Retail Brand Evaluation: M&S versus Zara - Case Study Example

RETAIL BRAND EVALUATION: M&S VERSUS ZARA Introduction This paper will compare two retail brands; one Britain-based retail store, Marks and Spencer and the other Spain-based retail store, Zara. They will be compared on the basis of their target customers, market positions, market shares, pricing, marketing and much more. We will study these to identify the key requirements for the success of any retail store. Finally, an overview of the retail market in the United Kingdom will be given. Background Marks and Spencer Marks and Spencer, also popularly known as M&S, Marks or Marks and Sparks is a British retailer that has more than 450 stores located throughout the UK and is growing internationally by franchising into more than 30 countries throughout the world ( Marks and Spencer, The Company, n.d.). It is a leading retailer in food, clothing and home-ware and financial services, in operation since 1884. Zara Zara is a leading Spanish Flagship Chain Store that deals in Women and Men's clothing. It opened its first store in 1975 and since then has taken retail fashion by storm. It is one of the largest brands, by the Inditex Fashion Retail Group, that has 723 stores in 56 countries making sales of Euro 3.8 billion (India Supply Chain Council, 2006). Zara's fashion is based on imitation; it copies designs from the catwalk and other spots and brings them to their customers at low prices in as little as a couple of weeks. Comparison Target Customer Marks and Spencer's average customer is mainly women aged between 35 and 54. They are wealthy and have an active lifestyle. They are also family-oriented and are open to trying new things (MMC Consultancy, 2004). Zara's average customer is aged between 15 to 30 years of age. They are fashion-focused and have a desire for high-end fashion. The average customer is an urban woman who is not necessarily exceptionally wealthy and looks for trendy clothes in reasonable prices. (Nidasio G., 2007) Market Position It was assumed that Marks and Spencer would do better with 70% of the stores being refurbished. Their strategy to increase market share for the past three years has been the same. This year, and the last, they still managed to come back at a higher position (after their big downfall till 2004). It is one of the few retail stores in the UK that managed to increase their market share in 2007, with high interest rates and low consumer confidence. Zara's position in the retail market has always been a leading one. This year was no different. It increased profits by expanding to into more territories. It hold a stronger position in the fashion retail industry than many other foreign labels. Sales, Profit and Market Share Marks and Spencer's sales turnover, for the year ended 31 March 2007, was Pound 8,588.1 million. The sales breakdown for 2006/2007 was as follows: Clothing was at Pound 3,570,900 and Home was at Pound 431,900 (with the rest accounting for Food and International slaes). The profit before tax was Pound 1,007 million, which was a 4.3% increase. According to Stuart Rose, Chief Executive of M&S, sales fell by 2.2% by the end of December, during Christmas season. The market share for women wear fell during Christmas time also. However, the sales in UK rose by 9.7%. The market share held by clothing and footwear in 2007 was at 11.1%. (TNS WorldPanel Fashion,Your M&S, 2008). Zara, on the other hand, has a very high product turnover. It makes more than 11,000 products annually. The annual report of Zara (Inditex) for the fiscal year 2006 covers all activities from February 2006 to January 2007. Zara opened 138 new stores during the past year, increasing its selling area by 15%. The sales were an increase of 21% at Euro 5,352 million. It earned net profit of Euro 1 billion (Safe G., 2007) an increase of 25%, was in contrast to last year's profit. The sales in Europe, with exception to Spain, were 40.6% of the total (Inditex Annual Report, 2007). Store Design Zara's typical store is a principally white, modern and spacious store; it is bright and has mirrors for walls. The stores racks are draping with the latest fashion. A long line of people is usually seen at the cash register (India Supply Chain Council, 2006). Mostly all Zara stores this year have introduced toilets and changing rooms for the disabled and even separate areas for the disabled have been made where they can pay for their purchases. Marks and Spencer's old "Luton" stores have been replaced by newer stores which will be completed by the end of this year. More than 70% of the stores have been refurbished. These stores have white laminated flooring replacing the carpeted ones. They are well-lit and are more spacious, rather than the regular pathway look. The design is more modern with larger fitting rooms, and better-looking product stands. Space Planning As mentioned above, Zara's space is utilized such that the stores are made roomy and airy. So is the case for stores of Marks and Spencer. Instead of making use of the space to make pathways, it has now used it to make the stores more spacious. Both the stores have smartly planned the use of the space available to them for their stores. Retail Operations and Store Locations Zara's stores are located in places that are generally busy and prominent and nearer to customers. High-status city centre shopping streets are the perfect example (India Supply Chain Council, 2006). Other than that, the same principle applies internationally also. M&S stores are also located in places that are accessible and outstanding. Product Range Zara's product line mainly consists of a menswear line and a women's wear line. These fashion items are highly fashion-oriented and trendy. This product range is continually updated and any products (couple of) that do not do as well are taken off the shelves. M&S, on the other hand, has a wide range of products available; clothing, footwear, home ware and financial services. However, our focus is only on its clothing and footwear sections (fashion retail items). Even these are available in a wide range from menswear to women's wear to lingerie. Pricing One of the most striking features of Zara's fashion is that it generally produces clothes at low cost. However, Zara's pricing is different across different countries markets. It sets its prices according to the conditions in those markets and unlike other retailers in the industry, its does not use the cost plus margin system of pricing. An example of different prices across different markets is exhibited in the following sentences. In Spain, Zara products cost less, while in the US, Japan and Mexico, they are priced as extravagant fashion items (India Supply Chain Council, 2006). Marks and Spencer retail fashion items are expensive and are targeted towards wealthy customers. However, this year the volume of the sales was more and customers bought items at lower prices (Your M&S, 2008). Visual Merchandising Zara's visual merchandising is remarkable. The windows are displayed differently vibrantly every few days, as decided in the head office. Other than that, items are divided separately for men and women and are size and style coordinated. Marks and Spencer has lately been investing in refurbishments and improving the store's visual merchandise. It has invested in new mannequins and product stands that display the items different and are more contemporary. In-store Customer Services Zara has excellent customer services. Employees are fully trained with special emphasis on customer services. At the same time, the freedom of the customer is maintained. Fixtures and fittings are put in such a way as to stop any sort of interference for the customer. Complaints or any sort of suggestions are taken in the store by the store managers. (Inditex Annual Report, 2007) Marks and Spencer tries to achieve excellent customer services by appointing informed and educated staff. The Shop Floor Staff in larger stores are generally more trained and have more knowledge about the latest trends as compared to the staff in smaller stores (in villages). In such stores, customers get confused and de-motivated (MMC Consultancy, 2004). Marketing As far as marketing goes, Zara markets its products only through changing its displays on the windows continually and by constantly and dynamically providing newer items every week. Customers look forward to going to Zara stores because they expect to see new products each time. As far as advertising is concerned, Zara believes in 'zero-advertising'. Its advertisement budget is extremely low and like many other retail stores, it does not adopt celebrity-advertising or any of that sort. Unlike Zara, M&S has advertising campaigns and marketing strategies. It projects its brand using TV, newspaper, magazine, world-wide web and billboard advertisement. They do not, however, use promotions such as in-store promotions to increase customer loyalty as well as base. Overview of the UK Fashion Retail Market Departmental stores are a huge channel for selling clothing and fashion and other home ware items. This is why the operations of significant players such as Marks and Spencer and Zara are vital to the entire market. The fashion retail market in the UK has been very competitive in the past couple of years. With several local and foreign brands promising new things, it has become difficult to retain and also obtain a very strong position in the market. According to Stuart Rose (2008), consumer confidence had gone down a lot due to higher interest rates as well as higher bills. However, hardly any changes in their spending habits were evident. He also thought that the market continues to grow with several new entrants and existing, more established ones increasing their selling areas (by opening new stores). Also, in addition to this, the general trend points towards increasing the volume of sales rather than the price of items. Therefore, most retailers had lowered their prices to create demand. Such a dynamic environment makes it hard for fashion retailers to gain a higher market share and position. Customer attraction and satisfaction must be the central focus of all retailers. Conclusion Zara's strength is that it is dynamic. It brings new items to the shelves in as little as two weeks. It does this though its extraordinary communication channels that cut down on production schedule time. It also buys directly from the suppliers and brings it straight to the fashion house (Safe G., 2007). It's secret lies in having complete control over each and every part of the store. The employees of the store and office are in contact always. It advertises by changing the displays on its windows and it feels that this is enough advertising. Because it brings out items in such little time, customers keep anticipating them and visit stores even more often in the hope of finding something new. This, fortunately works for them. Their plans for the future involve concentrating on strengthning the supply chain by applying a standardised system for qualifying their suppliers. According to Amancio Ortega Gaona (Inditex Annual Report, 2007), they also plan to go greener than that are currently. They plan to use cleaner energy for production. M&S, in comparison, already has a wide customer base and this is it's strength. These customers are older, more traditional customers who have been loyal to the brand since a long time. This brand loyalty is a result of the number of years the brand has been in the market. However, M&S has failed to maintain and gain the youth as its customer. M&S's strength also reflects in its big market share and the standard of its items. The goods bought from M&S promise good quality. However, it fails to meet customer demands and this is an are that M&S needs and plans to concentrate on. They also plan to explore new opportunities by expanding (their selling area) in the next year, which is forecasted to be economivally challenging. They, according to Stuart Rose (2008), "will do more of what they do but at a faster pace." BIBLIOGRAPHY 1. Our Stores [Internet], Marks and Spencer-The Company. Available from: [Accessed 7 June 2008]. 2. Milord M., Hotchin E., Watson L., Wahi J. (2004) Retail and Services Marketing Marks and Spencer [Internet], MMC Consultancy. Available from: [Accessed 7 June 2008]. 3. (2006) Zara Supply Chain [Internet], India Supply Chain Council. Available from: [Accessed 7 June 2008]. 4. Nidasio G. (2007) Strategy Management [Internet], SwaAccess. Available from: [Accessed 7 June 2008]. 5. (2008) Chief Executive's Business Review [Internet], Your M&S. Available from: [Accessed 7 June 2008]. 6. Safe G. (2007) Zara Leads Fast Fashion Rush [Internet], The Australian Business. Available from: [Accessed June 7 2008]. 7. (2007), Inditex Annual Report for the Fiscal Year 2006. Available from: [Accessed June 8 2008]. Read More