THE REPORT
Helen Snowball
CONTENTS 1 The Zara Story 3 Core Customer 9 Product and Ranges 17 Competitors 19 Logo & Packaging 23 SWOT Analysis 27 Areas for Improvement & Growth 29 Market Research Summary 31Two final ideas for Collaboration or Expansion
Z
ara is one of the world’s biggest retail stores, originating from A
Coruna, Spain, where Arnancio Ortega first opened his store in 1975. It is now part of the Inditex group which also owns brands like Pull and Bear, Oysho, Bershka, Zara Home and Massimo Dutti. Zara first international store was opened in 1988, and by 2007 expansion of stores reached 1000 in the majority of European cities. Today they have 1688 stores in 77 countries but are growing everyday due to Zaras vast expansion and also sell their products online on their website. Zaras business model is unique based on fast paced innovation. Zara has a efficient design and production factory in Coruna and only takes the factory fifteen days to design and distribute a garment to market. 10,000 of the 40,000 designs are produced annually which is a lot more then competitors. These designs resemble latest couture creations or classic pieces. Zara’s global strategy is to offer cutting edge fashion at affordable prices by identifying which styles are hot at fashion shows and moves these looks into production before the original designer can. Zara’s pricing is lower than its competitors, but profit margins are higher due to a short supply chain. Their quality is a good price for the value. Prices range from £19.99 to £199.99. Advertising expenses are minimal, only 0.3% of revenue is used which is used on posters of their windows. Zara prefer to spend their revenue into expansion of the business by buying prime real estates. Because Zaras stock is so low as stock is always being renewed every two weeks, sales aren't very important for the store.
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The Zara Story
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Z
ara’s target market is young, both males and females aged 15-40 who are fashion and price –conscious and are perceptible to following season trends. This will include educated students, young professionals and young families. The target market age demographics are wide due to Zara having such a large choice of styles, over 12,000 a year in fact. However, the main target of the company is middle-class working women aged between 25-30.
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Core Customer
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A
n example of a core customer is Camilla, a 29 year old junior manager
working in London city. She was privately educated, and has big ambitions to make senior manager in the near future. She likes to be a well-dressed trendfollower in work and everyday life but at a low cost. She lives with her long term boyfriend on the outskirts of London in a stylish terrace house and commutes to work everyday. Her figure is slim and petite and she likes to go for runs two to three times a week to stay in shape. Lunch dates with her friends and hot dates in fancy London restaurants with her boyfriend are a usual weekly occurrence. She is yet to have any children. She is an avid high fashion magazine reader, she likes to admire the high priced clothes and try to create the outfits at a lower price and to also see what’s in season. As she works next to Zara, she browses the store frequently, every week or fortnight.
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Core Customer
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A
t Zara, there are five brands, three of these
being women product ranges which include clothes, accessories and footwear.
Zara Women, this collection includes more formal & sophisticated pieces, suitable for work wear or fabulous nights out. Zara Basic which as the name suggests are basic and simple items ranging from vest tops to jeans, ‘fashion-fix’ pieces. Zara TRF, this is aimed at younger women due to the collection being more risk-taking, colourful and trendy.
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Product and Ranges
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Zara Women
Zara Kids
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Zara TRF
Zara Man
Zara Basic
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Zara Men includes a large range of menswear from leisurewear to formal suits. Zara Kids is a unique range for children. The clothes are of great quality with a reasonable price point for parents.
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Product and Ranges
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Z
ara’s main competitors around the world are H&M and Mango.
However, there are product differentiations with Zara making it unique. First of all, Zara is considered higher quality than H&M and Mango. This is because Zara sells good quality garments against price. Compared to its competitors, Zara have also never had any collaborations in their stores.
T
he key similarities between the three competitors are that they are
all European based companies (Mango is also a Spanish enterprise). They are also fashion forward at lower price retailers and have a strong international expansion strategy.
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Competitors
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The logo that Zara uses has been the same from the stores beginning. It is simple, classic and sophisticated, very much words that would describe Zaras own products. The logo is outlined using dark colors and it appears on a light whitish background. Zara stores can be easily recognized due to its common light logo where Zara is capitalized using a classic font and the same block colour for all the letters.
Items bought from the website are neatly folded into plain coloured tissue paper, held together by a sticker with the Zara logo on. The box it arrives in is a solid brown cardboard eco-friendly material. The Zara logo has again been placed on the top. The packaging is smart, simple yet a nice touch. Customers like the fact that their purchases have been carefully packed and not just stuffed in a box.
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Logo and Packaging
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S
TRENGTHS
Lovely and well displayed inside and outside the store. Boutique style. New items are brought in twice a week The company can design, manufacture and distribute garments to stores in just two weeks. Range of sizes is good Their mix of affordability and exclusivity is unique to Zara They do not advertise, so use their money in opening new stores. The little stock they have of each garment makes it ‘exclusive’ and makes for impulse buying People recognize the brand around the world, making them more likely to buy Zara products. They have such a large market due to them having brands for women, men, children, shoes and accessories. The Zara customer visits the store on average 17 times a year, compared to other competitors where they only make 2-3 visits per year.
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SWOT Analysis
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W
EAKNESSES
Lots of competition in the same locations The store can get easily messy at peak times which are not aesthetically pleasing to customers. Zara only has one manufacturing plant and distribution center in the world, if things go wrong here, this could be a massive threat to the company. As stock is so ‘exclusive’, it is hard to find sizes. Zara use designs from higher brands, ‘ripping’ them off. Quality of garments isn’t great, so garments couldn’t be worn for long By not advertising, Zara are missing out on a big chunk of potential target customers who do not shop at Zara
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SWOT Analysis
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C
urrently, Zara has a zero advertising policy so this budget goes on opening new stores. Zara
could increase its marketing to entice a new customer base or bring existing customers into their stores or website more frequently. Instead of stirring up controversy by ‘ripping’ off other designer brands, Zara could bring in collaborations to bring new designs and ideas to the store. In turn, if they select a good collaborator for the store, they could bring in new customers who usually wouldn’t shop in Zara.
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Areas for improvement
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I
created a questionnaire to give to existing and non-existing Zara customers for
them to answer basic questions which will help me with my research on which new brand idea I should choose. I chose to stand outside my local Zara store and twenty-six participants answered my questionnaire. 50% of the participants I asked were ages 26-36. 89% of participants wanted Zara to do a make-up line, compared to a lingerie or sleepwear line.
O
ut of the collaboration questions, they recognized Victoria Beckham as a
famous designer compared to the others that I asked. However, the designer most like to be seen to collaborate with Zara is Karl Lagerfeld. I asked why, and this was because of his exclusivity, being a fashion icon and also his beautiful designs from his Chanel and Fendi lines. If either of these ideas went ahead, every one of the participants said they would come into the store to see the new line.
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Market Research Summary
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M
AKE-UP LINE FOR ZARA
Range of blusher, foundation, eyeliner, eye shadow palettes, lipstick and lipgloss. Zaras competitor Topshop's make-up line has been very successful and profitable. High quality make-up for an affordable price, prices will vary from ÂŁ5 to ÂŁ25. Most popular line chosen by the target market questionnaire participants. Packaging to be simple yet sophisticated and stylish.
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Final Idea for Expansion
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K
ARL LARGERFELD FOR ZARA
Massive icon in the fashion industry. Known for designing for the high designer brands Chanel & Fendi. His collaboration with H&M in 2004 was so successful it sold out in 36 minutes. Karl wants to make clothes more accessible to women with a lower budget. He has requested that larger quantities of his collection be sold so everybody has a chance to purchase a part of the collaboration Popular choice with target market questionnaire participants Karl Lagerfeld's designs are in keeping with Zaras look The first part of the collaboration will only be a womenswear collection, which will include clothing, footwear and accessories. Prices estimated from ÂŁ15 to ÂŁ200.
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Final Idea for Collaboration
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