Zara is a renowned international retail brand for apparel and fashion items such as shoes, perfumes, and swimwear based in Galician Spain. The company was found in 1875 in Spain with an ambitious approach to become a fashion icon at the global level. The company stepped into international market in 1988 by entering in Portugal to attract a new customer base. To understand the inspirational success of Zara for becoming the leading fashion brand internationally, the Ansoff matrix is presented to understand the focus and tactics of growth by the company over the decades. The Ansoff matrix is provided below
Market Penetration
The focus of the company towards market penetration is evident from its collection of revenue and the opening of stores in different locations. In 2018, the company has collected a revenue of 18.9 billion globally with a total of more than 3,000 stores worldwide. This shows the market penetration of the company as the company understands the return of penetrating into the market for a product like fashion (Forbes, 2019). This market penetration has enabled the company to become a global leader and stay competitive otherwise it would have created a negative impact and the company would have gone down.
Product Development
Zara fashion believes in consistent and regular growth in different aspects and product development is one of the core areas of growth by the company. The company has grown in terms of developing new product lines as well as improving or bringing innovation in the already existing products. The focus of the company on the product development can be judged from the fact that the company has the lowest lead time in the world in fashion brand when it comes to collecting the information till providing the products in the market. Zara completes the whole process in 30 days and the customers get new products all the time. On the other hand, the company started as an apparel brand and kept on developing the products for the purpose of growing. The company started to offer shoes, bags, swimwear, beauty and perfumes which has enabled the company to attract a diverse base of customers making it beneficial for the company (García-Álvarez, 2015). This growth-oriented product development strategy has contributed massively towards the reputation and success of Zara as a successful international fashion brand.
Market Development
Mo (2015) mentioned that market development is a growth strategy that Zara considers vital for sustained growth. It is not possible for a company to sustain international growth and success unless it is involved in market development. The competition would eliminate the company in case of no focus on developing new markets. The Spanish fashion retailer started in Spain and then went to Portugal to implement market development. The growth did not stop at Portugal but the company grew geographically at a higher pace and become an international brand by having a presence in 96 countries. Zara did not stop but grew all over Europe and America which further led to growth in Asian countries. Zara understood the importance of stepping into the highly-dense Asian countries such as India to sustain international growth. This market development provided a stable base for the company and developed an image of a successful international brand. The success of the company in Asian markets is majorly because of its image as a successful European brand.
Diversification
According to Rao (2014), Zara Home Décor is the result of the diversification strategy of the company which is not related to the fashion and apparel industry. The company went through an unrelated diversification strategy in order to bring further growth to the growing organization in terms of market and product development. The purpose of diversifying into home décor is to bring diversity in offerings and having no link with the original business. This helps the company to sustain in bad times and the diversified business supports the original business if there is a decline for a time being in the original business of the company. This diversification is not a reason for success for the company but it has definitely provided firm support for the purpose of keep growing with the confidence and make strategic decisions.
References
Forbes. (2019). Zara. Available at: https://www.forbes.com/companies/zara/#6359445f7487
García-Álvarez, M. T. (2015). Analysis of the effects of ICTs in knowledge management and innovation: The case of Zara Group. Computers in Human Behavior, 51, 994-1002.
Mo, Z. (2015). Internationalization process of fast fashion retailers: evidence of H&M and Zara. International Journal of Business and Management, 10(3), 217.
Rao, K. G. (2014). Successful International Expansion of a Fashion Retailer: A Case Study of Zara. BS Publications, 245.