Inditex vs. Gap

1.Brief presentation of the two companies
Inditex is a Spanish multinational clothing company,one of the largest fashion retailers, headquartered in Arteixo ,Galicia. The Inditex Group is made up of more than 100 companies operating in textile design, manufacturing and distribution.
The companies brands are: Zara,Pull&Bear,Massimo Dutti,Bershka,Stradivarius,Oysho,Zara Home,Uterque.
The first Zara shop opened in 1975 in A Coruña, Spain, a city in which the Group first began doing business and which is still home to its headquarters. Its stores can now be found in prime locations in more than 400 cities on five continents. Franchises are only conceded in countries where corporate properties can not be foreign-owned (in some Middle Eastern countries, for example).
Most manufacturing is now in low labour cost countries, mainly in Morocco, China, and Turkey, although much production continues in Spain and Portugal, particularly for its Zara brand. In addition, Inditex has a factory for shoe design, production and distribution in the town of Elche, on the Spanish Mediterranean coast.
GAP is an American multinational clothing and accessories retailer, headquartered in San Francisco ,California.The GAP is made up about 3,100 company-operated stores and over 300 franchise stores.
The companies brands are: Gap,Banana Republic,Old navy,Piperlime,Athleta and INTERMIX.
Donald and Doris Fisher opened the first Gap store on Ocean Avenue in San Francisco on August 21, 1969; its merchandise consisted of Levi's and LP records.
Most of their clothing is produced in India and Sri Lanka.

2.Comparative analysis of their mission statements
INDITEX-mission statement * High priority on the customer combined with a high degree of vertical integration across all the fashion production process: the design, the manufacture, logistics and the sale. * To respond with agility to the demands of the market. * Inditex wants to be a part of the customer’s life * Achieve a customer’s experience when people go inside their shops * It wants to be perceived by its social actions * Core values: teamwork, open communication, creativity.

THE GAP-mission statement * “Gap, Inc. is a brand-builder. We create emotional connections with customers around the world through inspiring product design, unique store experiences, and compelling marketing." * In addition to its mission statement, The Gap also has a purpose statement, which is designed to guide the daily actions of its employees. The Gap Purpose is: "Our purpose? Simply, to make it easier for you to express your personal style throughout your life. We have more than 150,000 passionate, talented people around the world who help bring this purpose to life for our customers." * Practices the horizontal integration. GAP Inc. controls three distinct companies, Banana Republic, Old Navy, and the GAP brand itself. Each company has stores that market clothes tailored to appeal the needs of a different group. By using these three different companies, GAP Inc. has been very successful at controlling a large segment of the retail clothing industry. Finance industry experienced much horizontal integration, with numerous mergers between companies in the retail banking, investment and insurance industries. * “To us, it means everything from ensuring that workers are treated fairly to addressing our environmental impact.” * One more piece of guidance provided by Gap Inc. to its employees is its Key Values. These specifically defined values are meant to create a socially responsible retail operation in all of its stores and offices throughout the world. The Gap stores key values are: integrity, respect, open-mindedness, quality, balance.
COMPARISON
* Both of the companies declare in their mission statements that they wish to create a special relation with their costumers and environment. Around the world they create emotional connections with their customers through inspiring product designs, unique store atmosphere and compelling marketing. Inditex and Gap want to be a part of the customer`s life and every costumer to express their own style. Inditex has expanded so rapidly in recent months that it has overtaken Gap. * One of the most obvious differences is the integration: vertical- horizontal. * Both companies desire to be perceived as socially responsible through their environmental and charity contributions.

3. Strategic groups operating in the retail industry * H & M Hennes & Mauritz AB (H&M) is a Swedish multinational retail-clothing company, known for its fast-fashion clothing for men, women, teenagers and children.It is ranked the second largest global clothing retailer, just behind Spain-based InditexThe design team in the company’s Sweden office controls the steps of production, from merchandise planning to establishing specifications, and production is outsourced to approximately 800 factories in Europe and Asia. These facilities are used for horizontal division of labour, rather than being integrated * C&A is an international German chain of fashion retail clothing stores, with its European head offices in Vilvoorde (near Brussels), Belgium and Düsseldorf, Germany. It was established in 1841 by brothers, Clemens and August Brenninmeijer. Their main market segment are young people from the middle-class. * New Look is a British global fashion retailer with a chain of high street shops in the UK, Belgium, France, The Netherlands, the Republic of Ireland, Malta, Singapore, Thailand, Indonesia, United Arab Emirates, Azerbaijan and Poland. New Look was founded in 1969 when they opened their first store in Taunton, Somerset by Tom Singh. Since then the company has rapidly expanded and now operates across a chain of over 1,000 stores internationally and a staff of over 30,000

4.SWOT Analysis

Strengths | Weaknesses | Inditex | Original, appealing designsVarying prices(low to high)Member of ERRTJust in time manufacturing systemLarge product diversityStrong financial system | Poor product qualitySaturation of the marketCentralized distribution(Spain)Lack of size accordance between brands | GAP | Strong dealership teamworkGood working attitude, keeping an open mindDurability of productsGood permanent market(baby clothes) | Not a trend setterAppears to have lost touch with core consumerUntargeted marketingDependency on external suppliers | Opportunities | Threats | Inditex | Increasing interest of the consumer’s personal imageCreation of outletsTechnological developmentE-commerce | Increasing competitionDemanding customersE-commerce | GAP | Targeted marketingGrow into new marketsExpansion of product diversityOnline growth Once again become a trend setterMarket expansion | Fashionable discount storesRapid changing fashion trendsRising production costsOnine retailer’s growth |

5.Strategies
Corporate level strategies
Inditex
The most obvious corporate strategy for Inditex is their international expansion. Inditex has become the world`s largest fashion retail group. Currently it operates 6.104 fashion stores in 82 countries across the globe. In their earlier years, Inditex’s goals probably included achieving profitability and becoming an industry leader. Future goals include opening stores in all major cities around the world and building their brand name recognition.
Inditex employs a low cost strategy. It has developed a competitive advantage by developing a means of producing its quality products at costs below its rivals. Technology was a major contributor to the successful implementation of this strategy.
Gap
They put international expansion on the top of their corporate strategy, but with not a fast growth like Inditex. Currently operates approximately 3,000 stores around the world.
Business level strategies
The business concept for both companies is to give the costumers unbeatable value by offering fashion and quality at the best price.
Inditex
* Compelling mix of latest fashions and quality at affordable prices * Unique product strategy a) 36,000 new designs per year b) Delivery to stores 2-6 times per week * Customer interaction
a) Daily in-store feedback allows
b) Constant modification of collections * Attractive stores in prime locations
Inditex selects the world’s best manufacturers to produce its collections. Inditex’s production chain is highly diversified, with approximately half of its manufacturing conducted in near-source areas and in Europe, which gives the company unmatched swiftness and flexibility to address changing trends. Inditex’s manufacturing needs increase every year, and thus one of the Group’s strategic priorities is to ensure the sustainability of its production chain, through compliance with both the Code of Conduct for Manufacturers and Suppliers, enacted in 2001, and with the most exacting standards for product quality, health and safety.
GapThe clothing retail industry Gap Inc. competes in a fast-paced industry , and therefore the company must constantly change to keep up with the latest trends in fashion. The brand that The Gap offers has traditionally been very dependable for maintaining “the basics.” At a point in time, The Gap changed its focus to trendy clothing, trying to please the young college crowd.
Young consumers are now seeking quality apparel, as major chains like Gap Inc., charge more for upgraded clothing – better fabrics and craftsmanship – and sales keep climbing along with profits.

6.Which of the two companies has competitive advantage
With the help of the SWOT analysis we have reached the conclusion that Inditex has the competitive advantage when compared to The Gap.
Reasons:
* Inditex closely follows trends unlike The Gap which has lost contact with the largest market segment in the clothing business : young people. * Inditex is one of the companies that benefits from the advantages of Fast Fashion, as it succeeds to bring runway designs on the racks within weeks, not months. * Inditex also surpasses The Gap by the number of stores( 6000> 3000)

7.Future perspectives
Gap
As one of the leading clothing companies around the world and a complete organization, Gap announces a big global expansion to redefine the business and make it bigger.
We think that they should try to redefine their style by adding collections of more fashion-forward clothing as at this moment their style doesn’t really enter the same category as that of Inditex (GAP is more simple in its creations).
Inditex
Inditex is the meaning of "instant fashion". Instead of creating demand for new trends and using fashion shows-Inditex uses another method. They study the demands of the actual customers in their stores and then deliver that design at a very high speed. They save tons of money on their delivery methods.
We believe this will be a great success for Inditex and they are profitable enough at this moment in order to expand further. They plan to open 1,000 stores every year for the next 4 years. That is an extreme goal and even if they make half of it, they will still be successful.

Bibliography: * Wikipedia.org * Inditex.com * Gapinc.com * Gap.com * Google.com/images * Just-style.com * Online.wsj.com