Critically analyze the challenges faced by the global fashion brand Zara
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This assignment critically analyzed the challenges faced by Zara, the global fashion brand. Zara has come under intense scrutiny over its fast fashion business model. The clothing retailer has over the last few years faced a number of challenges, which will be looked at in this report. Some of the latest ones include shutting down its retail stores in Russia following the Russian invasion of Ukraine in 2022. Other challenges to be looked at include its sustainability record, which focuses on its business model of throw-away fashion. Climate activists have increasingly criticized the fast fashion giant for its lack of sustainability in the production of its clothing which uses a lot of water and energy, which is bad for the environment. Its throwaway fashion leads to issues of recycling, since the company focuses on quantity over quality leading to a textile waste crisis globally.
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ZARAS CURRENT CHALLENGES: A Case Study
Key Learning Outcomes
By the end of the case, students should be able to:
- Understand the macro and micro environment in which Zara operates and the challenges these environments are creating for the fast fashion retailer.
- Critically evaluate Zara's responses to such challenges and how effective such responses have been for company performance.
- Evaluate the merits of business and environmental analysis for business survival growth.
1.0 INTRODUCTION
Zara is a global fashion retailer founded in 1974 by Rosalia Mera together with her husband Amancio Ortega. The clothing retailer has more than 3000 stores for both kids and home stores operating in 96 countries and is the flagship brand of the Inditex Group. Zara is well known for its ability to develop a new product and gets to its stores within a fortnight whereas other retailers take six months. Its biggest market is in Spain with 547 stores, followed by China with 229 stores, France, Russia, and Italy.
Zara has over the last few years faced a number of challenges. Some of them include shutting down its retail stores in Russia following the Russian invasion of Ukraine in 2022.
Zara is one of the most successful global fashion brands, with a fast-fashion business model that allows it to offer the latest trends at affordable prices. However, Zara also faces several challenges in its operations, such as:
Sustainability: Zara's fast-fashion model relies on producing and selling large quantities of clothing, which generates a lot of waste and environmental impact. Zara has been criticized for its low-quality garments, poor working conditions, and lack of transparency in its supply chain. Zara has taken some steps to improve its sustainability, such as launching a recycling program, using more organic and recycled materials, and joining the Fashion Pact. However, Zara still has a long way to go to achieve its sustainability goals and to meet the expectations of its customers and stakeholders.
Competition: Zara faces intense competition from other fast-fashion brands, such as H&M, Uniqlo, and Primark, as well as from online platforms, such as Amazon, Asos, and Boohoo. These competitors offer similar or lower prices, faster delivery, and more variety and customization options. Zara has to constantly innovate and adapt to the changing preferences and demands of its customers, as well as to the technological and social trends that shape the fashion industry.
Expansion: Zara has a global presence, with more than 2,000 stores in 96 countries. However, Zara also faces challenges in expanding to new markets, especially in emerging economies, such as China, India, and Brazil. Zara has to deal with cultural differences, legal regulations, political risks, and logistical issues in these markets. Zara also has to balance its global strategy with its local adaptation, ensuring that it offers products that suit the tastes and needs of different customers around the world.
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