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A Case

Analysis in:

Zara

Clothing

Company

Report & submitted to the faculty of the

College of Hospitality Management & Tourism

Laguna State Polytechnic University - Los Banos Campus

In partial fulfillment of the requirements of the course

Supply Chain Management - HPC 4

Executive Summary

About the Establishment Zara is one of the world's best-known brands and is one of the largest fashion conglomerates. They are a subsidiary of Inditex and the world's third-largest clothing brand. It is headquartered in Spain and is their flagship chain of stores. In 1975, Zara debuted in Spain with its first store. In Galicia, the company's headquarters are located. Over 2600 outlets are located in 73 countries throughout the world. Zara's apparel brand generates a significant portion of the parent company's revenue. Zara is unique since it does not invest in marketing and instead focuses on expanding its shop network. Their bold attempts have earned them the title of one of the world's most inventive shops.

About the Management Amancio Ortega Gaona, a Spanish millionaire businessman, was born on March 28th, 1936. He founded and served as the chairman of the Inditex fashion conglomerate, which is best known for its Zara apparel and accessory stores. Ortega had a net worth of $70.9 billion in December 2021, making him Europe's third richest person behind Bernard Arnault and Francoise Bettencourt Meyers, and the world's 15th wealthiest person. He was the richest man in the world for a brief while in 2015, surpassing Bill Gates when his net worth peaked at $80 billion at the same time that Zara's parent company, Inditex, shares soared. He is the Ortega family's patriarch and the world's second-richest retailer. Zara is one of the world's most well-known fashion brands. It is owned by Inditex, the world's largest fashion conglomerate. Zara SA, abbreviated as ZARA, is a Spanish clothing retailer headquartered in Arteixo, A Corua, Galicia. Clothing, accessories, shoes, swimwear, cosmetics, and fragrances are among the company's fast fashion offerings. It is the largest firm inside the Inditex group, which is the largest apparel retailer in the world.

The Closure The sudden outbreak of coronavirus affected almost every field and Zara the clothing company is one of the victims of this novel virus and that completely shocked the fashion industry. Because of the pandemic, Zara is completely affected when it comes to shipping their products. Based on Isla (2020), Before the pandemic, Zara had massive daily sales and showed a significant increase in stock revenue, which indicated that the company was in a good financial position. However, the coronavirus has hit Zara hard due to store closures and changing consumer preferences and consumption habits. And also according to the report of Wall Street Journal, Due to the Coronavirus Pandemic, Zara's application downloads decreased by about 14% in the US markets. More than 60% of consumers say they spend less on fashion during the crisis and about half expect the trend to continue after the crisis.

Time Context

Zara Clothing Company was originated in northern Spain. In the following eight years, Zara`s method toward style and its enterprise version progressively generated traction with the Spanish consumer. This brought about the hole of nine new shops in the largest towns of Spain. On 25th of September in the year of 2019 were opened the Zara Clothing Company in One Bonifacio High Street, Taguig Philippines. This where their newest collections of of Man, Women and Kids can be found. This was the eight Zara store and the largest in the country.

Problem Statement

The paper discusses the effects of Covid 19 in Zara Clothing

Company. It specifically answer the following questions:

What is the major effect of Covid 19 to Zara in terms of its supply chain?

How can Zara resolve the decreasing sale of their stores?

What is the best recommendation that can be forwarded by the researchers to

address the effects of Covid 19 in Zara Clothing Company?

Statement Objective

The goal of this case analysis is the following:

Identified the major effect of Covid 19 to Zara in terms of its supply chain

management.

Know the possible way to resolve the decreasing sales.

Submitted the best recommendation and described the effects of Covid 19 in Zara

Clothing Company.

Areas of Considerations (SWOT Analysis)

Strengths Pioneer Advantage: Fast-fashion concentrates on designing, generating, and selling clothes as quickly as they recognise a trend. Zara sells in 202 marketplaces and has a presence in 96 of them. Zara has the most clothing retail stores in the world, with 2249 locations. Zara updates its online and in - store inventory twice a week. Zara's ten logistic centers deliver within 48 hours to any place in the world. Inditex has a crew of 700 skilled design teams who turn the desires of customers into designs.

Weaknesses Inditex collaborates with 1520 suppliers in 7108 factories. Although Inditex deserves the credit for developing a strict code of conduct, there is a significant gap in enforcing the code. The AI-Enabled Prediction is still on its testing stage. Zara’s presence in both the US and Asia-Pacific is weak. Zara's reliance on physical stores after the spread of Covid-19 made their sales drop.

Opportunities Incorporating a resale strategy into their current platform, customers would be able to acquire more with less waste. This promotes consumerism while also promoting sustainable development. Provides personalized suggestions to the customers. Influencer Marketing, promotes the business with influencers that may persuade and attract more customers. Provide and promote eco friendly and sustainable clothes. Aim to have a rapid delivery cycle.

Threats Online presence of other retail companies and competitors. Coronavirus has led to a massive drop in sales. Price wars in the industry. Imitation of products that sell for a low-cost.

Alternative Course of Action (ACA)

Create an alternative marketing strategy, such as using a technologically advanced method of incorporating their products to their customers. When making decisions in their entire management and evolving their focus in business, strategic management must be used. Engage in more appropriate adaptation of both traditional and technological ways of strategizing its products, as well as improving geographic segmentation. Accept failure; many entrepreneurs avoid taking this distressing step. Unless you set out to create something, failure is unavoidable.

Recommendations

“Quick response to the demands of target customers” is the strategic goal of Zara. To reach this goal, Zara's current POS upgrade should be viewed as a good advantage for Zara to institute a strategic approach to increasing overall competitiveness. Zara has the potential to become an industry pioneer if she seized this opportunity properly. It is critical to select several retail locations for testing in order to ensure the successful implementation of the new system. The evaluated stores should cover a wide range of sizes in various areas. Concurrent systems are required during the testing period to ensure a smooth transition. Although there are several features which can be incorporated to the new scheme, Zara should not try adding all of them at first, but rather shift to a new system with the bare minimum of functions, giving the company time to transition while also introducing some stability to the system. Once the system has proven to be reliable, as long as the system is in place, increased functionalities could be added later in a priority-based order.

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