Comment on David Valls’ Blog: Zara Fashion Chain

I decided to comment on this blog because it is a very well-known company for me, especially because I have done many projects about Zara’s business model back in Barcelona. I am sure that David will focus his project on the main points, but I want to help him on what I think could be improved.

I would like to start by highlighting how Inditex (parent company) describes Zara and its business model: Zara is a high fashion concept offering apparel, footwear and accessories for women, men and children. Zara offers a compelling blend of fashion, quality and price offered in attractive stores in prime locations on premier commercial streets and in upscale shopping centers. The in-house design and production capabilities enable us to offer fresh designs at our Zara stores twice a week throughout the year" (University of Oradea, Strategy and Sustainable competitive advantage: The case of Zara Fashion Chain, 2007).

Once we know how Zara works, I am able to compare it to David’s Blog. First of all, I would like to stress the fact that Zara tries to increase brand awareness through its stores design, instead of advertising the company in all media. David says in his blog that they gain Brand Awareness thanks to its prime location, but I would also say that store design and climate of scarcity is more important than prime locations. By climate of scarcity Zara means the feeling customers have when they go to the store and they know that the clothes they are seeing right now could be the last time they see them, because Zara changes its clothes every two weeks.

David did a very good research project to define the company and its processes. There’s not too much information to what he wrote in his blog, but I would change the main subject of the paper from Zara case to how Zara can enter the American apparel market.

 

It is pretty clear that Zara is performing very well and doing a really good job. But I would like to know why Zara is not that successful in the United States. As David said, Zara is present in several countries with an excellent performance, but United States. Maybe, that’s the element missing in his blog because he is defining Zara’s strategy but everything seems to be perfect. A good contrast would be to analyze how to enter successfully the saturated American market.

I spent an afternoon with David at Starbucks talking about Zara and here it is the result of our conversation. We found that America accounts for 29% of total apparel market and plays a key role in the global market. However, Zara is not performing well because it misunderstood what the American market wants. The main problem we found with Zara’s American strategy is that they decided to enter the market as a luxury brand instead of entering as a low-priced fashion chain (as they are in Europe). The problem arises when they continue the same business model: zero advertising policy, high inventory turnover and prime locations. American tastes are extremely different comparing to European tastes.

What I would do is to focus my paper on how to appeal American consumers in the apparel market. What Zara has to do to generate higher flows in its stores, what strategies Zara might follow to increase market share and brand awareness, describe its current pricing strategy and the best one Zara could use, etc.