It's interesting to compare zip with lzh, which was very popular in Japan; they're both from roughly the same era, yet lzh definitely seems far more logically designed (and often outperformed zip in compression ratio too.)
from my memory, both ARJ and LZH outperformed ZIP for my benchmarks. I used to stripe archives across as many floppy disks as I had until I eventually got a CD writer...
ZIP commonly uses DEFLATE which is LZ with a 32k window + Huffman, whereas LZH went up to LZ with a 64k window + Huffman. I suspect the doubled window alone is responsible for much of the improvement.
According to http://fileformats.archiveteam.org/wiki/ARJ , ARJ uses something similar to LZH's lh6 algorithm, which is LZ with a 32k window + Huffman, so the difference could be due to ARJ's reduced file format overhead compared to ZIP, or perhaps slightly better Huffman codes.
