Analysis of Retail Management at Zara in Klaipeda, Lithuania
Zara is a fashion retailer that is part of the Spanish parent company Inditex, one of the largest distribution groups of the world. The company is unique in the fashion retail industry because it is the most highly vertically integrated company in the fashion industry. It owns every stage in the value chain instead of outsourcing manufacturing to low wage countries in Asia. The first Zara store was opened in the city of Coruna in Spain in 1975. The company expanded rapidly because of the philosophy of integrating high quality, trendy fashion and affordable prices. Today, the company has stores in more than 400 cities of the world (Inditex 2012).
Merchandise Range and Assortment
Zara is a retailer in the fashion industry. Its stores are usually present in the shopping centers and malls of the city district. Zara has a unique position in the fashion retailing industry. It offers fast fashion to the customers and this is the most distinguishing factor that makes Zara distinct from its competitors. The brand relies on providing new trends to the customers. However, these trends are momentary and soon the old trends are replaced by new ones. This helps to increase the number of visits of customers to the stores. I observed this in the store at Lithuania because customers there were revisiting the store even after one week or ten days of making the last purchase from there.
To maintain such a high traffic of customers and repeat visits by them, Zara needs to offer merchandise that sells fast and has a high fashion appeal. The merchandise range has to be appealing so that it sells fast and the new merchandise has to be trendier than the old one so that customers continue to flock to the stores. The merchandise available has to meet the merchandise expectations of the customers (Radder 1996). This helps the company to achieve its strategy of fast fashion that increases merchandise turnover rapidly.
Another aspect of the strategy of Zara is that the merchandise has to be affordable compared with other high street brands like Gap and Benetton. For this reason the merchandise range and assortment has to be manufactured and sourced in a way that the lowest costs are achieved and transferred to the customers in the form of lower prices. Zara achieves this successfully by means of its pricing and sourcing strategies that will be discussed later in this report.
The merchandise range I observed at the Zara store in Lithuania included a merchandise assortment for varying buying preferences. The common feature of all the merchandise items was that they were stylish and trendy. The merchandise assortment was such that there was something available for all age groups and all fashion sensibilities. There were outfits in bright colors and outfits in sober colors as well. Because of the location of Lithuania in northern Europe and because of the cold temperatures, there was an abundance of winter wear like overcoats and jackets. The merchandise I saw was similar to the merchandise in Russia the previous year and it confirms that fashion retailers develop merchandise on the basis of cultural clusters (Warts & van Everdingen 2006).
The clothes were all very trendy looking but the quality was good as I tried on some of the clothes. There was also clothing to wear near the sunny beaches as well as skirts, trousers and blouses. There were other items to complement the clothes. I could see footwear and headgear on display as well as a few bags for the mobile customer. These products helped to break the monotony and create variety in the merchandise range.
Marketing communications play a very important part in retailing. Especially in a store like Zara where the business model is based on high merchandise turnover and new designs introduced several times a month, it is even more important to convey the arrival and unique features of the designs to customers regularly. Marketing communications take the form of various media but the retailing experience itself provides the most effective opportunity to communicate with the customers. The communication and promotional objectives for a retailer have to be tied to its strategic objectives (Fernie et al. 2003, p. 136). For Zara, that strategic objective is to position itself a fast fashion brand I the mind of the customers.
Zara has a unique marketing communications strategy that differentiates it from its competitors and gives it a competitive advantage over them. Zara spends very little on advertising as part of its marketing communications. The fashion retailer relies more on the store location and the strategic use of window displays. I observed that Zara stores were located in the busy shopping districts of the city and the customers came to visit the Zara store when they were in the shopping center.
In Lithuania, I visited the Zara store in the Akropolis shopping mall in Klaipeda and saw that the window display was one of the best in the mall. Several shoppers were admiring it. They said that it was to see the window display changed every week or so that they would often come to the mall. The strategic use of the window display as a marketing communications tool helps the brand to convey the image of fast fashion because a new set of clothes is put on display every week or fortnight. This also encourages customers to quickly purchase the clothes before the designs go out of fashion. The aesthetic appeal of the window display also attracts many people to view the store and increase the foot traffic in the store. In fact, an attractive window display may be the most crucial factor in a customer choosing to enter the store for the first time (Lochhead & Moore 1999, p. 247-256).
Zara also relies on how the interior of the store communicates its message of fat fashion and customer service to its customers. The layout and the design of the store carries an image about how the shopping experience is perceived. According to the Echevarria who was the chief communications officer of the parent company Inditex in 2008, the image of the Zara stores is renewed or changed after every six to eight months to communicate the freshness of its approach and fast changing merchandise (Business and Leadership 2008).
A fourth aspect of the marketing program at Zara is the use of merchandise and the goods display unit. The goods display inside the store does what the window display does for customers outside the store. It attracts them towards the products and conveys the unique combination of fashion, high quality and affordability. However, this may not be the case with all the customers. I asked a few shoppers about what the atmosphere of the store communicates to them. One of them who had visited a Zara outlet for the first time told me that she was surprised at the affordable prices because the environment is very classy and she felt that it would be an expensive place to shop.
Store Layout, Design and Visual Merchandising
Visual merchandising involves making strategies and decisions about various aspects of merchandising including how the merchandise to be packaged, how it is to be displayed in a way that maximizes exposure yet makes effective and efficient use of store space. It is necessary for firms to make effective stock keeping strategies to minimize the use of storage space so that it can be used as a display area. Zara keeps very short lead times as part of its strategy so that it does not need much storage space at all.
A visual merchandiser makes decisions about the merchandise to be stocked and the quantities of each item to be stocked. At Zara, the visual merchandiser needs to be in touch with the latest fashion trends so that those trends can be introduced through merchandise that will be most attractive for the customers. The visual merchandiser also needs to possess financial knowledge to make the most cost-effective merchandising decisions for the store. He or she also needs to have a good aesthetic sense so that he or she may design the store and its layout to showcase the merchandise for maximum exposure and facilitate customer movement in the store and interaction with the merchandise (Bhalla & Anurag 2010, p. 78).
Store Layout and Design
The display of the items in the store and the layout and design of the store are also important aspects to be considered in the visual merchandising role. The store layout determines how the goods will be sorted, arranged and displayed in the store. It answers questions such as whether the merchandise is to be placed on shelves or hung from racks.
It also answers the question of which merchandise items are to be placed close together to enable a customer to make related purchases or to compare different items of merchandise in a better way. It is necessary…