Competitive Challenges Of Zara

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The competitive challenges that Zara faces are:
- attract customers to stores and online shops;
- gauge and measure customers` expectations and demand and meet them with special attention to price-performance ratio;
- deliver products rapidly, to various geographical markets;
- innovate in products and methods of manufacturing.


Operating Results

In the half year 2014 Inditex reported continuing growth with net sales reaching €8.1 billion, 6% higher than 1H2013, gross profit reaching €4.7 billion, 4% higher and gross margin - 57.6%. Approximately fifth of sales are done in national market (Spain). Following its expansion strategy the Group opened 120 new stores in 40 markets taking the global total of outlets
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The strengths of Zara arise from its unique business model as well as expansion strategy that encompass short lead time, stock management, affordable prices, global reach and brand awareness. Moreover Zara`s strategy to follow the tendencies lets it avoid the risk of inappropriately gauging apparel trends. All these provide benefits to the company helping to overtake the rivals.
Due to pushed forward global growth strategy at some moment limited stock may become a weak point and have an adverse affect on sales. With this in mind Zara should carefully monitor and analyze sales and demand in order to increase production facilities when necessary.
The developing markets and Asian market present large opportunities for growth still the competition in global fashion retail industry is fierce and Zara needs to compete successfully otherwise its operation results will be affected. The company faces low cost Asian production of rivals that pushes it to implement cost reduction strategies. Zara`s products and business model are subject to risk of imitation that requires investments in technologies and R&D to anticipate the rivals. The risk associated with challenging global economic conditions cannot be avoided and should be taken into consideration while approving the expansion
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Being very competitive in pricing nonetheless H&M stays behind Zara in the number of markets operated in and in lead time that make the competitive advantage of Zara.

As for Gap, its target audience is more segmented. Except collections of American classic casual style offered by Gap, there are also more sophisticated collections targeting young audience and families by Old Navy, Banana Republic`s lines for relatively older customers and women`s athletic sport wear offered by Athleta. Meanwhile Gap loses to competitors in the speed of expansion, pricing and time-to-market.

Competitive advantage

As derived from above mentioned Zara builds and sustains its competitive advantage through both differentiation and cost. Zara strives to be the first offering cutting edge fashion at affordable

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