Continued Growth for Zara and Inditex
CASE 3.4 Continued Growth for Zara and Inditex
CIRCA 2008
ARTEIXO, Spain¡ªZara stores have set the pace for retailers around the world in making and shipping trendy clothing. Now
Pablo Isla, chief executive of parent company Inditex SA, says
Zara needs to speed up. As rivals catch up, Mr. Isla is attempting one of the fastest global expansions the fashion world has ever seen, opening hundreds of new stores and entering new markets.
To do that, as an economic downturn threatens sales, Inditex is changing the systems that have driven its success at Zara and its other store brands, to save time and money. Among the innovations, it is introducing new methods to enable store managers to order and display merchandise faster and adding cargo routes for shipping goods. ¡°There has been a clear change of mentality in the company,¡± Mr. Isla, a former tobacco executive who arrived at Inditex in 2005, said in an interview at the company¡¯s headquarters here. The world¡¯s second largest clothing retailer by sales after Gap
Inc., Inditex is responding to a predicament shared by other companies that come up with game-changing formulas: Eventually competitors catch up, forcing the pioneers to do even better to keep their edge. Low-cost carrier Southwest Airlines Co. is making big changes to fend off rivals that have copied its effi cient operating model. Inventory-control methods at Walmart Stores Inc. are being mimicked around the world, and Google Inc. is updating its search engine to keep users loyal.
The consumer slowdown is adding pressure. Inditex shares have fallen nearly 24 percent in the last 12 months, in large part because investors are worried about an economic downturn in
Spain, where Inditex generates over a third of its $12 billion in annual sales. The company is pressing ahead with its expansion plans even as consumers are slowing down. In the U.S., retailers had their worst monthly sales
CIRCA 2008
ARTEIXO, Spain¡ªZara stores have set the pace for retailers around the world in making and shipping trendy clothing. Now
Pablo Isla, chief executive of parent company Inditex SA, says
Zara needs to speed up. As rivals catch up, Mr. Isla is attempting one of the fastest global expansions the fashion world has ever seen, opening hundreds of new stores and entering new markets.
To do that, as an economic downturn threatens sales, Inditex is changing the systems that have driven its success at Zara and its other store brands, to save time and money. Among the innovations, it is introducing new methods to enable store managers to order and display merchandise faster and adding cargo routes for shipping goods. ¡°There has been a clear change of mentality in the company,¡± Mr. Isla, a former tobacco executive who arrived at Inditex in 2005, said in an interview at the company¡¯s headquarters here. The world¡¯s second largest clothing retailer by sales after Gap
Inc., Inditex is responding to a predicament shared by other companies that come up with game-changing formulas: Eventually competitors catch up, forcing the pioneers to do even better to keep their edge. Low-cost carrier Southwest Airlines Co. is making big changes to fend off rivals that have copied its effi cient operating model. Inventory-control methods at Walmart Stores Inc. are being mimicked around the world, and Google Inc. is updating its search engine to keep users loyal.
The consumer slowdown is adding pressure. Inditex shares have fallen nearly 24 percent in the last 12 months, in large part because investors are worried about an economic downturn in
Spain, where Inditex generates over a third of its $12 billion in annual sales. The company is pressing ahead with its expansion plans even as consumers are slowing down. In the U.S., retailers had their worst monthly sales