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Case
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Reference no. 617-0058-1
Authors:
Published by:
IBS Center for Management Research (2017)
Revision date:
23-May-2019
Length:
11 pages
Data source:
Published sources

Abstract

The case discusses Zara, a clothing brand and the pioneer of fast fashion. Zara was owned by Inditex had a cult following of customers who flocked to its stores expecting something new each time and Zara lived up to their expectations every time. It brought the in-trend designs to its stores across the globe at affordable prices and replenished its stores twice a week - a feat no rival in the Industry was able to replicate. Zara provided such a customer proposition by being extremely agile in its manufacturing and sourcing practices. Inditex, Zara's parent, also kept excess capacity in its factories and was heavily vertically integrated to maintain absolute control over its supply chain. In the 21st century, Zara witnessed more growth outside Spain and Europe which had historically contributed to the major part of its top-line. The Far East, which was viewed as a low-cost manufacturing source for Zara, also became a consumer of its Fast-Fashion so much so that China had the largest number of Zara stores in the world by 2016. But though Zara was a truly global brand, it didn't act locally. Analysts were of the view that Zara's bottom line could be under pressure owing to its burgeoning global presence, especially when Zara used air-freight for its global deliveries. Moreover, every store across the world was served through its head office in Galicia, Spain. Such centralization for a global company was considered by many as counterintuitive. But for Zara, to act locally meant giving up its competitive advantage.

Topics

Fast fashion; Retail operations; Inditex; Zara; Apparel industry; Spain; Supply chain
Locations:
Size:
Very Large
Other setting(s):
2011 - 2016

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