Zara vs. Uniqlo Essay

This case study talks about the slowdown in the premium jeans market. The first slowdown was in 2007, after that time premium jeans never the same. Between 2008 and 2010 the premium denim prices fell 10-15 percent over this time period. There were different tactics these premium denim designers including 7 for mankind, True Religion, Diesel, Joe Jeans and Levi Strauss tried to attempt to maintain their positions. Some did this by lowering the price of jeans, creating lower priced jeans (i.e. recession collection and jeggings), creating more brands and stores. This case study also talked about the major effects that things like economic issues (i.e. the recession) and rising cotton prices (due to low stockpiles, heavy rains and

The business idea of Zara is to link customer demand to manufacturing, and to link manufacturing to distribution. And based on this general idea, Zara has several essential elements for its business model. First, speed and decision making, which means that in the external level, Zara need to respond very quickly to demands of target customers, and always keep in style. While for the inside, Zara treasure intelligence and judgment of common employees who enjoy a great deal of autonomy. Second, its marketing, merchandising and advertising strategy. Zara does not spend on virtually advertising, while it spends heavily on stores, and no selling online because of

The U.S. women’s apparel industry market is mature, given that the average growth rate from 2005 to 2007 was 4.66%. Within the industry, there are 6 categories of clothing in which companies compete: haute couture, designer, bridge, better, moderate, and budget. Each category targets customers with different needs and different price ranges, with haute coutre and designer clothing ranging upwards from $10,000 and moderate

Hbswk.hbs.edu. 2005. Zara's Secret for Fast Fashion - HBS Working Knowledge. [online] Available at: http://hbswk.hbs.edu/archive/4652.html [Accessed: 25 N

Zara International is considered a high end clothing store that is affordable. Due to its quality in fashion, low prices and immediate availability, popular stores such as Gap and H&M fail to keep up with Zara’s success. Zara’s well known tactic of fast fashion has separated them from their competition. The ‘fast fashion’ objective is to distribute top trends of fashion within the runway to customers by selling them in local stores. Zara has been able to achieve the fast fashion perspective by hiring approximately 200 people that will assist in getting these trends out in stores within a matter of weeks.

No business in this type of industry has total control over the market price and there are no barriers to entry and exit. Because of its monopolistically competitive playing grounds, Zara’s conduct is to increase its market power by producing demand for its heterogeneous products. Through differentiation and cost leadership, Zara attempts to increase market demand by offering new items weekly while keeping a low inventory, thus making its products unique and attractive to consumers. Because of its backward vertical integration model, Zara creates a strong synergy throughout its production process. Zara has sustained a competitive advantage globally by expanding into new markets and becoming more efficient. In a monopolistically competitive industry, Zara is expected to make profits in the short run but will break even in the long run because demand will decrease as average total costs increase. This means in the long run, a monopolistically competitive firm, such as Zara, will make zero economic profit (AmosWEB, 2001).

Zara is a retailing chain of Inditexthat specializes in high-fashion at reasonable prices. In the last 12 months, Inditex’s stock price has increased by 50% despite bearish market conditions. The 50% increase is due to the investor expectations of Inditex’s growth. Inditex’s growth can be contributed to the decisions it has made in creating a vertically integrated centralized process. The centralization of its vertically integrated operations in Europe provided it with its competitive advantage; however, I believe it will also make it fail if it decides to grow substantially into other markets. Financial Analysis compare to competitors In comparing Inditex financial performance against its competitors, it is apparent that Inditex is

There are segmented clothing and retail industries around the world. Therefore, there are provisions for a smaller number of firms in the industry. Although Creación has direct competitors like Jovian and

Zara’s business model can be broken down into three basic components: concept, capabilities, and value

Quick response of Zara leads it to be successful in the fashion clothing industry. Zara adopts international strategy for its operation. With vertical integration, it benefits Zara in cost aspect, however, it involves some risks. Due to our anaylysis on Zara’s operations, some of the recommendations are made to facilitate its further improvements.

Rivalry among existing competitors: The apparel industry is highly competitive with a great number of both local and global competitors. As the market is mature, its growth is small. Accelerated growth and expansion to new markets are not easy goals to achieve. The barrier to get out of the industry is quite low for distributors, but high for producers. Most fashion manufacturers moved their production base to low-cost countries like China as wage and raw materials in developed markets like Western Europe are high. Besides, there is no great discrepancy in terms of quality of products, so customers make their purchase choices based on price and brand recognition.

4. Briefly describe five opportunities for continued growth during the next five years for Zara’s parent, Inditex, SA.

Zara, one of the world’s largest apparel retailers, was founded in 1975 in La Coruna， Spain. With its successful rollout in the Spanish market, it began to expand its stores around the world, and became one of the most profitable brands in the appalling market. Zara was famous for its ability to quickly respond to the market demands, which provides a useful lesson in terms of competitive advantage with its competitors. But confronting to the fast-paced and constantly changing market, if a company wants to consistently increase market share in order to survive in the competitive market, it is irrefutable that it needs to achieve sustainable competitive advantage, since the achievement of sustainable competitive advantage can be expected to lead to higher performance.

Companies in this industry also attempt to differentiate themselves by technical advancements in the apparel. Companies compete to find the technology that consumers believe will help their overall performance in sports and activities; whether it’s a sweat wicking shirt or lighter shoe, consumers seek the product they believe will give them the greatest advantage. Overall, the rivalry amongst competitors is a strong force that ultimately lowers the profitability of the industry.

The clothing industry in South Africa has always been an industry where there is intense rivalry between the companies. There are main companies in the industry namely Edgars, Woolworths Truworths, but there are smaller retail companies that enter the market that can satisfy the demand of the consumer’s better.