FAST FASHION: ZARA PROMISES ALL ITS CLOTHES WILL BE SUSTAINABLE

BY $2025$

Zara $-$ and other brands like Pull & Bear and Bershka $-$ have promised to only sell sustainable clothes by

The company that owns these shops says all cotton, linen and polyester they sell will be organic,

sustainable or recycled. Zara has $64UK$ stores, and its parent company has $7,490$ shops worldwide.

From next year, containers will appear in Zara stores to collect your old clothes so they can be reused or

recycled into new items. Some people in the fashion industry have been calling for more clothes recycling in

order to protect the environment $-$ while politicians think brands and shops should fund clothes recycling.

People in the UK send $235$ million items of clothing to landfill each year, according to the most recent

figures.

Zara is one of the stores not to currently use plastic bags and Inditex, the company that owns the chain, says

that by $2020$ it will eliminate the use of plastic bags across all of its brands. Primark and Boots are among

the big$-$name shops that have switched from plastic to paper bags. By $2023$ Inditex promises it will have

fully eliminated single use plastic in its stores.

Inditex also has a scheme called Join Life running in its shops, which identifies clothes which are made with

more environmentally friendly materials than conventional high street stores. These are made from things

like organic cotton and recycled polyester.

The boss of Inditex revealed the company's plans at its annual general meeting this week. "Sustainability is

a never$-$ending task in which everyone here at Inditex is involved and in which we are successfully

engaging all of our suppliers," said Pablo Isla, in front of shareholders and company executives.

a$.$ Identify the market structure for clothing stores, like Zara. Justify the reasons for

such a structure to exist.

$[4$ marks$]$

b$.$ Determine with justification the demand elasticity and market power of Zara and

other clothing stores that belong to the same market structure.

$[4$ marks$]$

c$.$ How does Zara or other clothing stores compete or differentiate themselves

from competitors? Provide any two $(2)$ strategies.

$[4$ marks$]$

d$.$ Distinguish the type of long run profit between firms, like Zara, and firms that belong

to the other market structures. Provide justification for each structure.

$[4$ marks$]$

e$.$ In what circumstances will Zara cease production in the short run? Long run?

$[4$ marks$]$