The Spanish lifestyle and retail brand Zara have been making waves throughout the world with its compelling line of fast fashion and accessories. Considered as the flagship brand of the Inditex Group, Zara has quickly become one of the names to reckon with in the global fashion industry.
With over 10,000 stores worldwide and more coming up steadily, the future of Zara lies in its ability to effectively gauge customer preferences and meet their expectations at affordable prices. Not only that but Zara’s ability to churn out multiple clothing cycles within the course of a year is certainly one of the factors that have worked in the favor of the brand.
However, the success of a business depends not only on its commercial feasibility but on certain macro-environmental factors as well. Global political and economic trends, together with socio-cultural, environmental and technological factors all contribute towards the smooth running of a brand. In Zara PESTLE analysis, we are going to take a closer look at this lifestyle and retail brand, and how its future may be affected by associated global changes.
Below is the Zara pestle analysis.
Political Factors that Affect Zara
As Zara is a brand operating from Spain, it falls under the ambit of the European Union and enjoys the benefits of free trade agreements and tax-concessions that have become the hallmark of the EU business scene. Due to extensive trade agreements among the EU countries, Zara finds it extremely easy to import raw materials and export finished products.
However, if Zara looks to expanding into other territories it must keep into account the political scenario of the region. Expanding into any country with a volatile political regime is surely not going to be conducive towards business. Further, before starting operations in a new location, Zara must keep in mind the laws and procedures of the land, as red tape can prove to be a significant hindrance in the progression of any business venture.
Economic Factors that Affect Zara
The success of Zara is deeply tied with the economic status of the territories it operates in. For example, being primarily a Spanish brand, Zara can utilize the low-cost labor that is easily available in Spain. This allows them to maintain profitability and also provide its loyalists with affordable fashion. Due to being a top fashion label that is trendy as well as affordable, Zara has been able to remain relevant even in times of global economic turmoil and worldwide financial slowdowns.
Social Factors that Affect Zara
One of the leading causes behind the worldwide acceptance of Zara is the ability of the organization to effectively research the social and cultural nuances of its target market. This allows the company to provide fashion that is readily acceptable by its target demographic, and also at prices that they can afford. Together with this, Zara’s innovative marketing tropes give its consumers a feeling of exclusivity which they just can’t afford to miss.
Technological Factors that Affect Zara
As with everything else in the 21st century, technology has a big role to play in the success of Zara. The brand has both brick-and-mortar and online stores, which makes it easy for them to collect and collate immense amounts of customer data and information. Using proper analytics, Zara can unearth a better understanding of customer preferences. Further, the use to automation and AI can help streamline the manufacturing, logistics and delivery processes, thereby improving operations across the entire supply chain.
Legal Factors that Affect Zara
A business cannot operate in vacuum and has to comply with the legal structure of the territory it operates in. Zara too is not an exception. It has to keep in mind the legal ramifications of its operations and make sure that compliance rules are effectively followed. Labor laws, supply chain functioning and trademark & copyright are some of the issues which the brand must successfully navigate to ensure its prosperity.
Environmental Factors that Affect Zara
Environmentally sustainable business practices are influencing businesses like Zara the world over. Zara’s parent organization Inditex has already pledged numerous sustainable goals that it intends to fulfill. Zara stores are being made more energy efficient and the manufacturing process is being streamlined to reduce wastefulness. The fast fashion industry is considered one of the biggest promoters of wasteful clothing purchases. So, if Zara wants to remain relevant, they need to maintain an eco-friendly business practice.
Finally, it can be safely said that with its affordable and trendy product lineup, Zara can continue to remain relevant in times to come. By taking advantage of modern technology and maintaining strict legal and environmental standard this brand can well ensure its way to success.