Zara’s Growth Strategies
Based on the article: Why Zara Is The Most Exciting Retailer Today
Heller, L. (2017, March 15). Why Zara Is The Most Exciting Retailer Today. Retrieved from https://www.forbes.com/sites/lauraheller/2017/03/15/why-zara-is-the-most-exciting-retailer-today/#446a7f385cd3
Zara, a multinational fashion brand is the most exciting retailer according to the Forbes, here is why.
Zara considers the customers to be at the heart of their unique business model, which includes design, production, distribution, and sales through our extensive retail network. Hence, the growth strategies instated by Zara makes them the most exciting retailer today.
The following are the growth strategies adopted by Zara which is being displayed through Ansoff matrix grid.
Ansoff matrix
| Old | New | |
| old | Market Penetration
· Bow Ties and other accessories |
Product Development
· Stylish Clothes for differently abled (handicaps) |
| New | Market Development
· Virtual trials and online store |
Diversification
· Zara Home – the décor store. |
Market Penetration: Zara’s new business plan focuses on designing and promoting the accessories. Zara has been working on an innovative technology named “the color weaving hair” (CVH). The primary feature and property of CVH technology is that they can alter the color and design according to the users wish. Zara fits microtechnology in the hair strands and then views them to strengthen them which makes it cost efficient. Zara has only introduced CVH for their accessories and their business plan includes opening exclusive stores for accessories. In my opinion, this growth option may not be successful because the excessive cost of production may increase the price and it would be a onetime cost for the customer as the primary feature would help them wear it umptieth of time which can lead to less stock turnover and high buffer stock.
Product Development: Zara’s ‘diffable’ project is the most talked about lately. It is targeting a new customer segment of differently abled people. Zara’s clothes collection for this has been specially designed which focuses on convenience of wearing, style and comfort. Therefore, this growth strategy of Zara can be successful because it is cost efficient and can also be considered ethical adding on the brand reputation of Zara can also help market the new product range, however this may make the customers feel inferior to the other customers.
Market Development: Virtual Trials are the most modern and advanced facilities introduced to the fashion world by Lenskart in the spectacles market and now this technology has been instated in the trials rooms of Zara in US which are the first of its kind in the world. This expansion policy of may not be successful because the installation of the virtual trial technology would be very costly with no revenue generating from them, though they would enhance the shopping experience and increase the speed of the purchase process. But they would not be profitable in the long term.
Diversification: Zara has been planning to diversify its business in the new market of Home Décor with its new product range of the décor items, this may be profitable because home décor is a business which has a lot of potential and with Zara’s Brand reputation and economies of scale this would be a feasible and profitable option.
Citations
- http://www.businessinsider.com/zaras-retail-strategy-is-winning-2015-6
- https://www.zara.com/us/en/info/company-c11112.html
- http://www.academia.edu/5492552/The_Strategic_Management_Analysis_of_ZARA_Relative_to_the_Case_in_Developing_Countries_