...Zara: Staying Fast and Fresh Wance Tacconelli Donghua University Shanghai Contents • • • • Historical background Overview of the Inditex Group Zara’s business model The competitive landscape – The Gap, H&M, Fast Retailing (Uniqlo) • Zara’s global store and online expansion • Questions Zara Case Study 2 Corporate history (1 of 2) • 1963: establishment of clothing production company in A Coruῆa, Spain • 1975: first Zara store opens in A Coruῆa • 1985: Inditex Group is established • 1989: first international Zara store opens in Portugal Zara Case Study 3 Corporate history (2 of 2) • 1990s: acquisition of brands Massimo Dutti and Stradivarius • 2001: Inditex IPO • 2006: first Zara store opens in China • 2010: first Zara store opens in India • 2010: Zara launches first online store Zara Case Study 4 Inditex’s performance indicators, 2012 • Net income totalled 2.3 billion euros, an increase of 22% from 2011 • 6,009 stores, 482 more than a year earlier • Online store network covers 23 markets, with new launches in China and Canada • Creation of 10,802 new jobs in 2012, bringing workforce to 120,314 employees Zara Case Study 5 Inditex Group Brand Portfolio (1 of 8) Zara • Fashionable, yet affordable clothes for a wide range of people, cultures and generations, who, despite their differences, all share a special fondness for fashion • 1751 stores in 86 countries • www.zara.com Zara Case Study 6 Inditex Group Brand Portfolio (2 of 8) ...
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...INTERNATIONALISATION OF THE SPANISH FASHION BRAND ZARA Carmen Lopez Ying Fan Brunel Business School Journal of Fashion Marketing and Management (2009), 13:2, 279-296 INTRODUCTION Zara is one of the world’s most successful fashion retailers operating in 59 countries. However, there is little research about the firm in English as the majority of publications have been written in Spanish. This paper seeks to address this gap in the literature by examining the internationalisation process of Zara. This study adopts an in-depth case approach based on extensive secondary research. Literature published in both English and Spanish has been reviewed, including company documents such as annual reports. The paper starts with a brief overview of the global textile and clothing industry, followed by the case study of Zara. The main part of the case examines the key aspects in the internationalisation of Zara namely: motives for internationalisation, market selection, entry strategies, and international marketing strategies. In the final section, comparisons are made between Zara and two of its main competitors, H&M and Gap. The global textile and clothing industry The removal of all import quotas in the textile and clothing industry from January 2005, involving the unrestricted access of all members of the World Trade Organization (WTO) to the European, American and Canadian markets is considered a key driving force in the development of the clothing sector (Keenan, et al., 2004). This...
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...INTERNATIONALISATION OF THE SPANISH FASHION BRAND ZARA Carmen Lopez Ying Fan Brunel Business School Journal of Fashion Marketing and Management (2009), 13:2, 279-296 INTRODUCTION Zara is one of the world’s most successful fashion retailers operating in 59 countries. However, there is little research about the firm in English as the majority of publications have been written in Spanish. This paper seeks to address this gap in the literature by examining the internationalisation process of Zara. This study adopts an in-depth case approach based on extensive secondary research. Literature published in both English and Spanish has been reviewed, including company documents such as annual reports. The paper starts with a brief overview of the global textile and clothing industry, followed by the case study of Zara. The main part of the case examines the key aspects in the internationalisation of Zara namely: motives for internationalisation, market selection, entry strategies, and international marketing strategies. In the final section, comparisons are made between Zara and two of its main competitors, H&M and Gap. The global textile and clothing industry The removal of all import quotas in the textile and clothing industry from January 2005, involving the unrestricted access of all members of the World Trade Organization (WTO) to the European, American and Canadian markets is considered a key driving force in the development of the clothing sector (Keenan, et al., 2004). This...
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...FACULTY OF BUSINESS, GOVERNMENT & LAW Assignment Coversheet Student ID number U3131451 Unit name International Business G Unit number 6241 Name of lecturer/tutor Dr Michael Corliss Name of Assessment Assignment 1 Due date 22th November 2015 Word Count 2.385 Student declaration I certify that the attached assignment is my own work. Material drawn from other sources has been appropriately and fully acknowledged as to author/creator, source and other bibliographic details. Such referencing may need to meet unit-specific requirements as to format and style. I give permission for my assignment to be copied, submitted and retained for the electronic checking of plagiarism. Signature of student: Felix Yuwono K. Date: 22 November 2015 Background...
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...Zara Case Study Pre-course Assignment | International Business INTRODUCTION TO THE CASE Zara is a retail chain company which operates in the fashion industry. It's owned by Indixt group in North West Spain. It holds the ownership of some world famous brands such as Massimo Dutti, Pull & Bear, Oysho, Uterqüe, Stradivarius and Bershka. The very first Zara shop was open in 1975 and their specialty is frequent innovation of new product lines. Also they decided not to outsource their production to low-cost countries which is a trend in the same industry. At the same time they followed up a special policy of investing on opening a new store instead of investing on advertising which ultimately causes them to spread their branch network and make their products available everywhere. Zara controls most of the steps on their supply chain. Also they get the customer feedbacks and respond to them in an impressive manner. Through this, they are maintaining a loyal and frequently aware customer base. INTERNATIONAL BUSINESS 1 Pre-course Assignment | International Business CASE QUESTIONS Which theory is the best representative of Zara's internationalization? When considering about the internationalization theories, there are three main theories to be taken in to consideration. 1. The Uppsala internationalization model 2. The transaction cost analysis model 3. The network model The Uppsala Internationalization model In this model, a firm is willing to intensify their commitments...
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...Samantha Stevens Case Study 2 9:25am 1. In what ways are elements of the classical and behavioral management approaches evident in how things are done at Zara International? ~The classical management approach is evident at Zara International. The three branches of the classical management approach include scientific management, administrative principles, and bureaucratic organization. The concept of scientific management can be seen in Zara International because time is the main factor instead of production costs and advertisements. Zara only spends 0.3% of sales of ads compared to their competitors who typically use 3 to 4%. The administrative principles are expressed through controlling design. At Zara, most of the clothing lines are not replenished. Instead they are replaced with new designs to create scarcity value so shoppers cannot be sure that designs in stores one day will be available the next. This will get shoppers to buy the item now instead of waiting. Bureaucratic organization is evident through clear division of labor. Zara International is a very efficient organization. Because of the clear division of labor, the organization can run smoothly. There were also elements of the behavioral management approach that was evident in Zara International. Zara’s management team focused towards the human factor as a key element in their organization. They paid close attention to what fashions the public was demanding. Even though their clothing designs are coming...
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...ANNALS of the ORADEA UNIVERSITY. Fascicle of Management and Technological Engineering, Volume VI (XVI), 2007 STRATEGY AND SUSTAINABLE COMPETITIVE ADVANTAGETHE CASE OF ZARA FASHION CHAIN Sunhilde CUC, Simona TRIPA University of Oradea, Faculty of Textiles and Leatherworks, e-mail: hectic@rdslink.ro, tripasimona@yahoo.com, Keywords: Company Strategy, Competitive Advantage, Operational Effectiveness, Strategic Positioning Abstract. In this case study we want to analyse this phenomenon called Zara, a strategic unit of the Inditex Group, and evaluate the strategies of Zara on the European fashion market. Finally within the clothing market, it shows the competitive advantage gained through modern systems by comparing Zara to its opponents. 1. COMPANY PROFILE Firms strive for sustainable competitive advantage, financial performance that consistently outperforms their industry peers. The world is so dynamic, with new products and new competitors rising seemingly overnight, that truly sustainable advantage might seem like an impossibility. But there are winners and the Zara chain is one of them. The Zara fashion chain, founded in 1975 in Arteixo, a small town in the north of Spain, is perhaps the world's most successful clothing chain. Zara has helped its parent, the Spanish firm Inditex, grow from obscurity in the mid 90s to the world's third largest pure-play fashion retailer after the Swedish H&M and US-based Gap Inc. with financial performance well ahead of these rivals...
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...CHAPTER 2 CASE STUDY Zara International: Fashion at the Speed of Light At the announcement of her engagement to Spain's Crown Prince Felipe, Letizia Ortiz Rocasolano wore a chic white trouser suit; within a few weeks, hundreds of European women sported the same look. Welcome to fast fashion, a trend that sees clothing retailers frequently purchasing small quantities of merchandise to stay on top of emerging trends. In this world of “hot today, gauche tomorrow,” no company does fast fashion better than Zara International. Shoppers in 78 countries, including Canada, have taken to Zara's knack for bringing the latest styles from sketchbook to clothing rack at lightning speed and reasonable prices. In Fast Fashion, Moments Matter Because style - savvy customers expect shorter and shorter delays from runway to store, Zara International employs a stable of more than 200 professionals to help it keep up with the latest fashions. It takes just two weeks for the company to update existing garments and get them into its stores; new pieces hit the market twice a week. Defying the recession with its cheap – and - chic Zara clothing chain, Zara's parent company Inditex posted strong sales gains. Low prices and a rapid response to fashion trends are enabling it to challenge Gap, Inc., for top ranking among global clothing vendors. The improved results highlight how Zara's formula continued to work even in the downturn. The chain specializes in lightning-quick turnarounds of the latest...
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...INTERNATIONAL MARKETING CASE STUDY ZARA: THE SPANISH RETAILER GOES TO THE TOP OF WORLD FASHION Professor: Jennifer Stack Student: Martina Sekuloska San Sebastian October,2014 International marketing [ZARA:THE SPANISH RETAILER GOES TO THE TOP OF THE WORLD FASHION] INTRODUCTION Inditex is a fashion retailer which dates back to 1963 when it started life in a small workshop making woman’s clothing. Today it has more than 6.460 stores all over the world (Inditex, 2014). Officially it all started with the launch of the first Zara store in La coruña, north-west of Spain in 1975. At that time the textile maker Amancio Ortega decided to open his own store after years of work in the textile industry. This was followed by the brand’s internationalization at the end of the 1980s and the successive launch of several another retail concepts: Pull&Bear, Massimo Duti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe. Today, Inditex is considered to be the greatest fashion retail group, and its founder Amancio Ortega, the richest person in Spain. Zara is the flagship chain of the Inditex Group which generates nearly 65% of the net sales of the group (Inditex annual report 2013). It encompasses many different styles, from daily clothes, to more formal elegant clothes for women, men and children. This case study tackles the challenges of being the world’s fashion retailer, the sustainability of the competitive strategy, and the group’s internationalization process. ...
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...INTRODUCTION Zara is one of the world’s most successful fashion retailers operating in 59 countries. However, there is little research about the firm in English as the majority of publications have been written in Spanish. This paper seeks to address this gap in the literature by examining the internationalisation process of Zara. This study adopts an in-depth case approach based on extensive secondary research. Literature published in both English and Spanish has been reviewed, including company documents such as annual reports. The paper starts with a brief overview of the global textile and clothing industry, followed by the case study of Zara. The main part of the case examines the key aspects in the internationalisation of Zara namely: motives for internationalisation, market selection, entry strategies, and international marketing strategies. In the final section, comparisons are made between Zara and two of its main competitors, H&M and Gap. The global textile and clothing industry The removal of all import quotas in the textile and clothing industry from January 2005, involving the unrestricted access of all members of the World Trade Organization (WTO) to the European, American and Canadian markets is considered a key driving force in the development of the clothing sector (Keenan, et al., 2004). This new scenario has created opportunities for large exporters like China and India 2 that are considerably increasing their market share...
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...Cover Page Business Model Analysis in the fast fashion industry Table of Contents 1. Introduction 3 2. Industry environment of fast fashion 4 2.1 PEST analysis 4 2.2 Five forces analysis 6 2.3 Summary of findings 7 3. Analysis of Zara and H&M 7 2.1 Analysis of Zara 7 2.1.1 Vision, mission and objectives 7 2.1.2 Internal analysis 8 2.1.3 Business model canvas 8 2.1.4 Value proposition canvas 9 2.2 Analysis of H&M 10 2.2.1 Vision, mission and objectives 10 2.2.2 Internal analysis 10 2.2.3 Business model canvas 11 2.2.4 Value proposition canvas 12 2.3 Summary of findings 12 4. Comparison of business models between Zara and H&M 12 4.1 Comparison of business models 13 4.2 Comparison of value proposition canvas 14 4.2 Summary of research insights 14 5. Development of a new entrant 15 5.1 Strategic model 15 5.2 Business model canvas 16 6. Reflection on strategic insights 16 7. Conclusion 17 References 18 1. Introduction Fast fashion is a sub sector of the fashion industry that boasts fast response to consumer demand and efficient distribution of materials and products in the global landscape (Hines and Bruce 2007). Hines and Bruce (2007) also imply that fast fashion could quickly identify and capture business opportunities and transform them into products in a timely manner. As fast fashion retailers need to deliver trendy apparels to end customers, low cost production and efficient distribution become...
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...Introduction The Zara case talks about the Spanish Retail giant Inditex which had grown over a period of 5 years from 1996-2001 with CAGR of ~26% (Exhibit 7:case), mainly riding on the success of its largest retail chain Zara. The main driving forces behind Zara's success were the simple business model (vertically integrated with short cycle times) ensuring high speed and design flexibility. Among all its chains, Zara is the most profitable and internationalized chain with over 500 stores in 30 countries (Exhibit 10:case) comprising ~40% of Inditex's store. However it contributed over 76% of Inditex's sales and over 85% of Inditex's EBIT (FY01) which clearly shows its operational efficiency. Issues Related to Product Development 1. High Capital Requirement (Low Asset turnover): Unlike its competitors, Zara owned much of its production and most of its stores. This led to the company having very low RoA compared to its competitors since it had to invest in its own factories (~20%) Particulars | Gap | H & M | Benetton | Inditex | Net Margin | -0.06% | 9.60% | 7.05% | 10.47% | Asset Turnover | 1.82 | 1.96 | 0.74 | 1.25 | Return on Assets | -0.11% | 18.78% | 5.25% | 13.07% | Moreover its optimistic revenue growth targets of 20%+ with like to like sales expected to witness only 5% to 7% growth meant that any new product had to be sold through additional expenditure on increased selling space. Recommendation: On the cost front, investments in assets can be minimized...
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...Introduction to Zara (Inditex) Case Study In 1975, Amancio Ortega started a fashion retail shop that makes the fashionable clothes faster and beauty than other competitors. The first Zara store opened in 1975 in Spain. The very best quality of Zara was, it only takes two weeks to develop a new cloth/product and release it to the market while other competitors take two months. Zara didn’t get third party help to distribute, design or even produce because Zara did them alone. Zara was fashion focused producers that makes new clothes, apparels according to the trending fashion. Zara uses its own strategic method which is done by sending some employees to higher level venues, occasions, functions, clubs etc.Then the collected new designs and patterns will be forwarded to the headquarters. Although Store managers are used to report feedback, new demands that is given by the customers. These methods will help Zara to be the top among their industrial competitors. Although this method will helps Zara to manufacture more products than others, like 30,000 products annually while others are doing 10,000. Another unique quality of Zara is they don’t keep products that doesn’t sell for around 4 weeks and this trick make customers to come and see regularly on Zara stores that “What’s new?” With the development process of Zara become more and more popular and powerful on its industrial market. Hence Zara decided to enter the market with various brands. They were categorized into...
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...ZARA: Fashion Follower, Industry Leader Business of Fashion Case Study Competition Amanda Craig, Charlese Jones and Martha Nieto Philadelphia University April 2, 2004 ZARA: Fashion Follower, Industry Leader Table of Contents Introduction………………………………………………………………….1 Financial Analysis and Comparison…………………………………………………….…………....1 Strategic Advantages………………………………………………………………...2-3 Strategic Drawbacks…………………………………………………………….….. 3-4 Possibilities for Failure…………………………………………………………………....…..4 Recommendations/Conclusion………………………………………………5 Calculations and Financial Statements……………………………………….……………….Appendix A Articles: The Recent Status of ZARA.……………………………………….…………………...Appendix B Works Cited Works Referenced The global apparel market is a consumer-driven industry. Also, globalization and new technologies have allowed consumers to have more access to fashion. As a result, consumers are changing, competition is fierce, and companies are evolving to meet these demands. Zara, a Spanish-based chain owned by Inditex, is a retailer who has taken a new approach in the industry. With their unique strategy, Zara has the competitive advantage to be sustainable. In order to maintain that advantage and growth they must confront certain challenges that face traditional retailers in the apparel industry. Financial Analysis and Comparison To prove Zara has the prospect of sustainable growth in the international apparel market, it is important to understand and compare the financial differences...
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...Jay Case Study: Zara International Fashion at the Speed of Light Question 1: In what ways are elements of the classical and behavioral management approaches evident in how things are done at Zara International? How can systems concepts and contingency thinking explain the success of some of Zara’s distinctive practices? Answer 1: Elements of the classical management approach are very evident at Zara International. The classical management approach contains three branches, which are scientific management, bureaucratic organization and administrative principles. Scientific management was expressed by selecting the workers with the right abilities for the job as well as time being the main factor instead of production costs and advertisements. For example Zara only spends 0.3% of sales on ads compared the competitors that spend roughly 3 to 4%. Next, administrative principles are displayed clearly through the control over design, distribution, production, and retail. In addition the clothing lines aren’t restocked and instead they become replaced by new designs to create a rarity value. Since shoppers will be unsure if the product will still be there next time they go back it will get shoppers to buy the item now. Lastly for the classical approach, bureaucratic organization exists through Zara’s clear division of labor and the organization runs smoothly because of it. However, Zara International also showed a few elements of the behavioral management approach. They focus...
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