion Week brand. useful for brands to improve their brand More suit for a smaller size. held in September 2013, with designers allowing users to or awareness? watch shows in real time onimage Google+ and You Tube and just a chioce of clothing even people on the tube are able to watch catwalk shows brand. streamed from a Twitter account.

(Appendix10% 4) These good quality and low price YES consumers seek entertainment escapism and fulfillment NO Brand image noted in Maslow’s hierarchy of needs, ultimately making how they display their product and interior shopping a ‘’fun, recreational activity by those who 90% engage in it’’ (Babin in Yurchisin & Johnson 2010:41) online

have more staff to help rather than those behind the counter Quality of clothing, more wearable

launch a range of classic style how they display their product

High Fashionability

Low Price

The survival of the fittest, which is highlighted in Darwin’s theory of evolution (1859), also fits in the business environment meaning that retailers have to adapt themselves to the ever changing marketing environment so as to survive. E-commerce as a crucial part of fashion industry today, from Zara’s questionnaire digital shopping experience is judged to be high, with 90% of the respondents suggested it is useful for brands to improve their brand image or awareness. (Appendix 1) Sufficient attention need to be attached to the increasing number of mid-market E-tailers including Miss Guided. co.uk, Boohoo.com and pretap or tabelle.com fig 4 and brand building to improve their digital presence, especially emphasize on social media. Boohoo, the young fashion e-trailer, is the main spender on advertising, and it invests £1.8 million in 2012 on campaigns including a Christmas TV ad. It has looked for young customer base with outdoor ads inside tube stations in central London. (Mintel, fashion online 2013) It is renowned that Topshop is famous for taking advantage of digital content to engage and stimulate consumers such as planning special events Customize-The-Catwalk/Shoot-The-Show (Appendix 7)

Fast Fashion Online Perceptual Map

High Price

Low Fashionability

Fig 14 Fast fashion Online Perceptual Map

and constantly upgrading its brand popularity by ownlabel makeup to every corner of fashion. According to the report, the company manages to create 2 million shares globally within the first 5 minutes presenting the strength of social media and entertainment among customers (Chilvers, 2012).

Missguided.co.uk as one crucial competitor is speeding up its expanding progress globally under the help from social media, TV campaigns (Appendix 7). Given this situation, Zara has to come up with responsive strategies and find as many as opportunities to keep its consumer base who are now inclined to be persuaded to change their mind if provided with similar products having good words of mouth, at lower price or feelings get them more involved in the brand.

20

Evaluation Report 2013

Digitalization In-store The new reality of retail extends to new markets, where local culture and competition shouldn’t be underestimated. Neither should reputational risk, as consumers really do care. (WGSN, 2013). ‘Experience’ is the main focus in future trends of fashion retails, because whether you go to a show or whether you wear a coat or a dress is an experience’’ Marc Jacobs. ‘’in recent times we have grown familiarity with the concept of the brand experience’’ (Tungate, 2008:73) increasingly encouraging retailers to turn away from traditional marketing concepts, but instead making ‘’the shopping experience an adventure’’ (Tungate 2008:73) Experience is something that Zara suggests to achieve for its own brand.

Suggesting Zara about in-store digitalization aims to embrace the future of shopping and build a bond with new consumers and encourage them to shop online and also create an experience.

22 Evaluation Report 2013

Fig 15 Zara lookbook 2013

Stimulus

Organism

Product Coordination

Emotional State Pleasure Arousal

Response

Purchase Intension Interactive Technology (Augmented Reality)

Perceived Amount of Information

Fig 16 S-O-R Model

S-O-R Model

Stimulus-organism-response (S-O-R) model can be applied to businesses and used to explain the consumers’ emotional responses to a physical environment mediated the influence of the environment on their behaviors.

(Mower and Kim et al., 2012, pp. 442-453)

‘’Mark Israel, CEO of Value Retail Management China and special projects director of Europe, said retailers nowadays must create an experience that is “worth leaving the house for”(WGSN, 2013). The idea that stimulus is fulfilled by launching in-store digitalization will be merging both the online and offline worlds together because “Customers want to have an experience online, and in a physical store.”

(Incorporated, 2013). It is suggested in the Zara questionnaire (Appendix 1) that 78% choose the instore shopping in Zara over the online shopping which could be due to the face that ‘’Shopping on the internet gives very little sensual pleasure’’ (Tungate 2008: 234) .As factors such as smell, touch and general face to face interaction are taken away, but are otherwise enjoyed by consumers that shop in the Zara bricks and mortar store and specifically concentrates on elements such as visual merchandising, colour and lighting, aiming to stimulated purchase decisions.

Using digitalization within physical retail store will

be important to showcase Zara’s brand image that can be enjoyed by all senses. A main objective will be that the store can be somewhere friends can socialize and interact together, and 85% of respondents consider shopping as a social experience and 73% respondents find shopping an enjoyable experience. (Appendix 2) According to shopping experience questionnaire74% are interested in digitalization in-store for Zara and 63% will purchase the item after using interactive mirror.

However, ‘’Buying something that can’t be seen, touched or tested will forever be a barrier.’’ (Trend watching, 2012: online) and with apparel being a product that is tested on both style comfort and fit, it can often lead to consumers not checking out their online basket or high level of returns. So Zara will use the digitalization in-store and on-line to introduce the concept of interactive mirror to the customers, this would be a gimmick for Zara to attract consumers, also improves long waiting changing room cue

(Appendix 2) and will help eliminate some of the key issue when buying online.

The mirror will use ‘’The Prime Sense 3D technology, that can map the users body using Kinectlike 3D sensors’’ (Trend watching, 2012: Online) the technology will be attached to the mirror allowing the consumers to virtually try on the products helping the consumer to gauge both fit and style of the desired item. Augmented reality within the retail store will also provide Zara an opportunity to extend into people’s homes due to developments from companies such as living room using webcams and other devices to create virtual changing rooms at home. Meaning that Zara, after trialing the technology in the retail stores, can as future recommendation develop their own virtual home changing rooms to help aid online shopping to global consumers. Consider for the high cost of the new technology, digitalization technology will only indicates Zara’s flagship store within major cities throughout the international market.

24

Evaluation Report 2013

Recommendation

Fig 17 Zara Wowenswear Lookbook September 2010

Zara has been a pioneer at building an international fast fashion brand also creating a community of loyal customers. However, having reviewed Zara and conducted environmental research using both primary and secondary research techniques, the report thus far considers that while Zara has an extremely high level of brand equity, Several problems which can affect the future success of the company have been identified. It is clear that even though Zara has much strength, many weaknesses that are apparent in its internal environment can be detrimental to the long term survival of the organization. Moreover, it is also clear that while the Indian and Chinese markets have provided the organization with many opportunities for expansion, diversifying its line to provide more ‘classic’ looks will help it penetrate the vast untapped North American market more successfully.

(Appendix5)

Many have mused that as economies struggle to recover from the ravages of the last financial crisis, Zara, which is often associated with a gilded age when clothes are considered as something to be worn once or twice and then thrown away may be faced with hard times, as individuals across Europe cut down on discretionary spending like clothes purchases and those in other parts of the world become more thrifty (Anonymous, 2012). To increase sales, Zara must understand the global economies and environmental issues, therefore it is essential that Zara strives to diversify its offerings and create more classic looks along with its ‘trendy’ range, in order to satisfy the changing needs of certain consumer segments and retain their loyalty to the brand in the long run.

26

Evaluation Report 2013

Fig 18 Zara spring-summer 2010 lookbook

O

nline strategy followed by Zara has been very weak. Sharing information is important nowadays, especially when targeting young savvy consumers, therefore it is believed that Zara should invest significantly in social media marketing.

Although Zara has already launched its basic Facebook page, twitter account, Website and Weibo Regular updating and engaging with their consumers by setting up an Instagram or blog to tell them more about fashion over time is essential. Such a strategy would also be useful in helping Zara to maintain contact with consumers and develop more long term relationships.

Online website having been rolled out by Zara since 2010, online website need to make effort to create innovative digital ideas which could maintain its experience. Zara shows strong strength and potential in international market which can be reflected in its expansion into further segments and increasing international sales.

And this strength needs to be maintained and consistently developed through careful and constructive planning. Threats from competitors should be paid careful attention, meanwhile Zara need to constantly come up with creative ideas so as to attract consumers’ interests. As for the company’s digital content, such as the look book, should be adjusted timely keeping up with related requirements.

In order to strengthen its loyal consumer base and upgrade its brand popularity, Zara need to take into consideration the concept of in-store digitalization to obtain a distinctive experience. In terms of current consumers have become more tech-savvy and desire to be inspired, Zara also needs to stay committed to prioritize its customers at the very first place, and tries hard to stay fashionable, favorable so as to win over young consumers’ hearts.

Word Counts: 3,368

28

Evaluation Report 2013

Fig 19 Zara Menswear spring-summer 2010 lookbook

Bibliography

Company Profile (Mintel, 2013) (CNN 2001, CNN: Online).

Citations

Introduction (Mintel, 2013) (Inditex.com, 2013) (Ferdows, 2004) (Barnes, 2006) (Mintel, 2013) The market (Zara : Online) (Chilvers, 2012) (Anonymous, 2012) (Hanford 2013) (Inditex annual report, 2012) (Chapman, 2007)

(Doran.S,2013 Paul smith report) (Daily.J, 2012) (Babin in Yurchisin & Johnson 2010:41)online (E-commerce, Mintel, 2013) (Mintel,fashion online 2013) (Chilvers, 2012) (WGSN,2013) (Tungate, 2008:73) (Mower and Kim et al., 2012, pp. 442-453) (WWD 2013, WWD: online) (Tungate 2008: 234) (Trendwatching, 2012: online) Recommendation (Anonymous, 2012)

30

Evaluation Report 2013

List of Illustrations Cover image Zara, 2013. Zara website. [Image Online] Available at: http://www.zara.com/ [Accessed 08 December 2013].

Fig 1: Zara S/S 2013 : Cara, Jon, Raquel & Sean by David Sims. [Image Online] Available at: http://forums.thefashionspot.com/f79/zara-s-s-2013cara-jon-raquel-sean-david-sims-205809.html [Accessed 08 December 2013].

Fig 2: Freja Beha & Cara Delevingne for Zara AW12. [Image Online] Available at: http://oystermag.com/freja-beha-cara-delevingne-for-zaraaw12 [Accessed 08 December 2013].

Fig3: WIN VIP TICKETS TO THE ZARA LAUNCH. [Image Online] Available at: http://shadesofgold.tgether.co.za/page/28/ [Accessed 08 December 2013].

Fig4: Zara Opens Chadstone Store [Image Online] Available at: http:// shadesofgold.tgether.co.za/page/28/ [Accessed 08 December 2013].

Fig 5: Fast Fashion Perceptual Map [Own Diagram] Fig6: Freja for Zara F/W 2012 Campaign. [Image Online] Available at: http://www.fashiongonerogue.com/freja-beha-erichsen-is-hippie-chic-forzara-fall-2012-campaign/ [Accessed 08 December 2013].

Fig 7: Zara’s August/September 2013 Lookbook. [Image Online] Available at: http://www.fashiongonerogue.com/zara-augustseptember-2013-lookbooklaunches/ [Accessed 08 December 2013].

Fig 8: Hanford, A 2013, Fashion curve diagram, lecture notes distributed in Forecasting theory at Nottingham Trent University, on 20 November 2013.

Fig9: Maslow’s hierarchy of needs (Zara) Diagram [Own Diagram] Fig10: SHORT JACKET WITH SILVER BUTTONS from Zara [Image Online] Available at: http://www.zara.com/ [Accessed 08 December 2013].

Fig11: zara Chicago store [Image Online] Available at: http://paulunt. wordpress.com/2012/02/04/blog-day-1-globalization-the-retail-industryzaras-successful-permeation-across-the-globe/ [Accessed 08 December 2013].

Fig 12: International Largest Social Networks diagram [Image Online] Available at: http://www.businessinsider.com/a-global-social-mediacensus-2013-10 [Accessed 08 December 2013].

Fig 13: Zara Questionnaire [Own Diagram]

Fig 14: Fast Fashion Online Perceptual Map [Own Diagram] Fig 15: Zara lookbook 2013 [Image Online] Available at: http://www.zara. com/ [Accessed 08 December 2013].

Fig16: S-O-R Model [Own Diagram] Fig 17 Zara September lookbook 2010 Available at: http://www.fluxuryb. com/2010/09/zara-womenswear-september-2010-lookbook/ [Accessed 08 December 2013].

Fig 18 zara-spring-summer-2010-lookbook Available at: http://stylepantry. com/wp-content/uploads/2010/02/spzara-spring-summer-2010-lookbook-04. jpg [Accessed 08 December 2013].

Fig19 Zara Menswear -spring-summer-2010-lookbook Available at: http://4.bp.blogspot.com/_kZgMM0w8S6k/TAj64TsIZlI/AAAAAAAAHGY/ USL11NgnyS0/s1600/Zara+LB+June+10+-+Lucien11.jpg [Accessed 08 December 2013].

Fig20 Zara Womenswear 2010 lookbook Available at: http://www.fluxuryb. com/2010/09/zara-womenswear-september-2010-lookbook/ [Accessed 08 December 2013].

32

Evaluation Report 2013

List of Bibliography Anonymous (2012) Fashion Forward. The Economist [Online] Available at < http://www.economist.com/node/21551063> [Accessed on 22nd November, 2013] Academic.mintel.com. 2013. Clothing Retailing - UK - October 2013. [online] Available at: http://academic.mintel.com/display/683763/?highlight=true#h it1 [Accessed: 6 Dec 2013].

Academic.mintel.com. 2013. Fashion Online 2013. [online] Available at: http://academic.mintel.com/display/676230/?highlight=true#hit1 [Accessed: 12 Dec 2013].

Baines, P., Fill, C. and Page, K. (2008) Marketing, London: Oxford University Press.

Barnes, L., 2006. Fast fashioning the supply chain: shaping the research agenda. Journal of Fashion Marketing and Management, 10(3), pp.250-271 Brassington, F. and Pettitt, S. (2012) Essentials of Marketing (3rd Ed). New York: Pearson.

Babin, B., Darden, W.R. (1995). Consumers self regulation in a retail environment. Journal of retailing, 71(1) 47-70

Chilvers, S. 2012. Topshop to turn London fashion week show into Facebook ‘entertainment’. [online] Available at: http://www.theguardian.com/ fashion/2012/sep/12/topshop-london-fashion-week-facebook [Accessed: 6 Dec 2013].

Chapman, A., 2007. Maslow’s Hierarchy of Needs. Business Balls [Online].

Available at : http://www.businessballs.com/maslowhierarchyofneeds5.pdf [Accessed: 12 Dec 2013].

Doran, S. 2013. How Social Media & Luxury Brand Websites Are Impacting eCommerce - Luxury Society - Reports. [online] Available at: http:// luxurysociety.com/articles/2013/02/how-social-media-luxury-brandwebsites-are-impacting-ecommerce [Accessed: 12 Dec 2013].

Edition.cnn.com. 2013. CNN.com - Zara, a Spanish success story - June 15 2001. [online] Available at: http://edition.cnn.com/BUSINESS/programs/ yourbusiness/stories2001/zara/ [Accessed: 12 Dec 2013].

Editor, N. 2013. Greenpeace Exposes Toxic Chemicals in Fashionable Clothing | Environment NewsService. [online] Available at: http://ens-newswire. com/2012/11/20/greenpeace-exposes-toxic-chemicals-in-fashionableclothing/ [Accessed: 7 Dec ]

Hanford, A 2013, Fashion curves diagram, lecture notes distributed in Forecasting Theory at The Nottingham Trent University, Nottingham on 20 November 2013.

Hugos, M. (2011) Essentials of Supply Chain Management (3rd Edition), London: Wiley.

Heller, L. 2011. The Future of Online Shopping: 10 Trends to Watch. [online] Available at: http://www.forbes.com/sites/lauraheller/2011/04/20/the-futureof-online-shopping-10-trends-to-watch/ [Accessed: 12 Dec 2013].

Incorporated, C. 2013. Smartphones Can Boost In-Store Experience. [online] Available at: http://www.wwd.com/markets-news/textiles/smartphones-canboost-in-store-experience-7214909 [Accessed: 12 Dec 2013].

Inditex.com. 2013. INDITEX Group - Zara. [online] Available at: http://www. inditex.com/en/who_we_are/concepts/zara [Accessed: 12 Dec 2013].

Inditex.com. 2013. INDITEX Group - Zara. [online] Available at: http://www. inditex.com/en/who_we_are/concepts/zara [Accessed: 6 Dec 2013].

Jing Daily: The Business of Luxury and Culture in China. 2013. Social Media Explosion Gives Brands A Second Chance In China. [online] Available at: http://www.jingdaily.com/social-media-explosion-gives-brands-a-secondchance-in-china/20439/ [Accessed: 12 Dec 2013].

Kotler, P., Armstrong, G., Wong, V. and Saunders, J. (2010) Principles of Marketing (5th Ed). New York: Financial Times/Prentice Hall.

Kang, M. and Johnson, K. 2011. Retail therapy: Scale development. Clothing and Textiles Research Journal, 29 (1), pp. 3--19.

Lamb, C., McDaniel, C. and Hair, J. (2013). Marketing (11th Ed). Austin: South Western.

Lynch, R. (2012) Corporate Strategy (6th Edition). London: Prentice Hall.

Manganari, E., Siomkos, G. and Vrechopoulos, A. 2009. Store atmosphere in web retailing.European Journal of Marketing, 43 (9/10), pp. 1140-1153.

Available from: doi: 10.1108/03090560910976401 [Accessed: 8 Dec 2013].

Mower, J., Kim, M. and Childs, M. 2012. Exterior atmospherics and consumer behavior: Influence of landscaping and window display. Journal of Fashion Marketing and Management, 16 (4), pp. 442-453. Available from: doi: 10.1108/13612021211265836 [Accessed: 7 Dec 2013].

34

Evaluation Report 2013

Reuters (2013) ‘Has Zara Reached Saturation Point? Far From It, Investors Bet’. The Business of Fashion [Online] Available at < http://www. businessoffashion.com/2013/11/has-zara-reached-saturation-point-far-fromit-investors-bet.html> [Accessed on 22nd November, 2013].

Smith, C. 2013. The Planet’s 24 Largest Social Media Sites, And Where Their Next Wave Of Growth Will Come From. [online] Available at: http://www. businessinsider.com/a-global-social-media-census-2013-10 [Accessed: 7 Dec 2013].

Sammut-Bonnici T. and Wensley R. Darwinism, probability and complexity: market based organizational transformation and change explained through the theories of evolution. International Journal of Management Reviews Volume 4, Issue 3Available at: http://onlinelibrary.wiley.com/doi/10.1111/14682370.00088/pdf [Accessed: 7 Dec 2013].

Taplin, I. (2006) “Restructuring and Reconfiguration - The EU Textile and Clothing Industry Adapts to Changes”, European Business Review, 16:1, 7184.

Tungate, M. (2008) Fashion Brands: branding style from Armani to Zara )2nd ed), London: Kogan Page Trendwatching.com. 2013.trendwatching.com’s May 2012 Trend Briefing “(R)ETAIL (R)EVOLUTION” covers the latest consumer trends in e-commerce. [online] Available at: http://www.trendwatching.com/trends/ etailevolution/?easycommerce [Accessed: 12 Dec 2013].

Vasudev, S (2013) ‘Why we love Zara’. Live Mint and the Wall Street Journal [Online] Available at < http://www.livemint.com/Leisure/ Haij1kOiMie8BvJdVgeFqJ/Why-we-love-Zara.html> [Accessed on 22nd November, 2013].

WGSN. 2013. Business Strategy Thought Leadership Conference Reports 2013. [online] Available at: http://www.wgsn.com.ezproxy.ntu.ac.uk/content/ report/Business_Strategy/Thought_Leadership/Conference_Reports/2013/ October/fashion--meeting-consumer-demand.html [Accessed: 12 Dec 2013].

WGSN. 2013. Retail and VM/Retail Strategy October 2013. [online] Available at: http://www.wgsn.com.ezproxy.ntu.ac.uk/content/report/Retail_and_VM/ Retail_Strategy/Retail_Conferences/2013/October/retail-week-shop.html [Accessed: 12 Dec 2013].

WGSN. 2013. Business Strategy Insight 2013. [online] Available at: http:// www.wgsn.com.ezproxy.ntu.ac.uk/content/report/Business_Strategy/ Business_Insight/2013/September/social-responsibility--do-consumers-care-. html [Accessed: 12 Dec 2013].

WGSN, 2013. E-commerce. [online] Available at: http://www. wgsn.com.ezproxy.ntu.ac.uk/content/wgsn/unifiedsearch.html?q=ecommerce&tags=&type=all&t=all&_charset_=utf-8 [Accessed: 12 Dec 2013].

Zara Creates a Ready to Wear Business (2003) â&#x20AC;&#x153;Leading Fashion Label Designs its Whole Operation to fit the customerâ&#x20AC;?, Strategic Direction, 19:11, pp. 24-26.

Zara.com. 2013. Our Mission Statement - Company - ZARA United Kingdom. [online] Available at: http://www.zara.com/uk/en/company/our-missionstatement-c18001.html [Accessed: 12 Dec 2013].

36

Evaluation Report 2013

Fig 20 Zara Womenswear 2010 lookbook

Appendix 38

Evaluation Report 2013

Appendix 1

Ethics: Zara Questionnaire Dear Participants Thank you for deciding to take part in my survey.

I am a Master student at Nottingham Trent University and the purpose of the survey is to collect primary research for my report on marketing strategy for the international expansion of Zara. All the results will be anonymous and will be used for educational purposes.

By clicking yes, you are argeeing that I can use the findings in my report.

Have you ever shoped in Zara?

Do you know the brand Zara?

GENDER Total of 43 participates

7%

100%

93%

43%

57%

AGE 18-25

25-36

37+

YES

How do you know about Zara?

3% Advertistment

40%

60% 27% Internet Sources

7% Others

63% Words of Mouth

40

Evaluation Report 2013

What is your mode of purchase from Zara?

75%

7%

In-store

Online

18%

Both

Beyond fashion clothing from Zara, what else does it attract you to come into Zara?

nothing price Affordable Classy

I also shop for clothes for my boyfriend in Zara, he really likes it as the menswear is very popular colours, a sense of originality and decent prices

Do you think digital shopping experience is useful for brands to improve their brand image or awareness?

YES

just a chioce of clothing brand.

More suit for a smaller size.

just a chioce of clothing brand. good quality and low price

10%

Brand image

NO

how they display their product and interior

90%

Any suggestions for Zara to change or do differently?

social media! post more things and more regularly nah its too cool

More classic look

the quality of clothing, especially shoes.

I'd like to see a Pinterest account and some bloggers featuring in YouTube videos for Zara Offer discounts time by time

have more staff to help rather than those behind the counter Quality of clothing, more wearable

launch a range of classic style how they display their product

Appendix 2

Ethics: Shopping Experience Questionnaire Dear Participants Thank you for deciding to take part in my survey.

I am a Master student at Nottingham Trent University and the purpose of the survey is to collect primary research for my report on marketing strategy for the international expansion of Zara. All the results will be anonymous and will be used for educational purposes.

By clicking yes, you are argeeing that I can use the findings in my report.

42

Evaluation Report 2013

Do you find shopping an enjoyable experience?

Total of 58 participates

Do you consider shopping as a social experience?

100 80

85% Yes

In-store Online

60

27%

40

73%

20

Where do you do most of your shopping?

15% No

42%

58%

0

Would you consider shopping as a day out?

If you have not make a purchase during shopping , how would you feel?

30% Not Satistied

20%

19% Highly satis�ied

27% Satis�ied

80% 24% Neutral

Would you purchase the item, after trying interactive mirror?

Yes No

63% 37%

44

Evaluation Report 2013

Appendix 3

External Analysis of Zara PESTEL Analysis

Political and Legal

Economic

- It has been the strategy for Zara to only enter and compete in markets, which have political and legal frameworks that are conducive to its business model (Kotler et al, 2010). This strategy has worked for the company in the past and is expected to work in the future.

-Knock-offs â&#x20AC;&#x201C; producing garments that copy the design and style of another product, but without using the trade mark. (intellectual property in the fashion design industry, 2012) - Customers from China may not have access to main stream social media e.g. Facebook

- Inflation in consumer prices for clothing eased in 2012 but price rises have heightened in 2013, in large part due to rising cotton prices. (Mintel, 2013) - Store sales in local currencies have increased by 10% from 1 August to 14 September 2013. (Inditex quarterly results, 2013) - Overall consumer price rises are still well above average wage growth. While this is continuing to depress consumersâ&#x20AC;&#x2122; spending power, clothing has been relatively immune from shoppers cutting back. This means the clothing category is less likely to benefit from any recovery in consumersâ&#x20AC;&#x2122; spending power. (Mintel, 2013) - The brand is often perceived as a manufacturer of trendy clothes that meet the specific needs of the customer but is reasonably priced (Reuters, 2013; Vasudev, 2013). This in turn has helped the organisation to remain competitive and expand even during the global financial crisis.

46

Evaluation Report 2013

Social

Technology

- Zara needs to make sure there are up to dates and work on trends, so it can satisfy their consumers and meets their demands of its demographics - There are some adjustments to its product offerings because of the customer’s size differences in Asian countries (Monllor, 2001) - Zara decided to move towards a geocentric orientation, allowing the company to adopt in some cases local solutions rather than merely replicate the home market. Zara sells a largely homogeneous product for a global market (Flavian and Polo, 2000).

- The 9% increase in 25-34-year-olds between 2012 and 2017 is positive for the market as this age group are the main online clothes buyers.

This demographic is also inclined to shop more for clothes online than in-store. (Mintel, 2013) - The brand is often associated with a ‘gilded age with throwaway fashion’ which is becoming unpopular in some quarters as ability to spend on discretionary items decreases (Anonymous, 2013).

- A global online platform has been rolled out already for Zara, and the other brands are gradually following suit. But Spain is not at the forefront of e-commerce, multi-channel and social media developments and Inditex still has some catching up to do with the frontrunners in the digital world.’’ (Mintel, 2013) - Social media was widely used at the recent London Fashion Week held in September 2013, with designers allowing users to watch shows in real time on Google+ and You Tube and even people on the tube able to watch catwalk shows streamed from a Twitter account. (Mintel, 2013) - Improving the activities of our central services and distribution centre, all of which are located in Spain. During 2012 the activities of the new Massimo Dutti complex in Tordera began with new buildings both for its headquarters- which houses its management, sales and design teams- and for a new logistics centre that can be considered to be at the forefront of technology applied to this area.

(Inditex group annual report, 2012)

Environmental -The organisation has been able to effectively use information system, point of sales data and automate the system so that point of sale information and customer buying trends are fed directly through to design and manufacturing and manufacturing is fed directly to the distribution channels (Hugos, 2011). Thus, even though many advances have been made in supply chain management over the years, the organsiation has been able to maintain a competitive advantage in the market place.

- As environment consciousness increases, more individuals may opt of out purchasing clothes for a few uses and may opt for more classic looks, thus causing a drop in market share for the brand.

48

Evaluation Report 2013

Appendix 4

Internal Analysis of Zara SWOTAnalysis

STRENGTHS

WEAKNESSES

o Established brand name o Recognised for providing trendy, reasonably priced clothing (Lynch, 2012). o Known for limited quantities and thus, able to provide relatively unique designs that meet the specific fashion needs of the hour (Anonymous, 2013). o Short supply chain with direct link between Point of Sales and Design, Design and Manufacturing, Manufacturing and Delivery (Hugos, 2011). o Able to change rapidly to needs in the market o Each year, the brandâ&#x20AC;&#x2122;s designers create approximately 40,000 designs, from which 10,000 new items are produced. Zara gives customers a wider range to choose from by producing five or six colours and between five and seven sizes in each design. (Mintel, 2011) o They also have a great Information technology solution in place which allows for decentralized decision making.

o Unable to duplicate the success in suburban stores in the United States, where consumers are looking for more classic looks (Anonymous, 2013). o Relatively higher cost of manufacturing as it is carried out in Europe as opposed to China (Anonymous, 2013). o Unable to retain customers who maybe looking for more classic designs in order to ensure that they do not use their clothes only once or twice (Anonymous, 2013). o Consumer dissatisfaction regarding lack of customer service associates (Zara questionnaire â&#x20AC;&#x201C; Appendix 1) o Zara has limited online shopping sites, there is only 23 countries are available for online purchase o Consumer dissatisfaction regarding lack of updates via social media (Zara questionnaireAppendix 1)

50

Evaluation Report 2013

OPPORTUNITIES

THREATS

o India and China have a growing middle class, which will help Zara to expand its markets in the long term. o Growing need for more classic looks, as the target market may start looking for more durable fashions that do not have to be worn once and then thrown out (Anonymous, 2012). o Even though discretionary spending is low, many individuals like to shop and do not feel satisfied unless they purchase something, which works in Zaraâ&#x20AC;&#x2122;s favour (Shopping experience questionnaire â&#x20AC;&#x201C; Appendix 2). o customization in apparel could be explored

o New entrants may be able to imitate the model by using the same principles and designing the supply chain that is similar to that of Zara. o Zara is often viewed as a store that provides extremely trendy clothes, that are not in fashion for long, hence customers have to throw away the items after a few uses. This could result in decreasing market share in the long run (Anonymous, 2012).

52

Evaluation Report 2013

Appendix 5

Competitive Analysis of Zara Porterâ&#x20AC;&#x2122;s Five Forces Analysis

Buyer Bargaining Power – Very High

Supplier Bargaining Power – Low

Threat from new Entrants – High

There are many organisations that provide the same type of the clothes at the same price point as Zara, such as H&M, thus making buyer bargaining power very high. However, since the organisation is able to rapidly change in response to evolving trends, its ability to sell most of its inventory and keep costs low is much greater, which will continuously help the organiastion to succeed.

Since the supplier base is fragmented, the supplier bargaining power is low (Baines, Fill and Page, 2008).

While the threat from new entrants is high, the ability to imitate Zara’s business model is very difficult as has been noted by companies like The Gap (Anonymous, 2013), thus the success of Zara will not be diminished in the short term due to this threat.

Threat from Substitutes – High

Competitor Rivalry – High

As is clear from the many brands that are competing in the same market space, the threat from substitutes is very high.

Zara has many different competitors across all the geographical locations that it operates in such as Benetton, The Gap and H&M, companies that are all constantly attempting to imitate Zara’s business model.

54

Evaluation Report 2013

Appendix 6 Critical Paths

OCTOBER 2013 Critical path

Sunday

6

Monday

Tuesday

Wednesday

Thursday

Friday

Saturday

30 Select Route A or B

1

2

3

4

5

7

8

9 Personal Tutorial Alex

10 Research topic/ Big idea

11

12

with

13

14

15

16

17

18

19

20

21 Primary Research +Secondary Research

22

23

24

25

26

27

28 Outline Both Research +Report structure

29

30

31

56

Evaluation Report 2013

November 2013

Sunday

Critical path

Monday

Tuesday

Wednesday

Thursday

Friday

Saturday

1 Start writing Report

2

3

4 Case studies selections

5

6

7

8

9

10

11

12 Personal Tutorial with Alex

13

14

15

16

17

18

19

20

21

22 Draft Hand-In

23

24

25

26

27

28

29

30

December , 2013

Critical path

Sunday

Monday

Tuesday

Wednesday

Thursday

Friday

Saturday

1 Finishing Report Layout

2

3

4

5

6

7

9 Finalizing Report PRINT

10

11

12

13

14

8

+

&

15

16

17

18

19

22

23

24

25

26

29

30

31

21

27

28

58

Evaluation Report 2013