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The clothing industry has become a major market all around the world. Many brands have opened franchises all around the globe. The notion of opening a shop outside your home country is quite perplexing in the sense that, are there going to be loyal customers? Is the shop going to boom just like it did in your home town? A lot of aspects need to be considered while forming a strategy for your international business. The most vital aspect of corporate strategy is concerned with the company's objectives or visions, which in turn affect the company's target market to a great degree.
(Bowon, pg.214) In order for any shop to be successful in another country, it needs to cater to the customer's needs. Zara and H&M (Hennes & Mauritz) are two global competitive international brands that I will be discussing in this research project.
Zara's background: - Zara was established in 1975 by Amancio Ortega and Rosal?a Mera, Zara is the star of Inditex (Industria del Dise?o Textil, SA), a company located in Galicia, Spain.
In a fair amount of time, frame Inditex has become the world's second largest clothing retailer with 2,692 stores spread across 62 countries worldwide by the end of January 2006.(Lopez, pg279)
?Rosal?a Mera ?Amancio Ortega
Nowadays, Zara sells its products in 88 countries and is aiming to sell and grow in new emerging markets.(Mayrhofer)
Ortega changed the distribution process to lessen the lead time and react to new trends faster. That's "Instant fashion".
He grew his empire that included well-known brands such as 'oysho', 'pull and Bear', and Stradivarius. (Gupta).
H&M is a Swedish based clothing company that has grown immensely over the past 72 years. Hennes & Mauritz AB was founded in Sweden on October 4th, 1947 By Erling Persson. (Alshaya)
H&M's business idea is to offer fashion and quality at the best price in a sustainable way.(Alshaya)
The H&M group has more than 4,300 stores in 64 markets including franchise markets.(Alshaya)
"Hennes & Mauritz is based in Stockholm and operates about 120 department stores in Sweden and more than 400 outlets elsewhere in Europe".( Barbara) And that's just in Europe alone.
Through my extensive research I have found what is internationalisation is and what are a few marketing strategies are and how the company Zara came to be. I have found a few case studies, one of them focuses on the internationalization process of a 'born-global' fashion retailer. "Zara employs a high-risk, high-reward model of internationalization to defend its unique merchandise and retail position by remaining completely vertical."( Bhardwaj).
I used secondary sources such as online journals from Saqr library and I used the MLA8 format to cite my resources. As you can see in my resources, the majority of my citations are derived from proQuest. It is the most efficient and trusted source.
Zara's clothing line is much different in the UAE than it is in Europe. The company has chosen a well-developed strategy which is an intensive strategy; they do that by improving their online stores and increasing their customer service. Other than that they use other strategies like defensive, diversification, and integration strategies. (Gupta)
The amount of work and effort Zara has put out there to make the business thrive not only locally, but internationally is mind boggling. "Zara is considered as the pioneer in terms of inventory management. With more than two hundred fresh and young designers and about 11,000 designs created annually, ZARA is able to stock new items in stores within 4 or 5 weeks"( Cortez, pg. 1-18)
Zara's worldwide success wasn't an overnight hit; it took a lot of different marketing strategies and global strategies to achieve where it is today. It grew extremely well and opened stores all over the globe. "Zara's global expansion strategy engendered a psychic distance paradox in that it was very successful in distant markets early on."( Bhardwaj, pg.293.)
H & M has grown immensely over the years, they have done collabs with "huge house names such as Balmain and Versace have willingly worked with H&M to create those affordable products to please all consumers."(Wall Street Journal) As you can see in the advertisement below, you can see that models such as kendall, and Gigi Hadid posing for the balmain and H&M colab. The reason behind this is, Mauritz's mission statement was to make some affordable clothing line for all the people. So instead of knocking off designer styles like zara, they actually collabed with huge designers and sold their products for a reasonable price
Zara and H&M both have the same approach when it comes to international business. They both aim to please their customers no doubt about that, but H&M is winning when it comes to the global business in Asia; The shop is on high demand and it keeps popping up in various locations all around the globe, especially in Asia. "While ZARA uses both internal production and global outsourcing, H&M outsourced all of its products to a network of 700 suppliers, mostly located in Asia. Similarly, Fast Retailing, Inc. Ltd., and GAP Inc. have also been totally dependent on external manufacturers"(Cortez, pg. 18).
From my observations, I found that both companies cater to what the country's clothing demands are. For example: Zara and H&M offer more modest and conservative clothing than the branches in Europe. On my journey to Europe, I saw that they offer winter clothing during the summer that is due to the cold weather all year around.
In order to open a business in the UAE you have to have a local partner that has a share in the business, unless it's a free trade zone. So it is a Foreign Direct Investment. The reason behind the globalization of markets and market production is that not every product that has high sales in a certain country will have the same result in the other country. That's why brands should consider globalization and adapt to the culture.
Culture plays a tremendous role in how the brand will lay out its products. If a brand is offering skimpy clothes in a conservative city, the sales will go down hence, the demand of the product is on low demand and not high.
Both companies are succeeding because their main objective is focusing on pulling people in, not pushing them away and discarding their needs. Customer loyalty is extremely crucial. It is the key to success. Without the customers, the brand is nothing.
In conclusion, Zara and Hennes and Mauritz both strive to please their customers and try to expand their empire by competing globally rather than strictly locally. In this research I explored how both companies use international global strategies to compete in the global market. And how both clothing companies cater their fashion sense based on the culture and demand of particular products.
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