Swot Analysis of Zara

2.7 Swot

Strengths

Zara is growing non-stop in recent years. With a mid-price point lifestyle, Zara manages to mantain a consumer base that successfully span age, socioeconomic and geographic boundaries. Therefore, Zara’s brand image in fast fashion industry is irreplaceable.

As a pioneer in fast fashion industry, Zara owns a brilillant, short and cheap supply chain that delivers similar to luxury brands fashion at a much lower price. This is due to the fact that Zara manages its supply chain with vertical intergration strategy, which means it controls everything from manufacturing to end sales. With this supply chain strategy, Zara can produce and supply products quickly.

One more amazing thing about Zara is that its new products is launched twice a week in limited quantities, attracting consumers come to Zara’s worldwide stores. Zara invest a lot in designing department, clothes are produced at a competitive price but with the most innovative and fashionable designs. The price point is a bit higher than budget but lower than luxury so the company attempts to gain consumers from both ends of the spectrum; the budget consumer sees the items as a splurge while the luxury consumer sees them as a steal.

All of above can be considerd as Zara’s strenghs, or what took Zara to where it is nowsaday.

1. Zara have a strong and famous brand in the world.
2. Their supply chain management is extremely low cost as well as most of their processes like operations, manufacturing are all vertically integrated.
3. New product launches twice a week in limited quantities help attract consumers to Zara's worldwide stores.
4. Produce and supply products quickly
5. Zara offers extremely trendy, well designed and fast delivery of new products
6. Clothes are produced at a competitive price with the most innovative and fashionable designs

Weaknesses

Comparing to other fast-fashion brands, Zara has almost no marketing campaigns or advertisments. Zara chooses to put all of its resources into supply chain management and design department instead of investing in marketing and addvertising.

Centralized distribution system is the biggest problem of Zara. If there is any technical snags occur in the distribution network then the whole system can be collapsed. But in other apparel companies, the distribution networks are decentralized and not self-contained like Zara. As such even if one part of the network falls, there is no wholesale collapse of the entire network. Zara controls its production, suppliers, distribution system, retails stores, unlike its rivals that make it prone to unpredicted problems.

1. Limited marketing and advertising as compared to some other brands
2. Self-contained Distribution system prone to unpredicted problems: Centralized distribution system is the biggest problem of Zara. If there is any technical snag occur in the distribution network then the whole system can collapse. But in other apparel companies, the distribution networks are decentralized and not self-contained like Zara. As such even if one part of the network falls, there is no wholesale collapse of the entire network. Zara controls its production, suppliers, distribution system, retails stores, unlike its rivals that make it prone to unpredicted problems.

Opportunities

Looking into Vietnam fashion market, retail sales is estimated at 5 billion dollars, and growth rate of 10 to 15 percent per year. The rapid rise of middle class, predicted by the World Bank will reach 33 million by 2020, making Vietnam a potential market for Zara. This can be considered as a most prominent opportunity of Zara when doing business in Vietnam.

Vietnam fashion market is determined to have good fashion standards. Young people are obsessed with branded clothings. A recent survey conducted by Niesel, based on 29,000 people in 58 countries around the world, 56% of Vietnamese respondents said they were more than ready to pay for a luxury goods, not to mention a mid-price brand like Zara. According to this result, the number of Vietnamese mesmerizes the world’s third largest, just after China and India.