Fashion Market In The UK: Porter’s Five Forces Analysis And Zara’s Internal Environment Essay.

The Fashion Market in the United Kingdom

The fashion market in the United Kingdom is growing with a market value of over billions of dollars making it viable in the economic world. The fashion market remains competitive given the increasing demand for a fashion sense which comes up every year. As a result, the different players have to use several strategies in obtaining a significant market share. Growth in brand name and marketing efforts assist the top firms in surviving the competitive nature of the sector.

Porter’s five forces model remains essential in analyzing the competitive nature of business based on the analysis of the environment under which a company operates. The five forces shall utilize the top shop competitive environment in establishing the business pattern in the market. The five forces in the industry include rivalry, buyer power, supplier power, a threat of substitutes, and barriers to entry in business. The analysis shall focus on the fashion market in the United Kingdom mentioning various factors surrounding it.

Buyer Power

The force refers to the ability of consumers to decrease the amount of money paid for a commodity. The force determines the extents to which customers can push down the prices, reject purchasing products, or switch between different offerings within the retailers in the industry. In the United Kingdom, the buyer power remains significantly high. Customers in the location take their time to move from one retail outlet to the other to compare the prices and the different products on offer. In this respect, retailers work extra hard in becoming innovative to push their sales and attract a return purchase scenario. However, the bargaining power remains at controllable levels since the clients feature individual buyers as opposed to a company case which would command a high bargaining power of the retailers.

Threats of Substitute

The threats of substitute in the fashion industry are small as clothes remain essential and a day-to-day necessity in human lives. Individuals have a high affinity to fashion, more so women who love to look trendy and have several lines of clothes matching their style. The entrance of cheaper clothes on the streets varies with class and hence do not pose a real threat of substitution since they serve different people in the society (Christopher 2016). Retailers in the fashion industry are fortunate as clothes lack a replacement, thereby growing the demand while limiting the threat of substitution.     

Supplier Power

Porter’s Five Forces in the Fashion Market

Providers can determine the prices of commodities given in the market depending on the prices indicated for purchase. Supplier power is relatively small to the fashion retail industry as most companies source their products from the third world manufacturers offering reduced prices for products. Suppliers have little control in the fashion industry as they can be replaced whenever increasing the costs. Besides, the vendors in the offshore location offer competitively lower prices which do not give them enough power in the market. Therefore, the prices remain all time low given the global development scenario.

Competitive Rivalry

There are a large number of the players in the fashion industry with the retailers selling similar products at different rates. The industry has a high earning which prompts a large number of retailers thereby raising the number of players in the industry. According to Rath, Bay, Gill, and Petrizzi, (2014) competition is set to remain high given the innovative nature of entrepreneurs who develop different approaches to selling their products. In this sense, the fashion industry is difficult given the competitive character of the market. The fact presents sad news for the retailers who have to compete to succeed.

Threats of New Entry

The threat of new entry is real given the case of supermarkets diversified their product offering to the fashion industry. As a lucrative industry in the market, individuals are bound to enter the market at different points thereby reducing the market share for the existing retailers. The situation presents a problem to the pure fashion retailers who experience a decrease in the number of customers preferring to go on one stop locations such as supermarkets for purchase (Lea-Greenwood 2013). The new entrants diversify their tactics thereby presenting a challenge to the existing retailers who experience the effects of an infiltrated location.    

Zara’s internal environment is different compared to other firms as it has different policies in its supply chain management as well as the production point. Zara is Spanish clothing and accessories company based In Galicia founded in 1975. The firm has maintained its mission in providing fast and affordable items delivered every other week with a unique approach in designing their clothes according to the customer demands. The firm’s success is driven by its ability to respond quickly to its rivals and design products for the market.

Internal Business Model

The firm has three different models running its business which include capabilities, concept, and the value drivers. The company concentrates on maintaining competitive designs, production system, and distribution which acts in response to the consumer market demands (Ghezzi 2014). The firm embraces an internal production system using the robots which perform faster and reduce the time that would otherwise have been used by importing from Asia.

Zara’s Internal Environment Analysis

Decision Making

The firm has empowered its employees with authority to act swiftly to individual judgments in the process development allowing them to work in teams thereby maintaining success. The store managers can make designs in their stores without relying on the headquarter decision thus meeting the demands of their local market. 

Inventory System

The firm’s inventory system is always replenished according to the market needs towards offering a fashion that stands the test of time. Zara launches over 11000 new items per year serving the demands of a lot of buyers. More so, the situation causes a massive traffic in its stores where customers visit the source for the latest fashion. Besides, the firm’s internal strategy emphasizes in time efficiency as it holds six days of inventory thereby guaranteeing delivery of products within the right time. Furthermore, the company avails its products to a diverse category of buyers such as in small boutiques, midsized stores, and large department stores. As a result, the company ensures a great market capture in its products.   

In-house Production

The company has kept its production in-house with no cases of outsourcing. While outsourcing may be seen a remedy to business costs, the firms choose an alternative option which seems profitable rather than the typical approach (El Meladi, Glavee-Geo and Buvik 2017). As a result, the company protects itself from imitation and copying of its future designs. According to Wolny and Mueller (2013), the aspect assists the company to come up with new designs and maintain its secrets within itself. The company produces over a thousand brands in a year thereby deviating from the possible copying of designs which can happen in the case of outsourcing (Vu and Medina 2014). The firm partners with the manufacturers and operational processes who work tirelessly to produce the product on time in the market.  

Internal Forecasting System

The firm has a well-placed forecasting system in the market that enables it to thrive in the competitive market. According to Fang, Chang, Ou, and Chou (2014), the internal forecasting enables firms to analyze the market and develop strategies for success. First, the company conducts an extensive market research on the latest customer demands and trends and responds by developing a fashion sense towards the same line. Besides, the company ensures a faster input and output response through its feedback system which is in cooperated through a more rapid production. The firm creates new fashion within the set time to woo the customers before the trend spreads to other locations. In the end, the company conducts a survey where the feedback for improvement is used to improve and develop customer-focused products.

Product Formulation

The firm has a proper management in its product development sector. For instance, the enterprise produces several products, thereby diversifying its market to accommodate the needs of a diverse population. The company stores products made for men and women with each having a subcategory in the upper and lower garment, accessories, shoes, and children clothing. Further, the firm produces clothes and shoes for a different size of individuals. The firm can redesign a commodity in two weeks and avail the same to the market thereby proving its time consciousness and the need to meet modern demands.

The firm has proper designers having a diverse taste that represent the desires of the customers. For instance, Zara’s footwear leads in the provision of a broad range of footwear belonging to the women who enjoy fashion. The types range from sandals, high heels wear, flat shoes, and bellies. Further, the type of material differs depending on the market forces where the firm offers leather, canvas, and suede for different designs.

Proper Diversification

As opposed to other firms, Zara captures the market through having a diverse range of products thus obtaining huge profits in and out of season. The company produces clothes, shoes, handbags, accessories, bed, table, and bath linens which increase the likelihood of clients visiting their firm. Further, the items undergo a constant update in the shops with the introduction of improved products each year. 

Cost Saving Strategy

Zara employs a cost effective strategy in the way it prioritizes its expenditures. Zara limits itself in spending on marketing efforts but rather concentrates on opening more stores which in-turn market while driving revenue for the firm. At the onset, the firm began with low pricing of its commodities which imitated the high-end fashion existing in the market. The company uses a team of designers as opposed to the individuals to develop utmost designs that match the demands of the market. The designers assist the firm in driving competition by remaining fashionable and changing its product fashion every year leaving the buyers spoilt for choices.

Management Information System

The company utilizes a proper management information system in its business venture with its centralized production where the information is shared between the management who can view the inventory and make planning decisions in advance to ensure a steady flow of products. The aspect improves the inventory system of the firm in the sense that it gets continually replenished on time so that customers receive products on time and in the correct numbers matching the demands in the market (Chopra and Sodhi, 2014). Lastly, the firm enables a proper stores ordering system which enables the store owners to make orders which are viewed according to the demands and have them arrive in two weeks for sales. The use of information management system in the firm places it ahead towards success. The firm has a well-connected information technology which allows for the production department to view the inventory progress and plan for making orders.

Marketing Department

The firm has a proper marketing design which differs from the rest of organizations in the industry. While other firms focus on advertisements and promotions, the company focuses on increasing its presence in the market by opening up more stores. Further, it undertakes research and development towards producing the right product for the market and find out the latest fashion and incorporate it into its production. As a result, the firm penetrates in the market with its strong brand name. The business analyzes the consumer behavior and uses the information. The company, through research and development, manages to sell garments with high demands on the fashion, therefore, scooping high returns on their investment.     

Pricing Policy

The firm has a proper pricing policy which matches with its sense of fashion. Despite the slightly high prices for its products, the firm’s product quality suits the pricing thereby maintaining the pricing strategy (Stevens and Johnson 2016). Besides, the firm has three different stages which it uses to sell its products to people of the lower, middle, and upper market.  

Zara is a powerful brand in the overseas market not only in the United Kingdom but also in Europe, Asia, and Africa. In ascertaining the internal environment of Zara, a SWOT analysis is essential in outlining the underlying factors to its business performance. The report examines the strengths, weaknesses, threats and opportunities the firm has towards success.

A High-Cost Leadership Strategy

The company prefers to use automated machines in its production rather than subcontracting individuals in Asia. The company has 14 automated factories which deal with the work towards creating unfinished gray goods for further redesign. In this respect, the firm limits expenditure and the time is taken to ship the goods from the offshore locations to the targeted places. In reducing the cost, the firm has partnered with small enterprises around its shop countries to handle the finish works into dresses and suits.  

Customer Care Feedback

Zara has a well-tailored feedback scheme which takes into customer feedback and implements the same towards product design according to customer’s preference. Besides, it takes a keen interest in serving customers and offering timely respond to customer queries. The new styles developed good well in the market as they are designed according to customers feedback received. 

Efficient Use of Information Technology

The firm uses information technology in its sales where buyers can procure and inquire on the product’s information online for delivery. At the same time, the firm has a well-connected supply chain where communication is done at a central place, and supplies dispatched promptly to various stores (Turker and Altuntas 2014). 

Prompt Delivery of Latest Products

Zara has a proper supply chain that ensures the delivery of new fashions once it emerges. The firm delivers its products twice every week to the outlets around the world. The supply chain standard provides the timely request for products according to forecasted demand. 

Latest Fashion Trends

The firm produces several new trends within a year thereby reaching the needs of a significant market share. The strength allows it to secure products designed according to the latest fashion. 

Stable Distribution Channel

The firm has a well-designed supply chain where it delivers products selling at different points within two weeks given the central location of the factories. Whenever orders are placed, the firm offers on a timely basis reaching the customers on time. According to Crandall, Crandall, and Chen (2014), having a proper distribution chain allows for a timely delivery of products thus keeping up with the market demands. 

Several Stores around the World

The presence of several stores gives the firm an extensive supply and take-up of its products. At the same time, the several outlets act as marketing tools which strengthen the brand name of the company.

Production of Plain Clothes

The firm produces plain clothes which are yet to be designed by the small shops. The fact increases the operating costs of the business as the products have to fetch low prices whenever selling to the shops who have to design the plain clothes. 

Little in Store Inventory

The company sends in clothes to the stores every other week and thereby creating a little stock scenario which limits the growth and the ability to choose from a variety in the market.

Little Efforts in Advertising

The firm does little advertisement of its products but rather depends greatly on the referral and brand name to drive more customers to the business. Lack of publicity disadvantages it in the market as other firms engaging in advertisements place themselves better to acquire a significant market share.  

One Location of Manufacturing Plant

The firm has a single place where its products exist thereby limiting the ability to deliver clothes to other areas far from the stores on time. The weakness leads to lack of proper inventory in the stores thereby affecting the profitability of the firm. 

International Expansion in Emerging Fashion Market            

The development of the fashion world across continents presents an excellent opportunity for the business to venture in international locations and sell their products to individuals. In this respect, the business shall grow, expand, and reap from the huge brand name created. The current population embraces fashion, and the fact spells success for Zara, a known brand name in the fashion world. 

Online Market Presence

The social media creates a huge demand for fashion products around the world. Therefore, the avenue is essential for advertising efforts and increasing online sales where products are delivered to customer’s location. The present world has several supply chain offering where the firm can use companies such as Amazon and eBay to sell its products and have the same shipped to customer locations. The company can utilize its current information technology to venture into the online market and use the broad market to popularize and expand its sales. 

Globalization Opening Market

Globalization opens up markets for products through increased knowledge and cooperation between countries. The situation creates new markets for products which Zara can sell its sets of fashion to ever-changing the contemporary world. The United Kingdom, as a member of the World Trade Organization which connects countries through a treaty allowing for the exchange of products and services, can explore the world markets by selling Zara product lines (Kim, Hayes, Avant, and Reid, 2014).  

Reduced Revenue Owing to Competition

The firm faces stiff competition from the clothing companies receiving products made in the Asian market which comes at the comparatively cheaper amount. With the companies’ rigid strategy, the firm stands to lose a significant amount of market and the spread of its services in the global market.

Global Competitors

The global players have an extensive presence which would be used to outdo the market for the Zara. The growing competition sets a competitive nature in the market which does not suit the reforms of the company which has a centralized distribution system (Escobar 2016).

Local Competition from Firms     

The market is growing and attracting local competitors who come with diverse strategies to success. Hence, the possible threat dilutes the market thereby reducing the market share for the firm.

Future Strategy

Zara has to develop a non-central distribution system to ensure it reaches other locations all over the world. The option of off-shore manufacturing is efficient and allows commodities to be transferred quickly to other global locations. Hence, there is a need for the firm to restructure its production and increase efforts in marketing both offline and online to meet the broad target of customers. Zara can succeed given the strong brand name.

Conclusion

The fashion market remains extremely competitive calling for the use of business strategies to attract and remain profitable in the industry. The five forces of market provide a clear illustration of the threats and opportunities in the industry and the measures that can enable firms to remain competitive. Zara has a proper adaptation to the fashion market with its informed sense of fashion changing every year across its product line. Therefore, the analysis provides a real picture of the competitive nature of the fashion industry in the United Kingdom, and the strategies firms use to survive and generate significant revenue. Style remains essential to human lives, and enterprises should change to keep up with the pace

Reference List

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