Zara

Key International Competitors of Inditex

Gap, H&M and Benetton are considered Inditex's three closest comparable international competitors. As in the product positioning map, Inditex's flagship brand, Zara, is relatively perceived as more fashionable than all the other three and prices less than Benetton and Gap but higher than H&M. In these four competitors, Benetton and Gap place at relatively less fashionable and higher price, while Zara and H&M is more fashionable and price lower.

In Appendix 1 which analyzed the operating and financial performance of the 4 companies in the year of 2001, we can see that H&M is the closest competitor in many dimensions, such as ROE, Gross and Net Profit Margin, etc. Also, H&M's focused approach to international market is more similar to Inditex's expansion style than the other two closest competitors.

Business Model of Zara

As the largest and most internationalized brand of Inditex's chain, Zara is the principle driver of the group's growth and play the lead role of Inditex's sales and profit. Zara's unique business model brings special interest of business studies and is often sited as "Dell in the fashion industry".

The core concept of Zara's business model is they sell "medium quality fashion clothing at affordable prices", and vertical integration and quick-response is key to Zara's business model. Through the entire process of Zara's business system: designing, sourcing and manufacturing, distribution and retailing, they presented four fundamental success factors: short cycle time, small batches per product, extensive variety of product every season and heavy investment in information and communication technology. These four elements are involved in every aspect of the business.

Zara's designers track consumer preferences on a year-round basis and place orders with both internal and external designers. Each year several hundred thousand SKU’s are produced based on 11,000 distinct items varying...