Zara’s capabilities to increase digital sales include robust supply chains, effective online store design, and brand reputation, but accessing emerging markets can become a challenge.
There are several capabilities that can help Zara achieve 25% of revenue from its digital channel. These are mainly physical – i.e., relater to the work process – or human – i.e., related to organizing and influencing people (Whittington et al., 2021). The first of these is the robust supply chain allowing to delivery of products swiftly and globally for digital customers ordering all over the world (Aftab et al., 2018; Camargo, Pereira, and Scarpin, 2020).
The second is the effective online store design, which is a crucial factor in attracting customers (Kausnik et al., 2020). It has some similarities to Zara’s skill in creating “meticulously planned show windows” (Elizaga, 2016, p. 19). As such, it at least partially corresponds to its existing competencies (Camillus, 2008). Finally, the company may utilize its brand reputation, which is particularly high in Europe and North America, to keep the existing customers and attract new ones (Anwar, 2017). Naturally, digital sales planning should develop in coordination with the general sales strategy rather than in isolation (Hambrick and Fredrickson, 2001). Put together, the strategic utilization of these capabilities can move Zara closer to its goal.
At the same time, the company’s relative weakness in emerging markets can be a serious constraint on its plans to expand digital sales. Zara’s distribution network predominantly targets Europe and North America and only has a modest presence in most parts of Southeast Asia apart from China (Elizaga, 2016). Uniqlo is an example of how it may resent a difficulty: while not as large as Zara, the company faces the same issue of competing with the entrenched when entering emerging markets (Anwar, 2017). However, since emerging markets offer greater prospects than the largely saturated European and American, Zara will have to find a way to establish a firm foothold there.
Reference List
Aftab, A., et al. (2018) ‘Super responsive supply chain: The case of Spanish fast-fashion retailer Inditex-Zara’, International Journal of Business and Management, 13(5), 212. Web.
Anwar, S.T. (2017) ‘Zara vs. Uniqlo: Leadership strategies in the competitive textile and apparel industry’, Global Business and Organizational Excellence, 36(5), pp. 26-35. Web.
Camargo, S., Pereira, S., and Scarpin, M. (2020) ‘Fast and ultra-fast fashion supply chain management: an exploratory research’, International Journal of Retail & Distribution Management, 48(6). Web.
Camillus, J.C. (2008) ‘Strategy as a Wicked Problem’, Harvard Business Review. Web.
Elizaga, U.L. (2016) The contrast of fast fashion giants, Zara, H&M, and UNIQLO. Web.
Hambrick, D.C., and Fredrikson, J.V. (2005) ‘Are you sure you have a strategy?’, Academy of Management Review Executive, 19(4), pp. 51-62.
Kausnik, V., et al. (2020). ‘Why do online retailers succeed? The identification and prioritization of success factors for Indian fashion retailers’, Electronic Commerce Research and Application, 39, 100906. Web.
Whittington, R. et al. (2021) Fundamentals of strategy, 5th ed. Harlow: Pearson.