COMPANY INTRODUCTION

H&M INTRODUCTION

Hennes & Mauritz (H&M) was established in Vasteras, Sweden in 1947 by Erling Persson.
H&M offers fashion and quality at the best price and offers fashion for women, men,
teenagers and children. The collections are created centrally by around 100 in-house
designers together with buyers and pattern makers. H&M also sells own-brand cosmetics,
accessories and footwear. The stores are refreshed daily with new fashion items. In Sweden,
Norway, Denmark, Finland, the Netherlands, Germany and Austria H&M offers fashion by
Internet and catalogue sales. H&M does not own any factories, but instead buys its goods
from around 700 independent suppliers, primarily in Asia and Europe. H&M has about 16
production offices around the world, mainly in Asia and Europe. The turnover in 2009 was
SEK 118,697 million. H&M primarily operates in Europe, North America and Asia, and have
around 2,000 stores spread over in 37 countries. The company is headquartered in
Stockholm, Sweden. H&M has grown significantly since its beginnings in 1947 and at the end
of the financial year had around 76,000 employees. The average number of employees in
the Group, converted to fulltime positions, was 53,476 (53,430), of which 4,874 (4,924) are
employed in Sweden. Around 79 percent of the employees were women and 21 percent
were men. Women held 77 percent of the positions of responsibility within the company,
such as store managers and country managers (AR2 2009).

H&M’s strategy is to offer fashion and quality at the best price. H&M’s annual report (AR1
2009) emphasizes that “quality” relates to both. H&M’s products exceeding customer
expectations, and also customers being satisfied with the company itself. The report states
“Taking responsibility for how our operations affect people and the environment is also an
essential prerequisite for H&M’s continued profitability and growth.”

H&M is driven by strong values such as commercial mindset, simplicity, constant

improvement, cost consciousness and entrepreneurship states in annual report (2009:13).

The World of H&M (H&M 2010)

ZARA INTRODUCTION

Zara was founded in 1975 by two founders Amancio Ortega and Rosalía Mera, as a family
business in Galicia, a city of Spain. Its first store already featured low-priced lookalike
products of high-end brands. In the next decades, Zara's business model gradually earned a
reputation among Spanish consumers, with nine more stores in Spain's most prominent
cities.

In 1985, Zara was incorporated into Inditex as a holding company and started expanding
worldwide with a better distribution system that quickly reacted to the fashion industry's
shifting market trends. Ortega created a new working process that is called "instant
fashion," - which could reduce lead times and adapt to new trends in shorter periods. This
was driven by investments in information technology and utilizing designer groups.

The following decade saw the rapid expansion of Zara into global markets, including the US,
France, Portugal, Mexico, Greece, Sweden, Belgium, Cyprus, Malta, Norway, and Israel.
Now, there is hardly a developed country that doesn't have a Zara store. Across 96
countries, Zara's fashion empire has over 200+ stores and is the world's largest fashion
retailer. The founder Amancio Ortega is currently the sixth richest man in the world.

In 2019, the Zara brand's value was approximately calculated at 16.5 billion euros. The
parent company Inditex also has other fashion brands in its portfolio, such as Zara Home,
Pull & Bear, Massimo Dutti, Bershka, Oysho, Bershaka, and Uterqüe. The total revenue of
Inditex in 2019 is estimated to be 23.31 billion euros.
 HUMAN RESOURCE MANAGEMENT OF H&M & ZARA

HUMAN RESOURCE OF H&M

H&M’s corporate strategy is to expand on a continuing basis, and as a consequence,

employee strength also increases continuously. The growth target is 10-15 percent new
stores each year, which means that 6,000 -7,000 new jobs each year. Their staff is spread
across approximately 37 countries and come from different cultural backgrounds. Their
strategy is to recruit locally whenever a new store opens as stated in the annual report
(2008).

The main area for which H&M may have clearly articulated policies are listed below. The
policy areas are based on the categorization by Armstrong (2006).

Overall Policy and Values: H&M’s website indicates that their objective is to be a good
employer, including in those countries whose laws and regulations fall short of their own
requirements. To quote the Head of HR “In order to meet people’s expectations of H&M as
an attractive employer, the company develops global guide lines on diversity, equal rights
and against discrimination” (AR1 2008).At H&M, HR activities are guided by a fundamental
respect for the individual. This applies to every aspect from fair wages, working hours and
freedom of association to the opportunity for growth and development within the company.
This also indicates that the company has specific policies for areas such as Equal
opportunity, Managing diversity, and Employee development, Health and Safety, among
others.

Employee Relations and Voice:

H&M has an opendoor policy granting all employees the right and the opportunity to discuss
any work-related issue directly with management (AR1 2008). They also support their
employees’ right and ability to organize and to decide who should represent them in the
workplace (AR1 2008). H&M has positive experience of open and constructive dialogue with
the trade unions and they welcome such relations wherever they operate. They consider
such cooperation to be essential if they are to become even better. Examples of
collaboration on staffing issues include their agreement with UNI (Union Network
International) and the work they do with the EWC (European Works Council).

 Promotion: In the annual report of H&M (2008:34) the Head of HR quoted “Internal
recruitment and job rotation enable the company to grow quickly”. This statement
indicates that H&M has policies related to promotion.
 Employee Development: To quote Mr. Par Darj, Head of HR at H&M “I tell
employees, if you do not grow neither will H&M” (AR1 2008:34). This indicates that
policies exist for this area.
 Rewards: According to the annual report (2008) H&M focuses on rewarding people
by providing more opportunities and responsibilities, and not through a promotions
and job titles. This indicates that H&M has policies for this area.
Other areas with clearly defined policies might exist, but these are not evident from
available sources.

Organization Behaviour and Structure

Structure: Corporate management is based at H&M’s head office in Stockholm. Stockholm is

also where the main departments for design and buying, finance, accounts, expansion,
interior design and display, advertising, communications, IR, HR, logistics, security, IT and
CSR and environment are located.

H&M has around 16 country offices that are responsible for the various departments in each
sales country. H&M also has around 16 production offices which take care of contacts with
the approximately 700 independent suppliers that H&M works with. There are nine
production offices in Europe, eleven in Asia and one in Africa.

Behaviour: H&M operates in 37 countries and has a work force belonging to these 37
countries because they recruit locally. H&M’s espoused values are stated to be the
foundation for a multinational company in a multi cultural market where great respect is
paid to the individual.

Interviews with the CEO and Head of HR in the annual report indicate a participative culture
where “everyone is made to feel like a part of the company’s success” (AR1 2008:34). Par
Darj (Head of HR) stated in the annual report the key word for continual growth is
responsibility and commitment. We have committed employees and we are prepared to
delegate responsibility at every level. The company encourages what it calls the “The H&M
spirit” employees committed to their work and prepared to take on new challenges,
common sense, hard work and team spirit are encouraged. All their operations are typified
by an essential respect for the individual; including reasonable wages, reasonable hours,
and opportunity to grow, and develop within the company (AR1 2008). Quotes from
employees about the organizational climate indicate that the values above are “values in
use”. These quotes can be found on the career section and in the annual report of H&M.

Based on this information; the prevalent culture appears to be primarily “task oriented”
(Schein 1985). Such a culture can support H&M HR related strategies and policies (like Open
door, job rotation, freedom of association etc.). They also have a significant impact on HR
aspects; Recruitment needs to focus on finding candidates with the right fit to the
organizational culture irrespective of local culture, facilitating expatriation of experienced
staff when new stores are opened, facilitating rewards schemes aligned with organizational
culture, enabling HRD that can empower employees to take on new challenges and work in
new teams.

At H&M, a lot of importance is given to personality development and for opportunity for the
employees to grow within the organization. Various practices empowering the employees;
like a Shop Manger being allowed to take independent decisions, and managing the
business like an entrepreneur etc. are designed to increase employee loyalty and
commitment to the organization and are great motivators (AR1 2008). The HR strategy for
employee motivation; total reward with emphasis on Intrinsic Motivation (Armstrong 2006),
has been proven, to be directly related to forming the success of the organization. All their
operations are typified by an essential respect for the individual; including reasonable
wages, reasonable hours, opportunity to grow and develop within the company (AR1 2008)
The prevailing organizational culture at H&M encourages team work, supports effective
leadership and provides adequate growth opportunity for employees. These HR strategic
initiatives in turn make significant contributions to the organizational goals of continuing
growth and profitability.

Organization Culture
H&M’s strong corporate culture – the spirit of H&M – has existed ever since the days of
H&M’s founder, Erling Persson. This strong culture is of great value and is a contributory
factor to H&M’s successes over the years.

The spirit of H&M: The spirit of H&M is based on a number of values that describe in simple
terms how we want to work. These are in turn based on our business concept, fashion and
quality at the best price. The fundamental values behind the spirit of H&M are among other
things common sense and own initiative. H&M provide room for people to make their own
decisions and take responsibility, and co-workers get regular feedback on their
performance. An important part of H&M’s culture is to delegate responsibilities to the
stores. Strong commitment and involvement are important, and co-workers are encouraged
to take their own initiatives within a defined framework. Creativity and job satisfaction
increase when there is a good working environment. Co-workers’ commitment makes a
major contribution to H&M’s successes. H&M believe in the abilities of the individual and
encourage co-workers to develop further. Respect for the individual is a fundamental value
at H&M. This applies to everything from fair pay, reasonable working hours and freedom of
association to the opportunity to grow and develop with the company. Job rotation is
common at H&M. In the stores, for example, duties may vary between the cash desk, fitting
rooms, unpacking, display and follow-up of advertising and campaigns. Working in the store
provides very important experience and is a way of getting to know H&M from its very
foundation. Attracting and retaining skilled staff is important for H&M’s success therefore
H&M work constantly on skills development and all training is carried out within H&M.
However, the biggest knowledge gain is made through active learning on the job.

Information System
H&M has employee-scheduling system to improve its use of staff resources and maximise
time spent by staff on the shop floor.

The Swedish clothing company implemented. 30,000 employees swipe in and out with
smartcards at the beginning and end of their shifts. The system reduced administration by
recording shifts electronically and helped improve sales by scheduling shifts to coincide with
the busiest times in stores.

The scheduling application is linked to H&M’s human resources and payroll systems, which
lets the retailer control staff costs more accurately.
The Workforce Management application from software supplier Work Place Systems will be
hosted at a data centre in Stockholm.

Motivation at H&M
H&M is a flat organization, which might give the impression that it’s hard to move up within
H&M, the organization is constantly evolving and is growing fast, thus providing more
opportunities to its employees. Employees are motivated by providing new challenges; in
another department, another role or, another country. H&M encourages employees to try
many different roles within their organization stated in annual report part 1 and 2 (2008).

H&M recruitment advertisements indicate possibilities like: working abroad, furthering

education and learning new things. Their websites promotes that many in management
today, actually started on the shop floor. H&M also provides a comprehensive benefits
package. H&M fulfils employee aspirations by providing opportunities to take more
responsibilities.

Individual development versus organisational development.

H&M’s annual report (AR1 2008) and website (Careers website), emphasize that working at
H&M is about commitment, both from the individual and the organization. H&M’s Head of
HR emphasizes that organization can grow only if the individuals grow. H&M won’t make a
career plans for their employees, but will provide them with tools to go as far as they
possibly can on their own.

This indicates that at H&M, individuals are expected to drive their own development, within
the framework that the organization provides. The organization appears to facilitate and
promote cross-functional and cross-boundary development opportunities for individuals,
which is aligned with their own development and growth strategies.

To quote Pär Darj, (Head of HR), “We have committed employees and we are prepared to
delegate responsibility at every level. I tell employees, if you do not grow neither will H&M”,
(AR1 2008:34). This indicates that H&M treats individual development and organizational
development as tightly linked areas.

Selection & Recruitment

The HR strategy, which is closely aligned with the organizational strategy to achieve
continuing growth and profitability, envisages recruitment of people every year to run the
new stores scheduled to be opened. For example, as per their Annual report (AR1 2008),
about 6000 – 7000 employees are to be recruited during this financial year, to meet the
requirements of the 225 new stores being opened worldwide. The planning and recruitment
is based on the HR policy to recruit locally when a new store is opened. Future employees
are evaluated and chosen according to certain criteria practiced by H&M and based on the
company’s culture.

They look for people with personality who can perform well within the culture, growth and
motivational framework provided at H&M. Par Darj, Head of HR stated, At H&M, great
grades and all the university credits in the world are no guarantee of a job or a fast-track
career. Of course, we do welcome those things, but what we are really looking for, more
than anything, is people with the right personality. This is based on the belief that one can
always gather skills as you go along, but personality and attitude can’t be taught. Either
you’ve got it or you don’t. One of the most important things we look for is drive (AR1 2008).
H&M values personal qualities much more than formal qualifications. Since H&M is a fast
company and the tempo is always high, they need employees who are self-driven and
capable of well direct communication. Hence H&M recruits people who like responsibility
and decision-making also it indicates that a love of fashion combined with a focus on sales is
perceived as an advantage. These appear to form the basis for H&Ms recruitment
requirements (and person specifications), programmes and drive its selection processes.

At H&M selection interview approach is usually face to face and mostly “structured
situational based” According to Armstrong (2006) In a situational based interview the focus
in on a number of situation or incidents in which behaviour can be regarded as being
particularly suggestive of succeeding performance. This is followed by panel interviews and
aptitude/work sample tests. It appears that candidates are filtered at each stage of the
process in H&M.

Sources of candidates:

Internal Recruitment: This is their first choice for a new job opening. External recruitment is
considered only if no internal options are available.

External recruitment: Potential recruits (minimum age is 16 years) are encouraged to apply

directly to the local store, from the careers website. H&M does not offer summer jobs or
work experience placements. Buying is centralized in Stockholm, and so is the recruitment
for the same.

HUMAN RESOURCE OF ZARA

 MARKETING STRATEGY OF H&M & ZARA

H&M Marketing Strategy

Product Strategy:

The company is known for “Fast-fashion clothing stores” which means they never fail us in
presenting high-quality clothes & winning accessories that are admired according to the
fashion trends.

Besides, they are always prepared to release new product lines on time and sell European
influenced fashion in the American market as it brings inter-cultural fashions in such
demographical.

H&M product strategy is about providing high-quality clothing according to the latest
fashion at the best price possible. The company maintains four product stages- Introduction,
Growth, Maturity and Decline stage, whereby the product manager analyzes the demand &
supply of H&M products and works on these 4 stages of product life to bring effective
marketing strategy on the new product to compete in the market.

Price Strategy:

According to the buyers, Some clothes by H&M cost an arm and a leg to acquire as they
provide high quality fashion. While H&M focuses to satisfy customer’s needs with high
quality fashion at a low price by controlling transport and labor cost to their possible. H&M
clothes are priced as low as Rs 399 to as high as Rs 7999.

Promotion Strategy:

H&M developed a multi-channel promotion strategy that subsumes- advertising, sales

promotion and internet promotion that helped the brand to be exposed worldwide.
Moreover, the company entices customers by building brand awareness by showing low
prices on the products while marketing them.

Place Strategy:

H&M established a reliable bond between customers and the company, by owning outlets in
different geographical places all over the world. H&M make their basic goods in Asia,
whereas high branded goods in Turkey and sell them in their owned 5000 plus stores in 73
countries.
Cost leadership Strategy:

H&M sells their fashionable clothes at a low price to broad markets, where the price is
determined according to the market price of a certain niche. Cost leadership strategy
focuses on working efficiency in expanding their market share rather than setting a high
price to earning a huge profit margin.

People Strategy:

H&M always emphasizes the customer’s needs and provides them with fashionable items
that are trending at that period of time.

The Unique Marketing Strategy of H&M

H&M always comes up with new products that increase the customer's desire for clothing,
that too at an affordable cost. Their only notion is fashion and quality at the best price.

They have everything that a person may look for, from normal wear to business suits, sports
wear to lingerie sets all at a reasonable price. They collaborate with other top brands to
establish a fresh style.

H&M collaborated with Karl Lagerfeld in 2004, Versace in 2011, Alexander Wang in 2014
and the collaboration with Balmain is the most triumphant to date.

They also collaborated with the celebrated Indian designer Sabyasachi in 2021. The
collection was named Sabyasachi x H&M.
Before releasing the season's collection, they fuel the people's curiosity by promoting it on
social media platforms. The brands mostly target the teens, to get their attention, they
make sure their brand pops up in every online platform and publicize it by the influencers
with a large following.

They feature models in different skin colour and sizes, giving the notion that fashion
pertains to everyone irrespective of their skin colour or size.

STP (Segmentation, Targeting and Positioning) Strategy of H&M

Segmentation Strategy

H&M almost already reached various cultural, religious and lifestyle all over the world.

 Segmented into class- from middle class to high society by rendering low-cost price
products to extravagant products.
 Segment by age- H&M literally covers all genders from the age group of 15 to 30
years old in presenting them fashionable products and accessories.

Targeting Strategy

H&M basically targets fashionable and trending consumers who are very much interested to
spend their money on purchasing high-quality clothes. Notably, H&M highly aims to target
women, as they usually invest a lot of money in purchasing fashionable items- clothes,
accessories, shoes, Garment care etc. at an affordable price.

Positioning Strategy

H&M is a fast-fashion clothing retailer which manufactures products in their rented or

owned outlets and sells them worldwide. For instance, those fashionable European clothes
are brought into the American market to create demands. Besides, the company functions
online as well as offline by understanding socially, economical and environmental
sustainability.

ZARA MARKETING STRATEGY

Zara 4p's marketing strategy

To get a better understanding of Zara's marketing strategy, we need to see all the important
sides of marketing. This leads us to a traditional marketing research method, which is called
the 4p's strategy, which includes products, place, price, and promotion. Let's see how Zara
strategizes in these four sections.
Products

Zara is an "instant fashion" brand, which means it identifies the latest fashion trends and
brings the design to its stores quickly at reasonable prices. This is the source of the brand's
quick growth and reputation. The brand's products look somewhat similar to the hottest
items in the market, but they have different traits depending on specific markets. Zara does
its research before releasing anything to suit the local culture and people's tastes.

In short, Zara products have the latest styles, trending designs, affordable prices, and local-
adapted tastes.

Place
Zara has nearly 3000 stores worldwide, but the even more incredible fact is that it is a
vertically integrated retailer. This means Zara does all of the designs, manufacturing, and
distribution itself without third-party suppliers. This brings the same environment and
experience for customers everywhere. Its store's design is modern, luxurious, and
predominantly white.

Online selling has been carefully planned and limited to specific countries as well. This
creates a throughout strategy for the company's growth, and it seems to work because Zara
has managed to establish itself as one leading fashion retailer globally.

Price
Zara's pricing strategy focuses on the average shopper that wants the latest fashion items at
affordable prices. So its prices have to be catered to the price-sensitive buyers as well. The
pricing strategy that Zara applied helped its products meet the needs of a very large
consumer segment. But Zara doesn't compromise the product's quality, so it will be lower
when compared to other brands such as Hugo Boss or Uniqlo.

Some Zara stores have very premium pricing, whereas others have much more affordable
prices, based on the locations and targeted customers. Zara is able to maintain a good
pricing strategy by optimizing development and distribution costs. This creates a unique
brand image and grows the brand's market share faster, especially among millennials.

Promotion

One thing to note is that Zara spends very little on promotion campaigns compared to
average fashion retailers. It just simply doesn't market itself as aggressively as other
companies. But this doesn't mean it has no focus on marketing. Zara mainly focuses on
opening new stores and word of mouth. The key promotion strategy of Zara is based on
experience, exclusivity, affordability, and differentiation.
This strategy is visible through the attention to each detail of its showrooms. Everything is
precise, professional, and elegant. Every store manager can talk directly to its counterparts
in Spain regarding the situation. By focusing on the brand's core qualities towards buyers,
Zara can build its popularity with an effective brand image. When it comes to promotion,
Zara has also used the power of social media channels effectively.

Zara's marketing tactics

Focus on customer's experience

Product used to be the focal point of every business, but not anymore. In the new economy,
the customer's experience matters more than the product itself in the mind of the shopper.
And Zara fully understands this. It tries to capitalize on the store experience by always
offering reasons for the buyers to revisit the stores. A Zara's loyal customer can visit the
store about six times per year.

Zara's fast-fashion formula provides frictionless shopping experience in a highly curated

environment that offers limited supply and new styles that rotate continuously. Shoppers
feel like if they buy items from Zara, other people won't have the same outfit. So not only
buyers are trendy, but they are also unique, which sounds pretty cool like being in a cool
kids' club.

Value for the price

Many fashion brands try to be innovators and the leaders of a new movement, but Zara
takes a completely different approach. It doesn't want to be a trendsetter; it just wants to
be a fashion company that customers need. Buyers now want an item's value to be beyond
price, with more time-saving and convenience.

Zara has a deep understanding of these values and delivers affordable high fashion items in
just two weeks. That translates into a great brand with high values for customers. Through
this approach, Zara can earn many loyal buyers that are less price-sensitive and return a
higher profit margin.

Zara is not the cheapest in the fast-fashion industry, but it delivers trend-right products at
appealing prices consistently, which makes it have the best-branded value.

The power of brand loyalty

Speaking of loyal customers, Zara's meaningful experience and values tap the potential of
frequent buyers to promote the brand. Rather than spending more on pushing marketing
out (it only spends about 0.3% of sales on advertising), Zara pulls customers in and turns
them into brand evangelists to spread word of mouth about the brand.
On social media channels, Zara has over 28 million Facebook followers, over 39 million on
Instagram, and over one million on Twitter. These are used to analyze what is on trend or
being said on social platforms. This is used to improve operations, services, and products to
keep customers satisfied.

Convenient physical store locations

While Zara doesn't spend much on advertising and promoting, it invests heavily in the
location and appearance of 2,250 stores around the world. Not only that, but Zara also
delivers the brand experience and products when and where the buyers demand it. Through
technology and mobile connectivity, shoppers can access inventory not present in their
locations conveniently. It currently has 39 online markets.

The location strategy of Zara is to put stores in high-street retail areas of major metropolitan
cities. The stores are likely to be near high-end fashion brand stores. Zara has the courage to
continually strengthen its portfolio by closing underperforming stores and opening new
markets, so its flagship stores keep the reputation among loyal shoppers.
 SWOT ANALYSIS OF H&M & ZARA

SWOT Analysis of H&M

(S)trengths – One of the main reasons for H&M’s popularity is because of its trendy
items for such a low price. This store offers quality clothing at department store prices
which is rare for many retailers today. Strength for this company is their overall delivery
time. It only takes 12 weeks to get an item from the design to its retail state which is very
impressive for a worldwide, low price retailer. The average for retailers is usually about 6
months which is double the time that H&M uses. They also manage to keep the stores
brands fresh with guest designers coming in for different lines in the store. Some of these
have been Madonna and Robert Cavalli. They also keep the prices affordable by using very
few middlemen and buy large volumes cost consciously. But with these strengths come
weaknesses as well.

(W)eaknesses – One of the strengths I mentioned above can also be a weakness for
this company. Buying large volumes means that there is no real guarantee that all the items
will be sold. This means that they’re already low prices may have to be lowered in order to
make room for the next collection. This means that if these items are not sold in time, then
the company will have to pay more for extra storage for the items not sold. Another
weakness could be its wide range of customers this brand provides for. The range is for men
between the ages of 18-45. This is not including the children’s clothing and maternity wear
and the huge wide range of different styles they provide depending on what store you go
into. This can be difficult to manage especially in a vertical company because there is no real
focus on a target customer and gets more expensive to provide machinery for all these
different groups of people. But with these huge leaps there are many opportunities for this
company flourish.

(O)pportunities – One good opportunity would be for H&M is to have matching clothes
for mothers and children. I think this would be a good opportunity because there are also
maternity wear and children’s clothes and I think that it would appeal to a larger crowd.
They would like to dress their children like them in the same styles.

(T)hreats – since H&M is a brand that is very unique it has very few threats as far as
retail chains go. One of these stores would have to be the clothing chain called
ZARA. This is a store that also has fairly reasonable prices but is most famous for its
rapid delivery time. It only takes two weeks for the design to make it into retail
stores. Even with H&M’s time which is 50% faster than most retailers, cannot even
compete with that time. The second threat to H&M is Gap just because of their
quality at reasonable prices and their wide range of people they reach as well with
their vertical company as well. There is a market for babies as well as men and
women
 SWOT Analysis of Zara

SWOT Analysis of a brand is a study of its Strength, Weakness, Threat, and Opportunities.
Learning SWOT Analysis of Zara will help you in upgrading your knowledge about their
business and increase your own regular problem-solving skills.
Let’s get into the details: 
 
1. Strengths of Zara

Starting off the SWOT Analysis of Zara, we have its Strengths. In this sub-section, we will
learn about the organization’s unique capabilities that give it an advantage in capturing
more market share, attracting more customers, and maximizing profits.
 
 Pioneer Advantage: The focal point of instant fashion is to design, produce and sell
at a fast rate. Conventionally, this procedure is lengthy; but for Zara, it is only a
matter of 3 weeks. As pioneers, Zara has the most developed, strategic practices in
supply network management.
 Stores: Zara has outlets in 96 out of the 202 countries it sells in. Zara has the most
fashion retail stores in the world, with 2249 locations. The number of retail stores is
about double that of Nike, which has the second-highest number of retail stores.
 Supply Chain: Zara’s supply chain updates its online and retail collections twice a
week. Zara’s ten logistic centres deliver within 48 hours to any region on the planet.
Inditex also has an in-house software development team that is working to increase
the company’s order fulfilment speed.
 Team of Designers: Zara has a design team of 700 trained designers who turn
customers’ desires into designs. Each year, the design team produces 50,000 pieces
of work. It also takes them only three weeks to get the designs from the drawing
board to the shelves.
 Investing in Online Retail: Inditex is investing $3 billion to boost its online sales. The
money will go into creating a fun online shopping experience and integrating the
current physical infrastructure. By 2022, the corporation wants to generate a quarter
of its income from online sales.
 
Zara’s success can be attributed to her mastery of the fast-fashion game. Fast fashion,
however, is proving to be a double-edged sword as environmental and ethical issues mount.
In our next part on Zara’s weaknesses, we’ll go over this and more.
 
2. Weaknesses of Zara

Zara’s commitment to revising its collection every three weeks sets it apart from other
fashion houses. Zara’s dedication has earned it a spot on the top of the industry. However,
the advantage comes at a cost. Here’s some more information on Zara’s weaknesses: 
 
 Instant-fashion Trends: Surprisingly, the movement that propelled Zara to the top is
also the source of its most serious flaw. Zara’s issue is to find a way of balancing
sustainability with instant fashion, which is becoming more popular among buyers
and policymakers.
 Physical Store Dependence: Zara’s efforts to reduce the number of physical stores
were pushed by the pandemic. Zara was able to recover from a large reduction in
sales due to COVID-19-related issues thanks to online sales. Even with the increase in
online sales, sales are still only 89% of what they were in 2019.
 Expansion to the US and Asia-Pacific: Zara has a total of 99 stores in the United
States, out of the total 2249 outlets, US stores only account for barely 4.4% of the
total. However, the United States is the world’s largest apparel market. In addition,
Asia-Pacific accounts for 38% of the global apparel market. Zara has a little presence
in both geographies.
 Ethical Workplace Standards: Inditex works with 1520 different suppliers across
7108 different plants. Although Inditex deserves respect for developing a strict code
of conduct, there is a significant gap in its enforcement. This gap is highlighted by an
article in Buzzfeed about the treatment of employees in Myanmar.
 Prediction Aided by AI Systems: Zara is actively working with AI and Big Data
companies to develop an AI-enabled market trend prediction system. On the other
hand, the current system is still being tested. Once such a system is in place, Zara will
have an unrivalled ability in forecasting and satisfy client wants.
 
3. Opportunities For Zara: 

Zara’s ability to quickly capitalize on fashion trends is one of its most significant assets. Zara
is in a good position to take advantage of upcoming changes because of this edge. These are
some of the opportunities:
 
 Rapid Cycle: Customers visit Zara’s stores an average of 17 times each year,
indicating a rapid delivery cycle. This is due to the company’s proclivity for reacting
to trends as soon as they emerge. Zara currently creates a trend from start to finish
 in about two to three weeks. The brand should be able to continue these cycles even
further in the future.
 Customization: Thanks to AI, collecting data and segmenting the client base after
evaluating it is easier than ever before. This enables clients to receive customized
recommendations. Zara should use this technology to its advantage.
 Sustainability: More than a third of Millennials and Gen Z look for “sustainable” and
“environmentally friendly” labels on clothing, according to the Sourcing General. The
two groups together account for half of the population. As a result, Zara must pay
attention to and respond to this expanding need.
 Reselling: The resale market, which is currently worth $28 billion, is expected to
expand to $64 billion in the next five years. Customers would be able to buy more
with less waste if they included a resale plan into their present platform. This
promotes consumerism while promoting environmental sustainability.
 Influential Marketing: Influential marketing is the most effective technique for
promoting lifestyle companies, according to Unbox Social. Zara’s #DearSouthAfrica
campaign, which involved 60 micro-influencers, reached an audience of 8 million
people. This should serve as a blueprint for the future.
 
4. Threats For Zara

In the last segment of SWOT Analysis of Zara, we will delve into the problems the brand
might face. In the traditional sense, Zara’s largest competitor is H&M, on the other hand,
the brand is now also facing a slew of internet-based competitors. But these rivalries are
only part of Zara’s problems.
 
 Competition: Shein, the world’s largest apparel shop with an entirely online
presence, is China’s fast-fashion behemoth. The Shein app received 10.3 million
downloads in September while Zara got only 2 million downloads in the same period,
spelling danger for the brand’s future.
 War of Prices: Zara’s core niche is fast-fashion, which offers the latest runway trends
to clients swiftly and at a low cost. Imitators are conducting pricing wars to drain off
Zara’s line, but the sector is vulnerable.
 COVID-19 Pandemic: Inditex reported a 44% reduction in revenues in the first
quarter of 2020. According to Inditex’s report, the closure of 88% of its outlets due
to the Coronavirus was the primary cause of the reduction in sales.
 Regulations And Restrictions: In Spain, Inditex has 13 factories. Only three of the 13
factories were operational in the early months of the epidemic due to the Spanish
government’s lockdown efforts. The company can expect similar restrictions as
Europe and India prepare for a Third wave.