Lydia Hargreaves Leeds Arts University Fashion Branding and Communications 1 (Level 4) LAUFBC401
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EXECUTIVE SUMMARY ZARA’S HISTORY (& TIMELINE) THE BRAND ZARA’S BRAND ONION MISSION STATEMENT SLOGAN IDEAS ZARA’S TARGET MARKET CUSTOMER PROFILE MARKET POSITION BRAND IDENTITY PRISM COMPETITION P.E.S.T.L.E S.W.O.T ANALYSIS THE FUTURE: BRAND REPOSITION § REFERENCES
Within this presentation booklet I will be analysing Zara as a business and as a fashion brand. I will particularly be focusing on how they have become such a successful brand, where they stand within the fashion industry and how their relationship with their target market can affect this. I will also be researching the history of the brand and the marketing strategies that they use and have used in the past in order to increase sales and profits. In addition to this, I be will carrying out a S.W.O.T and P.E.S.T.L.E analysis of Zara in order to investigate and examine the internal and external factors that have the ability to determine where Zara is currently placed and can be placed in the future fashion market in comparison to its competitors.
Zara, founded in 1975, is a Spanish clothing retailer that now operates in 96 countries around the world (Parietti, 2019). It is a vertically integrated company that consistently delivers trendright products for its customers at appealing prices. Zara all began in 1963 when Ortega established a dressmaking factory called ‘Inditex’. Ten years later, he opened a small clothing store in La Coruna, Spain that he named ‘Zorba’. After a couple of years of the store opening, Ortega then changed the name of the store to Zara. During 1981-1988, Zara expanded worldwide to the United States, France and the majority of Europe. Zara holds a very strong position within the fashion industry as it successfully and consistently produces cheap fashionable clothing that is easily accessible for most people with midrange incomes. The annual growth of the business has continued to increase year upon year and since extending their services online in 2010, they are now able to reach 202 countries worldwide. As part of the Inditex retailer group, Zara caters for a wide target market, including women (aged 18-40), men and children. Zara nurtures ‘a highly intimate relationship’ with its consumers whereby a deep level of loyalty is created meaning the majority of customers return without fail and consequently avoid Zara’s strong competitors (Inditex, 2019).
– The business begins in La Coruna, north-west Spain – The first Zara store opens – Zara expands across Spain – Inditex if officially established and founded – Zara goes internation and expands in Portugal – Zara goes transatlantic, in NYC – Zara is brought to France – First Zara store in Mexico opens – Zara expands to Greece – Expansion to Belgium and Sweden – Zara begins to operate in Malta – Zara enter the Cypriot market – Expansion into Norway and Israel – Zara reaches a 2,000 store milestone – The development of their Environmental Strategic Plan begins – Zara deepens their coverage in China: Stradivarius, Bershka and Pull&Bear – Zara goes online and opens their 5,000th store in Rome – Zara now has 7,000 stores in operation with 78,000 employees over 50 countries – Expansion of ‘JOIN LIFE’ collection – Selling in 202 and expansion of headquarters in Arteixo, La Coruna in Spain
As mentioned already, Zara is a company who specialises in ‘fast-fashion’ and thus has a highly responsive supply chain at the core of its business. Because of this Zara holds the ability to react extremely rapidly to new trends and produce products that are very desirable. The majority of Zara’s products are manufactured in Spanish factories that are closely controlled. By locating their factories and headquarters within their ‘home’ country, it provides them with a lot more flexibility than lower cost Asian countries, even though it comes at a much higher cost. Furthermore, not only are Zara’s factories and headquarters strategically located but it’s high street stores are also well placed on busy streets in popular city centres meaning an optimum amount of sales are reached. Zara has remained faithful to its core values (beauty, clarity, functionality and sustainability) from day one of the business opening. In addition to this, and in order to improve their products and services, Zara has implemented the ‘4 E’s Marketing Strategy’ that puts the customer at the centre of their business. This strategy states that the customer’s experience replaces the product, exchange is new price, evangelism is now used as promotion and that every place is a new place. By Zara enforcing this strategy instead of the ‘4 P’s’ (product, price, promotion and place) whereby the company tries to push the brand out to the customer (e.g. H&M’s strategy), it means that customer curiosity and intrigue is created; pulling the customers and grabbing their attention. As a result of Zara’s marketing strategy, the average Zara customer visits the store 17 times a year as opposed to the average of 3 times a year for other brands (Harbott, 2011), proving its success. Zara is also a brand who focuses a lot of its ethos on and around inclusivity. Because of this, it’s products come in sizes XXS up to XXL meaning they are very accessible to the vast majority of its target market which increases their ability to reach optimum sales.
On-trend high street fashion at affordable prices Fashion oriented women Sustainability
Fashionable clothes and accessories
Up to date fashion Trendy
Trendy
Values
Fairly good quality Forward-thinking
Fashion-conscious
Successful
Innovative
Feminine
Customer centre of business
Varied assortment
Online services International shipping ‘JOIN LIFE’ sustainable collection
Essence
Personality Brand In Actions
Synchronised strategy between online and offline commerce
“Through Zara’s business model, we aim to contribute to the sustainable development of society and that of the environment with which we interact.” Inditex have also published a ‘Corporate Responsibility Statement’ that highlights their objectives and aims related to their environmental contribution, these include:
• • • • • •
The implementation of an eco-friendly management model in order to reduce their energy consumption by 20% through their stores, the lighting and cooling/heating systems. Recycling hangers and alarms – a criteria of their Waste Management Policy. In-company training and sustainable practice education for their staff – in hope to modify their own personal behaviour patterns. Zara is also thought to support organic farming as they make some of their clothing out of 100% organic cotton that is made completely free of pesticides, chemicals and bleach. In addition to this, Zara’s lorries, that transport over 200 million items of clothing a year, use 5% biodiesel fuel. According to Zara this will reduce their emissions by 500 tonnes. They also claim that in line with their commitment, their fragrances are not tested on animals.
(Google Sites, 2019)
Despite these positive environmental changes, it can be argued that Zara could do a lot more in terms of reducing their carbon footprint (e.g. only using sustainable materials). As they are such a huge business, it may be quite difficult to to do this however they currently have such an extensive negative impact on the planet so by altering certain daily actions of theirs they will have a much higher chance of achieving their mission statement in a considerably shorter period of time..
Out of the two straplines that I have come up with I believe ‘look good and feel good’ is the most effective. This is because Zara as a brand is now focusing a lot more on sustainability with it’s eco-friendly collection ‘JOIN LIFE’. They also have a future goal to ensure all their collections are made from 100% sustainable fabrics before 2025.
A:
B:
Look good and feel good
I believe this strapline would be very suitable for Zara to use as it is simple, catchy and it is a way to emphasise that they are focusing a lot more on sustainability now. This strapline could also work for the brand as a whole rather than just the women’s branding (e.g. example B).
For every woman
‘For every woman’ additionally works well for Zara as they are all about inclusivity. Respect, diversity and equality are all factors that make up Zara’s ethos. Therefore to show how comprehensive and adaptable the brand is, ‘for every woman’ works very well. Despite this, this strapline is restricted to just the women's branding.
Generally, Zara’s target market is those with a mid-income (and medium to high purchasing power) who enjoy looking well put together on a daily basis. Zara attracts those who have a combination attitude and lifestyle of work and play. Despite being one of the largest international fashion companies with great economic success, Zara has spent very little on advertising and marketing campaigns over the years. Their products, including shoes and perfumes, are supplied based on consumer trends and Zara, as a company, listens very carefully to their customers when it comes to feedback. For example, in 2016 Zara’s customer service agents responded to more than 17 million customer inquiries. Consequently, loyalty is one of the biggest aspects when it comes to the customerbrand relationship of Zara. Their customers essentially become ‘brand evangelists’ who promote and share excitement about the brand with their networks, widening Zara’s target market. When manufacturing Zara’s clothes, their designers not only take into account the target market of their company, but also take into account the psychographics of their customers hectic lifestyle. Because of this it could be argued that Zara relies a lot of instinctive buying from their customers.
Name: Lexy Gender: Female. Ethnicity: White British. Age: 20 years old Background: Well-educated, brought up in a middle class family Personality: Fashion forward, trend conscious; easy going, positive, fun and friendly. Lexy considers herself as ‘loyal and impulsive’ – in that she would be very likely to purchase something she likes as soon as she sees it, rather than waiting incase it goes out of stock. Psychographics/Hobbies: Lexy enjoys going to the gym, watching Netflix, spending time with family, friends and her boyfriend. She also enjoys reading magazines such as Vogue, posting on Instagram and Youtube as well as travelling around the world Lexy would like to work in the fashion industry in the future. Location: Lexy lives with her parents and younger sister in a four bedroom house in Brighton but enjoys getting the train to go shopping in London on the weekends. Style: Lexy generally strives for a minimalistic, natural look whilst also looking chic. Despite this, she would describe her style as versatile as she also likes to wear urbanized ‘street style’ inspired garments and occasionally wears bold make up when she goes out. Lexy has a part-time job at an independent clothing boutique near her house. Because of this and the fact she has savings, she likes to mix expensive brands with cheaper clothing however she usually sticks with something In between or goes for clothes that have a high street price tag but look expensive Some of Lexy’s favourite shops are: Zara, H&M, Topshop and Mango. She takes her inspiration from Instagram bloggers (e.g. @camilacoelho) and celebrities in magazines.
TRICKLE DOWN EFFECT: Inspiration from couture, designers, luxury fashion filters down the fashion market. This is where the high street takes inspiration for their ranges to sell to the masses.
Hermes, YSL, Chanel, Versace
HAUTE COUTURE LUXURY FASHION BRIDGE BRANDS DIFFUSION LINES HIGH STREET FAST FASHION ECONOMY Primark, George (ASDA), Matalan
Zara’s market position is located mainly in the ‘high street’ block on this pyramid. However their ‘TRF’ range is an example of a diffusion line so therefore they generally sit comfortably in the middle of this diagram. Their diffusion line offers a more affordable range of clothing targeted to the younger market which is a common feature of a higher end brand, which is what Zara is striving to become. TRICKLE UP: Ideas from high street fashion and culture creates momentum to become a trend rising through the hierarchy where high end designers create their own versions e.g. punk culture in the 1970’s
Investigating ZARA’s brand identity utilizing Kapferer’s brand identity prism: PHYSIQUE: High level of flexibility, rapid reactions and successful trend forecasting.
PERSONALITY: Stylish, ontrend, mature, sophisticated, confident, unpretentious
RELATIONSHIP: Trustworthy, loyal and there is a fair exchange of value
CULTURE: Spanish born brand, international, strong customer/brand relationship
ZARA
SELF-IMAGE: unique, edgy, fashionable and confident
REFLECTION: Individualism, urban, style PICTURE OF RECEIVER
INTERNALISATION
EXTERNALISATION
PICTURE OF SENDER
ZARA
Similar to many of it’s competitors, Zara’s purpose is to provide its customers with ontrend fashion at low price tags. However as distinguishable factor of Zara is that it aims to offer a higher number of available products than its competitors. By doing so, Zara is able to appeal to a wide audience with various unique tastes in fashion.
UNIQLO: Originally founded in 1949, UNIQLO now has 2,000 stores open worldwide. As it has adapted its marketing strategy from ‘The Gap’, UNIQLO positions its brand as private-label apparel. In essence, the designs of UNIQLO’s products are more simplistic than those of Zara and H&M meaning they appeal to a slightly different audience.
H&M: Founded in 1947 (in Sweden) it is well known for its affordable fast fashion on the high street and online. Despite being a ‘budget retailer’ the H&M Group also own 8 other brands, including COS and &OtherStories. Unlike Zara, H&M have collaborated with various brands including Versace and Alexander Wang, bringing new customers to their market. H&M currently have 4,968 stores open worldwide (Parietti, 2019)
POLITICAL factors (changes in government, tax policies, trade tariffs). EUROPEAN TRADE AGREEMENTS – easy to import raw materials and export finished products within the EU – note: this may become more difficult as a result of Brexit. TAX CONTRIBUTIONS. FINANCIAL REGULATIONS (in certain countries)
ECONOMIC factors (changes in taxation, inflation in economic growth, the rate of exchange etc). LOW COST OF LABOUR – high rates of unemployment in Spain so fairly low labour costs which improves profitability. RELATIVE AFFORDABILITY – caters for a large audience and target market. CURRENCY FLUCTUATIONS.
SOCIAL factors (highlight any alteration in trends in the society and their potential effect on the company’s consumers e.g. cultural trends/seasonal behaviours). FASHIONABLE BRAND – creates a strong and positive brand presence. ONLINE SHOPPING TREND – more and more people are wanting to buy their goods from the comfort of their own homes. INDITEX’S SUPPORTING COMMUNITIES PROGRAM.
TECHNOLOGICAL factors (concentrate on the advancement of technology and how the development of technology benefits to the customers). USE OF BIG DATA – long process analysing data sets (will help them long-term). TECHNOLOGICAL EFFICIENCY OF APP AND WEBSITE.
LEGAL factors (represent litigation and legal procedures that a company has to undergo e.g. trade barriers/customer laws). COPYRIGHT ISSUES – accused of stealing designs from brands such as Adidas and Balenciaga. RIGHT TO WEAR – human rights and partnerships
ENVIRONMENTAL factors refer to global situations like global warming, the greenhouse effect and ‘The Green Agenda’ etc). FAST FASHION IMPACT – accused of ‘wastefulness’. SUSTAINABILITY PLEDGE/MISSION STATEMENT – ‘TRF’ collection/goals to reduce water and energy consumption. ECO-STORES/‘CLOSING THE LOOP’ (i.e. collect, reuse, recycle)
– aspects that give the brand a competitive advantage over another brand.strong control over supply chains, no outsourcing (in-house production), efficient production management and design strategy, large distribution of network and reach. Other strengths include the strategic locations of the stores, the brand’s affordable prices and the company’s sustained financial growth. Customer centric approach.
– aspects that give the rival companies a competitive advantage – self contained distribution system, imitation of runway fashion and lack of advertisement/limited marketing.
– areas of potential advantage (the company can use these profitably in the future in order to outpace its rivals - scope for global expansion (further markets to explore), expansion in e-commerce sector, increase focus on distribution network.
– areas that the company needs to be careful about if they want to dominate the market – tough market competition (from external (H&M) and in-house brands such as Massimo Dutti) – means limited market share and the possibility of high branding switching. Absence of collaborations with international designers and celebrities. Foreign exchange risks is also a threat as Zara reports financials in the European Euro but operates worldwide.
Chanel Ralph Lauren
M&S
& Other Stories Whistles
Zara
UNIQLO Zara H&M Topshop
Primark
Current position and competitors New position after brand reposition with new competitors
House of CB
Brand repositioning – I would reposition Zara in this new position as their mission statement revolves around sustainability. Therefore by reaching their goal it will mean their quality of products will increase as they start to use more sustainable materials and because of this their prices will also increase.
• Google Sites (2019) Zara: Mission Statement. Available at: https://sites.google.com/site/zarajkz/home/international-expansion (Accessed 22 October 2019) • Bush, T. (2019) PESTLE Analysis of Zara. Available at https://pestleanalysis.com/pestle-analysis-of-zara/ (Accessed 23 October 2019) • Harbott, A. (2011) Analysing Zara’s Business Model. Available at: https://harbott.com/analysing-zaras-businessmodel-6ee755699a70 (Accessed 21 October 2019) • Images: Pinterest (2019) Zara Official. Available at: https://www.pinterest.co.uk/zaraofficial/ (Accessed 21 October 2019) • Inditex (2019) Our Brands: ZARA. Available at: https://www.inditex.com/about-us/our-brands/zara (Accessed 21 October 2019). • Parietti, M. (2019) H&M vs. Zara vs. Uniqlo: What’s the Difference? Available at https://www.investopedia.com/articles/markets/120215/hm-vs-zara-vs-uniqlo-comparing-business-models.asp (Accessed 23 October 2019) • Preceden (2019) Zara Business Timeline. Available at: https://www.preceden.com/timelines/395988-zarabusiness-timeline (Accessed 23 October 2019) • Roll, M. (2018) The Secret of Zara’s Success: A Culture of Customer Co-creation. Available at: https://martinroll.com/resources/articles/strategy/the-secret-of-zaras-success-a-culture-of-customer-co-creation/ (Accessed 21 October 2019)