Zara: Fast Fashion - Case Study

1493 Words6 Pages
Issues Since the decision upon Zara’s future expansion strategy will have a significant impact on the group-level development, the company would be well advised to identify and deal with the most important issues concerning its future business. As mentioned before, future growth can be achieved by intensifying its business in Europe or by establishing a strong position in a second market. Therefore, Zara has to consider the two most important factors influencing the success of expansion, namely the size and growth of the target markets as well as the level of competition. With a view to Zara’s alternatives, the (Western) European and U.S. market seem to be characterised by a substantial size as they accounted for 63% of total apparel sales in 2000, while the Asian market was significantly smaller, with a share of 23%. On the other hand, the developed countries are expected to be saturated and will show only little growth rates within the next years, while the Asian market will be subject to extraordinary growth (cf. Baigorri: 2009). Additionally, competition within the US market and Europe faces a high level of concentration and big players determine the market. As regards the United States, The Gap is a very strong player, with its US home market accounting for 87% of sales and a narrow geographic portfolio the company is likely to maintain its focus on this market and has dwarfed H&M and Inditex combined. At the same time, the European market does not seem to be less competitive, as concentration is also quite high. While the biggest single apparel market in Italy is characterised by competition among many independent retailers and strong domestic brands (e.g. Benetton invested heavily in this market), H&M is focusing on northern Europe with maintaining a strong position in the rest of the continent. Asia is estimated to be even more competitive than the US
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