ZARA is probably the only fashion brand that goes on to teach people the art of customer retention. It is an undebatable fact that Zara has managed to capture the fashion industry with its unique marketing and production strategies. To find more about Zara’s marketing strategy, please read: Marketing strategy of Zara: Secret to success?
Zara’s SWOT Analysis
Let’s have a look at the SWOT analysis of ZARA:
Zara has a clear advantage over its competitors due to the fact that it produces affordable clothing that is suited and appreciated by all kinds of customers. Due to this, the company has to bring versatility to its collection which means unique designs and a lot of them!
Due to this and a handful of other uniquely administered strategies, the company has managed to establish and maintain a dignified brand value in the fashion industry. Currently, the company is ranked number 53 by Forbes.
There is an explicit lesson for all the marketers following Zara for its business strategies that it is possible to achieve higher profits even with low costs if you have the right business model to implement.
For a brand with such great publicity, global support, and global recognition, it is difficult to have any major weaknesses that are easy to be exploited or pointed out. However, there are certain evident loopholes that can be categorized as weaknesses for the international fashion brand.
Firstly, the company does not specialize in anything. The company claims in producing affordable clothing options for all types of customers. Due to this, the company’s catalog has to be extremely versatile to cater to varying types of customers. Customers tend to move from a brand to some other competitor when the competitor has a direct focus on a particular type of product. For example, a brand that specializes in jeans is a better option than a brand that sells jeans and shirts, both. The versatility in its product-line forces Zara to have a lack of focus in one dimension.
Secondly, Zara has a unique marketing strategy of zero investment in advertising. This unique decision derives from the company’s belief and apparently effective strategy of spreading awareness by word-of-mouth. However, this hurts Zara. It is understandable that low-costing is Zara’s USP and this is one of the main sources of cost-reduction. But, the brand is unable to stack its profit and turnover by advertising its latest collection.
Thirdly, Zara is unable to maintain safety stock for its designs. Zara has a strategy of producing their designs in small numbers to ensure its customers can witness fresh designs often. However, if a single design is a hit amongst the customers, the company lacks a contingency plan. It will be unable to cater to the high demands in a short period of time.
Zara banks on its ability to boost its sales with the establishment of physical stores across the whole world. However, online E-commerce has remastered the shopping dynamics of a common man. If they plan intelligently, Zara can capture this area with ease.
Major threats to Zara’s sales are its limited reach to its customers and the increasing competition. Companies like Vero Moda, H&M, and Mango are extremely popular amongst the masses and it is difficult to compete with them. However, Zara is safe due to its brilliant cost-cutting strategies.
Furthermore, the company needs to devise an effective plan to increase its reach by instilling new strategies and methods.
Wrapping it up
Zara’s SWOT Analysis clearly shows that the company’s strengths clearly outweigh its weaknesses and possible threats. However, it should continue to improve its status to maintain this dominance.