It was ultimately a private person who founded a small company who wrote a tool for DOS and distributed it as shareware. There were other tools like it (ARJ and LHA were other popular ones). PKZIP disappeared, but its format ZIP became the de-facto standard and survived decades later, which was likely the result of some random circumstances.
So it shouldn't be surprising that the format isn't necessary ideal looking decades back.
(One could add that ZIP encryption is a big mess. The original ZIP encryption is insecure, there are two incompatible less insecure modes that still are vulnerable to malleability attacks and there's no way to have any modern form of encryption with an AEAD in ZIP.)