Zara Case Study

Zara is a retail store specializing in fashionable clothing for men, women, and children, offered at a reasonable price. They are known for their fast turnover rate on the fashion they offer. Zara does not keep a large inventory enabling them to offer new trends faster than other retailers. Zara is affiliated with Inditex, a large global retail parent company that designs, manufactures, and sells through Zara as well as five other chains around the world. These chains included Massimo Dutti, Pull & Bear, Bershka, Stadivarius, and Oysho. Through Inditex, Zara has grown from 6 stores in 1979 to 565 stores in 2003. Zara has been focusing on expanding into new areas, opening new stores in new countries. One main market that they have been trying to tap into is the United States. The American customer has a difference in taste, the country has a lack of distribution and production centers, and the costs of advertisements are all main issues preventing this expansion.

Zara’s leading competitors in apparel retailing are The Gap, Hennes & Mauritz, and Benetton. The Gap which is based in San Francisco, still has a good grip on the US market. They have Banana Republic and Old Navy to reach different demographics and meet tier customers’ needs. H&M was founded in Sweden but also has established a good reputation in the US for their fashion forward items. Benetton has a strong Italian influence with about 100 mega-stores in addition to 5,500 smaller establishments.

In order for Zara to continue to expand into new markets, they must intrigue the new customer as well as satisfy their needs and wants. Since the fashion industry is fast paced, Zara’s strategy for speedy inventory changes is an advantage. Zara can keep this flow and continue to use it as a marketing pitch to the United States. Customers do not always want to see the same items in the store or online so this can give them a fresh place to look for their next fashionable piece. The downside to this decision is the small amount of inventory they have to keep to continue with the fast changes. Once an item is sold out, the customer can no longer find it from them which may cause frustration. The customer will either stop their interest in Zara or be quicker to buy the item since they know how Zara operates.

Another solution to tapping into the United States market would be to look into different ways