Contemporary Retail Environment Analysis of Zara Clothing Company - Case Study Example

Contemporary Retail Environment Analysis of Zara Clothing Company By Presented to Contemporary Retail Environment Analysis of Zara Clothing Company Zara is a retailer dealing with clothing and accessories based in Galicia, Arteixo. The Spanish company was launched in 1975 by Rosalía Mera and Amancio Ortega. Zara is the parent chain store for Inditex group that is the largest apparel retailer in the world. The fashion company owns major brands such as Pull and Bear, Massimo Dutti, Stradivarius, Uterqüe, Bershka, and Oysho. Zara has set a record of two weeks of product development and delivered them in its stores. The lead time is less as compared to the industry average of six months. This essay evaluates Zara’s retail system in line with the modern trends in retailing for the clothing industry. Zara has reputation for extemporary consumer-centric relationships and stores that involve like-minded operating and supply chain models in customer service. Most of the active consumer interaction within Zara’s supply chain attracts divergence among shoppers. Some of the clothing shoppers pay significantly more to acquire specific ingredients, higher product quality, faster delivery, or sustainable attributes. Further, others trade down within lower cost products that do not include any of the mentioned features. Zara understands its market position and is continuum in the number of consumer centric opportunities needed for substantive leveraging. Zara’s customers’ aggregate buying power within buying groups with the retail line has broader elements for entire departments while dedicating management towards powerful consumer buying groups. The groups are in a position of employing short-term promotions while awarding purchase or resale advantages (McDonald & Wilson, 2011). The concept also creates a formulation of retailing trends that is morph in wholesaling and is conventional to retailers and individual consumers. In the cloth line industry, the transitions put intense inclusion on various retail models that in drive asset productivity and square footage. The modern retail landscape for Zara represents a more complex environment in terms of distributorship. Most trading partners face numerous international and domestic hurdles in product delivery. The retail organizations that Zara works with do not alter the ways in which sales and operations adapt and succeed within the challenging landscapes. Drivers and integral trends of the retail industry are outlined based on the core strategic choices in terms of retailing and appropriate descriptions of "paradoxes" (Pride & Ferrell, 2010). The brick-and-mortar model of retailing came under pressure for balancing personalization and localization across the increasingly global world. For purposes of making sense of the complexity, Zara’s retailing system builds on distinctive skill sets for dynamic clustering of cloth line products. Zara also aggregates various opportunities that differ in visible ways while bringing such opportunities to the marketplace (Baines & Fill, 2014). The global perspective shows that Zara’s retailing continuously searches for equilibrium between the skill sets which are applicable in all places. There is also need for adaptation to local markets (Hugh, 2012). Zara draw parallels between segments for geographically disparate markets against global retailing firms to establish trading ecosystems comprised of distinctly different national segments (Estelami, 2009). The distinction offers a significant component of commonality. Global buyers and retailers continue increasing the abilities in terms of partnering with global trading partners such as Zara in understanding and capitalizing on opportunities. Zara is opposed to the simple leveraging scale based on lower acquisition costs (Borghini, Nina, Kozinets, McGrath & Sherry, 2009). The modern retailing system in Zara combines various logistics strategies enabling top management add new business through marginal costs. The section has operational logistics systems and resources focusing on support for corporate strategies. Most of the market expansion logistics in Zara have the important role within market expansion of the company (Stolle & Micheletti, 2013). The modern retail environment for the clothing industry is represented through upstream logistics performance as a way of proactively determining downstream market operations. The pole position of Zara’s supply chain involves matters of class and supply logistics for business expansion (Westwood, 2005). There are high speeds of volume and market coverage increase. The element of supply of goods in Zara is solid while market expansion undergoes risk management (Linneman & Stanton, 1995). In the end, modern performance levels of Zara involve persuasion of supply chain and logistics through prerequisite drivers of establishing new strategic positions. Zara widens system borders in addressing logistics for purposes of including both downstream and upstream logistics within the supply chain management scope (Stolle & Micheletti, 2013). The concept offers a clear distinction between modern retailers and ancient push retailers in the clothing industry. As a modern retailer, Zara’s SCM and logistics becomes a core business with central roles aimed at formulating firm strategies. The development in Zara allows for implementation of logistics based SCM approaches. The logistics development technique in the clothing industry drives the targets of the company as well as growth while focusing on time logistics to set pace prerequisites (Crewe, Gregson & Brooks, 2003). Most clothing retail companies, including Zara, utilize logistics as pivot for growth. The industry is marked by dramatic growth in the recent years as well as annually opening of hundreds of new retailing locations in the world (Borghini, Nina, Kozinets, McGrath & Sherry, 2009). Zaras development model continues to penetrate markets simultaneously for purposes of achieving high densities for shops in populated region. In the end, economies of scale are reached by firm activities of both logistics and marketing. Entry markets are typically propelled through logistics platforms based on different regions that await volumes necessary to appropriate local distribution center (Estelami, 2009). Zaras strategy in retailing includes growing and maintaining profitability through offering customers quality and value from fashion at the favorable price. The objective includes increasing the number of stores by between 10% and 15% each year. The number is equal to a pace of 259 new shops yearly attached to the existing 2,000 shops spread across the world. Similarly, Zara aims at increasing sales throughout the existing locations (Baines & Fill, 2014). Zaras logistics take the design of controlling the entire chain based on a store idea while providing high shareholder and customer value. Customers get new collections for fashion clothes at affordable prices more frequently as compared to business standards of other collections annually (Westwood, 2005). The elements of the supply are availed through large volumes from across the industry fabric suppliers. Zaras competitors are growing at higher paces as compared to the firm with approximately close to the store each day across the global markets and countries (McDonald & Wilson, 2011). Physical logistics structures for Zara are organized based on different distribution centers that service different retailing concepts. Zara also works on making direct deliveries to retail shops across the globe (Hugh, 2012). The clothing business model for the firm is based on exclusive information sharing both downstream and upstream in the retail system. The resultant elements include balancing supply chains in which components are aligned to the rhythm (Linneman & Stanton, 1995). For instance, Zara aims at making deliveries to retail stores weekly as a standard approach to supply chain flexibility. Zara achieves this through making combined efforts of having factories in fashion garment regions make deliveries within low-cost countries in exchange for basic products. Excessive capacity within logistics and manufacturing allows its sub-suppliers to have stand-by resources that handle increase in growth rates and maximization of value to customers based on high availability across regional shops (Demangeot & Broderick, 2006). The self-made fashion goods comprising of Zara’s distributorship have the capability of changing collections within two weeks of supply in areas of manufacturing, distribution, and design to retailers. Globalization displays an alternative category for critical drivers impacting retailer operating models. The scope and nature of materials market allow the Zara consumer market access a combination of growth and development within the developing world. The concept also puts inflationary pressure to raw materials among retailers and shoppers (Kumar & Shah, 2004). Zara addresses the challenge through establishinh supply chains that have a global network without intense concentration in local markets. Pressure for cash flow together with the speed of delivery causes Zara to consider sourcing materials are locations that are closer points of final distribution and not across oceans (Broadbridge, Gillian & Ogden, 2009). Zara anticipates that the globalization asserts a push on retailing into various new and different market types. Additionally, success is achieved through competition within different geographies, and there are expectations that global learning platforms influence the forms of stores that Zara operates (Kumar & Shah, 2004). Zara benchmarks for global formats and has rapidly spread out the retailers adapt best practices for swift relevance in meeting the requirements of the markets. Competitors require an understanding of the global portfolio format for purposes of ensuring that they develop strong format strategies to competing in increasingly polarized worlds (Clarke, Perry & Denson, 2012). In recent years, consumer electronic devices continue to evolve from occasional-use devices into highly embedded instruments of people’s lives. Close to 46% of mobile phone users is in possession of smartphones. Smartphones are fast becoming enmeshed within people’s daily lives with more efficient and easy applications to use. The concept provides greater functionalities while requiring minimal power. The focus includes suitability elements including battery efficiency as well as alternative power supplies (McDonald & Keegan, 2002). Such phones have the ability of storing and using the power for longer periods. Zara recognizes this critical variable as an approach to resolving current retail technologies in its access. The continuing improvements of user interface make shopper‘s connection to wired worlds have increasingly effortless and seamless access to a listing of the products. Effective leveraging of the smart devices platform offers specific prompt for users to include retail partners while becoming a reality within the retail industry (Kumar & Shah, 2004). The Zara context for perpetual connectivity includes a projection of various potential applications emerging from retail systems that fundamentally reshapes the classic retail marketing fundamentals (Pride & Ferrell, 2010). Product merchandising with shelf life offers interactive complementariness to shoppers. Zara’s packaging actively shows products focused on the use and direct communication to such smart devices (Fabbi, 2011). The platform allows Zara to price fluid dynamics between initially-offered prices and interactions with consumer. Such elements are ideal implications of the final price in line with rewards and special deals presented to individuals close the sale points (Broadbridge, Gillian & Ogden, 2009). Zara’s promotions are triggered through shopper‘s physical presence and delivery of products tailored and personalized to the shopper’s interests. Social media are one of the powerful enablers in consumer engagement and provide a platform for providing online group deals, promotion, and coupons information. Zara considers that the subsequent social media generation of will compel marketing and merchandising into group activities for both online and stores (Lowe, 2005). For instance, there will be associations with products as well as shelf level of its stores. In future, there will be shelf tags that have ratings that change based on shoppers purchase and review. Further, usage suggestions will be derived from groups within social media who provide product information within the store. Such activities will be enabled through electronic content of fixtures and mid-air hologram technologies (McDonald & Keegan, 2002). Clothing consumers demand and expect high levels of reciprocity and trust across their relationships to retailers. Such expectations include an increase in the information flow based on conditions in which services and products are procured. All working conditions within the company as well as the suppliers allow for adherence to standards of social responsibility (Coca-Stefaniak, Anders & Rees, 2010). Information flow is a two-way initiative. Zara has programs aimed at supporting shoppers based on free exchange of information that is generated across transactions. Unhindered information flow helps in anticipation and responding to consumer causes and needs (such as, sustainability). Retail pricing is a complex and complicated concept based on value statements and surrounds branding, aggressive and dynamic competitors as proximity to subsequent products (Demangeot & Broderick, 2006). The immediacy for use, as well as the role of product in the retail strategy, allows Zara to identify the retail channels that are appropriate. The concept is visible based on the way prices have wide availability based on smart phone websites and applications (Fabbi, 2011). The perception is that the online propositions within the cost and information breakdown linked to clothing have wide audiences (Stevens, Loudon & Nykiel, 2003). Zara anticipates that far more complex levels of detail availed to shoppers while retailers automate the value settings through both digital devices and store establishment while finding appropriate prices close the sales points. The concept allows for individualized pricing that is defined through the amounts that consumers have a willingness of paying. Zara integrates its supply chains within the regional, global, and local levels to accrue major achievements in retailing. Zara manages demand chains through imperatives towards stronger growth based on influencing technological advances as well as consumer demands for where customers buy clothing products and accessories (Wilson & Bates, 2002). Moving forward, Zara focuses on closer integration for its supply and demand chains through inclusion of the necessities of maximizing value and driving profitable growth (Aaker, Kumar, Day & Leone, 2009). Zara has made advancements within its business intelligence sector to avail tools that help its intermediaries have a better understanding of consumer behavior. This is achieved through examination of behavioral patterns as well as overall trends prior the expression of need from the markets. Zara improves on demand signal accuracy through analytics while driving efficiency across its supply chains (Fiore, & Jihyun, 2007). Cloth line consumers have visibility to the kinds of products that Zara avails, organizational provenance as well as how such products fulfill the overall needs (Coca-Stefaniak, Anders & Rees, 2010). The element of focus includes alignment for supply and chains demand where retailers and manufacturers alike are in a position of ensuring higher positions of in-stock products (Hiebing, Cooper & Wehrenberg, 2011). Top management promotes speed to shelf as well as demand appropriation while competing with the frictionless consumer interfaces. The highly visible and end-to-end retailing system allows for equal access to parties across the system. However, there is an increasingly close working relationship with the consumers. Zara practices consumer-driven retail chain systems. End-to-end value chain visibility for Zara’s products increases the understanding of how consumers buy and locations of products through adjusting retail strategies. Zara has growth fragmentation approaches to its retail channels through the prevalent survey that is primarily driven through continuous shopper behavior identification. The concept translates into an increment in access for product information as well as end-user applications (Serenko, 2010). Brick-and-mortar retail formats have been fine-tuned into a state of precision through positioning performance to flourish in worlds where clothing stores are under constant competition by non-store retail. Clothing shoppers are armed with the information to enable them focus on establishing appropriate fit for various changes in preferences and needs among clothing retailers. There are efforts of trading partners who seek to catch up (Stevens, Loudon & Nykiel, 2003). Customers in the clothing industry are influenced through fast-developing fashion trends. Zara is becoming more nimble to such marketing efforts. Trials for new products, as well as category experimentation, are easier and common. This is because risks of alternate product trials are mitigated through user conceptions accessed through recent easy-to-search product reviews and online blogs. In parallel, Zara refines the shopper segments and insights through finding more profitable and consistent behaviors to respond (Stolle & Micheletti, 2013). The process requires that Zara find growth through manageable fragments or audiences in the niche through isolation and responding to forming and dynamic opportunity pockets. As Zara seeks to expand in the international scene, the firm is confronted by major dilemmas similar to those faced by global manufacturers today (Wong, 2010). The elements of change include globally neutral or locally authentic markets. Locally authentic approaches involve an understanding of the local cultural as well as key consumer drivers which are costly investments and time-consuming (Johnson & Kim, 2009). However, they are instrumental in mitigating the possibilities of getting right messages in the wrong tone. It is critical to have a marketing approach that is globally neutral through developing sets of marketing messages working across all cultures while leveraging neutral ideas other than culturally sensitive and locally responsive marketing campaigns (Wilson & Bates, 2002). Common solutions include leveraging automated computer representations for persons, companies and entities in the delivery of messages to a wide and diverse audience (Pride & Ferrell, 2011a). In future, Zara will engage the concepts in positioning itself within the scope of competition while retailers seek to find solutions across national boundaries. In turn, the modern retail systems for Zara appeal to transnational interest groups with potential to seek support (Pride & Ferrell, 2011a). Zara as an opportunity of storing and managing massive data sets solicited from points of sale, consumer input, and supply chain through social media interactions or loyalty cards (Wong, 2010). Ability to avail such levels of analytical insight allow for use and management of other business parts such as the shopper and anticipation to determine Zara’s retailers who succeed and thrive in the process (Bowie & Schnieder, 2011). The top management at Zara has a clear mapping of the changes in behavior personnel of the consumers (Berry & Wilson, 2000). The illustrations support the marketing efforts towards extensive shopping as well as significance of strategies used by Zara’s intermediaries as critical contributors to strategies which are important in appreciating the emerging trends in fashion (Palmer, 2010). There is a clear improvement of value for retail business as well as enhancement of modern retail formats. The outcomes of present retail strategies include increased retail outlet sales. Strategies embraced within the retailers’ indicative concept of marketing have a significant relationship to customer retention strategies (Hiebing, Cooper & Wehrenberg, 2011). Zara centers are retailing strategies on customers and variations between modern retail formats coupled with attributes for the changing store image, customer delight, better environment, and consumers’ preferences across the retail formats. There are attractive merchandising coupled with loyalty programs used in marketing strategies coupled with the retailers’ customized technology (Aaker, Kumar, Day & Leone, 2009). The promotional strategies are effective in the enhancement of retail outlet sales. Zara’s channel relations are a volatile conceptualization based on the intensive distribution and supplier responsibility for its retailing personnel (Pride & Ferrell, 2011a). The concept maximizes sales of Zara’s suppliers and allows forward integration to offer a broad scope of value additions coupled with product versions (Wells, 2013). Competition among players in the clothing industry is depicted by high sales of similar items while other forms of retailing system use tactics that are not welcome to the individual suppliers. Zara is more concerned with its individualized results. Retailers assign minimal shelf space to weak brands while setting high prices for their items without a guarantee of advertising (Donald & Keegan, 2005). Selective distribution allows Zara sell based on the moderate provisions of retailing intermediaries. The combination of aspects for intensive and exclusive distribution is used in Zara to achieve higher sales as compared to exclusive distribution. Zara carries competing brands through encouraging distributors to provide marketing support and give adequate space on their store shelf (Pride & Ferrell, 2011a). Zara maintains string relationships between the retailing channels and the major suppliers. Retailing intermediaries’ form critical elements in the distribution channel and Zara and its wholesalers is concerned about the quality of displays, store hours, reliability, and customer service of its retailers as business partners. The retailing system also presents essential clientele for goods and services aimed at future resale, store fixtures, management consulting, insurance, and computers (Berry & Wilson, 2000). Zara and its suppliers have varied priorities for areas of control within the profit allocation, distribution channel, and the number of competing intermediaries handling Zara’s products product displays (Wong, 2010). In the end, promotion support, operating flexibility, and payment terms are essential considerations due to the development of new retail chains awarding more power to distributorships than before (Wells, 2013). Zara knows the needs of its distribution channels and can develop a good rapport with each of them while emphasizing on durable retailing concepts among garment suppliers (Bowie & Schnieder, 2011). Zara picks favorable offers them as existing channel relations are smoothest within the exclusive distribution. Further, suppliers engage agreements with various retailers who are specified geographic through certain products or brands. The implication of Zara’s approach is stimulation of parties into working together to uphold a reliable image, assignment of shelf space, allotment of profits and costs, and advertisement. Zara usually requires that its intermediaries limit brand selection to specified product lines while increasing the scope of handling bands of the suppliers (Donald & Keegan, 2005). From the perspective of the manufacturers, exclusive distribution limits the overall total sales. Zara anticipates that the global consumer in the future will have an increased awareness and responsiveness to extensive formations of trends (Johnson & Kim, 2009). This includes streams of information and ways of instant communication. In conclusion, the paper shows that various fashion trends encountered by Zara are working on rapid cycles that have remarkably important contributions to events and perception. Zara has active and close monitoring on the fast-emerging fashion trends to filter the elements that are responsive to the services and products in their offering. Online retailing allows for an endless shelf acceptance that serves as an alternate reaction to demand sudden changes or rapid consumer. In the end, predictive analysis for shopper trends is done through rapid platforms and is increasingly becoming one of the necessary means for product planning projection and allowance for flexible product solutions as preferences and needs arise. References Aaker, D. 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