Zara Case

3 December 2007

Introduction

ZARA is the flagship chain store for the Spanish Inditex Group owned by Spanish tycoon Amancio Ortega, who also owns brands such as Massimo Dutti, Pull and Bear, Stradivarius and Bershka. Today, Inditex is probably the world's fastest growing clothing retailer with over 3,100 stores around the world in over 70 countries (more than four times the 2000 figure) the Zara format taking around 1,000 of those stores. In March 2006, the group overtook Sweden's Hennes & Mauritz (H&M) to become Europe's largest fashion retailer.

A. Industry Analysis

Inditex belongs to the clothing industry (also called �textile products’ - SIC sector 2299). Although the company is also involved in the design and the manufacturing of its products, its main activity is the retail by means of its own stores present in Europe, North and South America, Asia, and Oceania.

This industry is extremely large and gathers a huge number of firms sorted in sub-categories like footwear, men/women/children clothing, fashion, et cetera. As no comparison can be made between companies of other sectors, Inditex (and Zara in particular) must be filed in the sector of fashion family clothing, which consists of the design and the retail of trendy clothes for young men and women. The direct competitors of Inditex are Gap Inc., H&M, and Abercrombie, for example. This specific sector of industry appeared by the end of the XVIIIth Century when the use of sewing machine led to the standardization of textile products. In the following century appeared several manufactures that introduced the notion of trend related to the brand name and not only the product. Fashion clothing, an adult market, has been aimed at young people -especially teenagers- only very recently (beginning of XXth Century).

This sector is growing because of several factors: the increase of brand recognition and the fashion importance in nowadays’ society and the increase in population coupled with...