In 1973 Amancio Ortega Gaona, Inditex Group president and main shareholder, created a textile company, which specialised in producing dressing gowns and underwear. Two years later he opened the first Zara store in La Coruña. Nowadays, the Inditex Group is the most successful in the Spanish textile sector. It is a thriving multinational and one of the largest multinationals in Spain. Inditex group is located in most countries, in particular, Europe and North America. Its success is due to its original strategy which is explained in this motto: open the doors of the fashion world to everybody by affordable prices. Its presence in most of the countries and its strategy are aiming to attract as many customers as possible. Indeed, inditex group has grown quickly that is why we chose to analyse the main reasons of Inditex and Zara success. Firstly, we will discover the group Inditex through its presentation and history, then the most famous brand of this group which is Zara and especially how it managed to become a top brand all around the world.
[...] 1988: The opening of the first ZARA store outside Spain occurs in December 1988 in Oporto (Portugal) 1989 - 1990: The United States and France are the next market in which the group targets along with the opening of outlets in New York (1989) and Paris (1990). 1991: The birth of the PULL&BEAR chain and the purchase of 65 per cent of the MASSIMO DUTTI group 1994: INDITEX continues to open new international markets: Mexico in 1992, Greece and Belguim in 1993 and Sweden in 1994. [...]
[...] To keep a high level of reactivity, Zara's production is in Europe, even if the salaries are higher. The need to reduce prices is high to keep competitive advantage. That is why the production in Zara's factories is highly automated, to reduce workforce cost. - Zara's retail strategy The production cost is also reduced with an original retail strategy. Zara organised the distribution sector as a global and integrated activity. The retail chain is vertically organised, from the production to the supply of the stores. [...]
[...] The garments are quickly cleared through the distribution centre, and shipped to the stores, arriving within 48 hours. Every store receives deliveries twice a week, by plane or trolley. So, after being produced the merchandise does not spend more than a week at most in transit. This exceptional saving strategy is the key stone of Zara's competitive advantage. Competitive advantage: Products quality Design inspired by haute couture High control on production Low prices Linked to the costs control Good logistic organization High reactivity due to the vertical integration retail chain. [...]
[...] The most H&M sales are made in Germany, Sweden, and United Kingdom whereas Zara is more famous in the south of Europe and in America. Conclusion All in all, we discovered some deep aspects of Inditex group and also of its main brand, Zara. Zara is a textile powerful European company enjoying success all around the world. This performance can be seen as a paradox; indeed the textile industry in Europe is suffering from the competition of some countries as China. [...]
[...] The other 40% of Zara's items, mainly the most fashionable, are manufactured in their factories. The efficiency of the system means the company can keep costs down by keeping stocks low. Designers produce 11,000 different designs each year. Zara's performance compared to its competitors is difficult to measure. However, we can say that Inditex net income in 2001 was million, a figure far superior to the one of Gap million) or Benetton million). H&M presented a more competitive figure with a net income of €410. [...]
Online readingwith our online reader
Content validatedby our reading committee