PESTEL Analysis

Political

The political environment of any country affects the state of business in it. The
political factors influencing Zara are that the government intervenes in the economy and
passes laws that change the way of life in the country. The government can easily change its
policies and ways of doing business in the country, which will affect the company's
operations and retail trade. They can change laws and take radical actions, such as
changing the interest rate. Zara needs to be prepared for any potential change. As many
brands outsource their manufacturing to different countries, workers' rights and child labor
laws are also scrutinized.

Zara benefits immensely from the EU's free trade policy, namely through extensive
trade agreements that facilitate the import of raw materials and the export of finished goods.
For example, in countries like China and India, local laws make it difficult for businesses and
create barriers for foreign brands trying to enter the market.

In countries where political unrest and instability are regular, business is always at risk of
disrupting supply chains.

Economic
Zara is cutting smaller outlets around the world in favor of expanding flagship stores:
1200 stores are expected to close by the end of 2021 - Up to 700 stores will be closed in
Europe, as well as 100 in the Americas and 400 elsewhere.
Zara has a great strategy - an affordable price. Thus, even if economic activity
declines and people cut costs, they can ditch luxury brands, but not brands like Zara, which
are sold at affordable prices. Recently, the world has experienced a difficult economic
recession, which has seriously affected sales. Zara has relatively higher margins compared
to other brands, as Spain has one of the highest unemployment rates in Europe, which
means it has relatively low labor costs - especially when compared to other Western
European countries such as France, Germany and UK (Statista.com, 2021). Due to different
customs duties and tariff levels in different countries, prices for Zara products vary from
country to country. For example, according to a study by the newspaper El Confidential, the
selling prices of Zara products in France, Italy and Germany are 22-24% higher than in
Spain. Mexico and Great Britain 50%, South Korea 96%, USA (92% and China 78% more
expensive than Spain (Morgan Stanley research, 2015).
https://www.statista.com/statistics/1115276/unemployment-in-europe-by-country/

https://www.reuters.com/business/retail-consumer/zara-owner-inditex-close-all-stores-
venezuela-local-partner-says-2021-05-22/

https://us.fashionnetwork.com/news/zara-worldwide-pricing-strategy-revealed-by-
study,544318.html

Social
The social advantage of Zara products lies in the fact that before launching any new
product or investing in new markets, the company conducts its research, explores new
markets and cultures and produces products that are combined with the local culture,
geographical location, race and origin of the country's population. Therefore, on the shelves
of Zara you can always find clothes for very thin or very fat people. Zara provides its
customers with bonus packages such as promo codes, vouchers and special offers. The
company promotes its products through various coupon sites where discount codes can be
found that can be used on their online shopping sites or in-store. Online shopping is one of
the main trends of the 21st century. Zara has long adapted to consumers' desire to order
clothes at the touch of a button from the comfort of their home, as they already have a
popular online store.

Technological

Zara began its technological development with the opening of an eco-friendly store.
Zara tactfully uses information technology to support its international logistics system and
online store where goods are purchased, exchanged and returned. Using the online map, it
is convenient for shoppers to find stores by specifying the desired region and location.

Through an app on tablets, customers have the ability to interact with friends while looking at
clothes via video chat, instant messaging and voice chat (FashionWindows, 2011). ZARA
has also implemented an RFID system to track inventory throughout the value chain. It also
allowed ZARA to respond more quickly to customer inquiries, track inventory in other stores
or on the website, and better coordinate its supply chain and logistics activities. In addition to
the inventory management process, this has significantly improved the quality of customer
service (Wordpress, 2017).

Davis M. (2011) Zara Adds Video Chat on Its iPad App [online] Available from:
https://www.fashionwindows.net/2011/11/zara-adds-video-chat-on-its-ipad-app/
Silmon M. (2017) https://logisticsmgepsupv.wordpress.com/2017/04/11/rfid-technology-in-
zara/

Environmental

ZARA and its parent company Inditex are investing in green businesses and are
committed to making their stores 100% eco-efficient. As part of this plan, their stores will be
equipped with energy-efficient devices and therefore consume less energy and water
compared to conventional stores.

ZARA also strives to eliminate all types of hazardous waste from its supply chain system. In
addition, ZARA has invested in sustainable technologies, namely sustainable garments
made from organic cotton (Fashionista, 2016).

Zara invests in sustainable development and is environmentally conscious the company

details its “commitment” to water, climate and energy change, biodiversity, sustainable
materials, animal welfare and other environmental issues on its website (Zara website).

Fernandez C. (2016) WHAT WE KNOW ABOUT ZARA'S FIRST SUSTAINABLE COLLECTION

[online] Available from: https://fashionista.com/2016/09/zara-sustainable-collection-join-
life (Accessed on 17 June 2021)

https://www.zara.com/us/en/sustainability-products-mkt1455.html

Legal

For all fashion brands, copyright law is one of the scariest legal branches. He was
accused of stealing clothing designs and concepts from companies such as Adidas, Celine,
Christian Louboutin and Balenciaga (Oladele, 2020). Early Roman fashion brand Fendi
claimed that Zara had illegally used their photographs taken from the Fendi show at Fashion
Week 2013 (Papa, 2014). Zara has also been involved in disputes, including the sale of
items with insensitive designs. Another example of a product that sparked controversy over
racism was Zara's necklaces with figurines in black faces. (Guardian, 2015). The exposure
of such lawsuits was very important.

ZARA is focused on creating an ethical brand image. Compliance with legal regulations is
essential. The brand has invested sufficient funds to ensure compliance throughout its entire
system, including the supply chain.
Gajanan M. (2015) Zara accused of creating culture of customer discrimination in new
report [online] Available from: https://www.theguardian.com/us-news/2015/jun/22/zara-
reports-culture-of-favoritism-based-on-race (Accessed on 17 June 2021)

Oladele B. (2020) Small designers fall victim to larger brands stealing their designs [online]
Available from: https://theboar.org/2020/08/small-designers-victim-larger-brands-stealing-
designs/ (Accessed on 17 June 2021)

Papa M. (2014) Unfair competition and copyright infringement: the Court of Milan decides
on the case of Fendi vs. Zara [online] Available from: https://martinimanna.com/unfair-
competition-copyright-court-milan-fendi-zara/ (Accessed on 17 June 2021)

ZARA инвестировала в несколько вещей, чтобы очень хорошо управлять некоторыми

из этих факторов, такими как технологические, социальные и экологические. Его
стратегия доступного ценообразования также позволила ему справиться с
экономическим давлением. Что касается правоохранительных органов, то ZARA ведет
себя осторожно. Этот анализ показывает, как и почему ZARA добивается такого успеха
благодаря разумному инвестированию во все или большинство из этих областей.

Zara - крупный бренд не зря: он создает модные товары, вызывающие ощущение

роскоши, по доступной цене. При более низких затратах на рабочую силу,
обеспечивающих солидную прибыль для акционеров, основная бизнес-модель
компании является прочной.

В некоторых странах он продается через Интернет, а еще в нескольких ему еще

предстоит расширить свое присутствие и продажи в Интернете.