Zara vs. Uniqlo Essay

2. Richard M. Johns (2006). The Apparel Industry. 2nd ed. UK, London: Blackwell Publishing Ltd.. 1-124.

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.

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

Zara and Benetton: Comparison of two business models. 2010. [e-book] p. 10. Available through: Google Scholar [Accessed: 25 Nov 2013].

‘Fashion industry is characterised by short product life cycles, volatile and unpredictable demand, tremendous product variety, long and inflexible supply processes and a complex supply chain.’

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.

Inditex’s efficiency is the result of a more profitable investment strategy. By owning all the stores and manufacturing sites it is able to achieve control over all production processes and costs. The high number of stores may be also traced back to the increasing value of the property because Zara only buys stores in strategic areas (shopping malls, shopping arcades, pedestrian districts etc.) where competition boosts rents. Therefore total assets of Zara increase as well.

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.

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.

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

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

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

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.

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.

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