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Abstract

The case compares the competitive growth strategies of two ''fast fashion'' retailers - H&M (Hennes & Mauritz) and Zara. Swedish retailer H&M has been growing at an average rate of 20% annually in the past two decades. No other European retailer has expanded so quickly and so successfully beyond its own borders. At the heart of Zara''s success is a vertically integrated business model spanning design, just-in-time production, marketing and sales. Inditex and its flagship store Zara have been growing at a furious pace. The two European retailers are known for their ''fast fashion'' and have unique business models and growth strategies which have enabled them to expand quickly and successfully beyond their own borders. With the European markets becoming saturated, the two companies are looking for ways to expand outside Europe and establish their hegemony in the US, in many ways the world''s most important market. The case outlines the growth strategy of the two companies in the US, emphasising the similarities and the differences in their approach. H&M has tailored its product strategy to fit the US market. It has headed for more upscale malls and busy downtown centres and decided to open smaller stores. Zara has decided against developing a manufacturing base in the US. However, it has followed the same business model and product strategy that it followed in Europe. Its clothes are however priced higher in the US than in Europe to take account of supply costs.
Location:
Industry:
Size:
USD8.3 billion
Other setting(s):
2000-2006

About

Abstract

The case compares the competitive growth strategies of two ''fast fashion'' retailers - H&M (Hennes & Mauritz) and Zara. Swedish retailer H&M has been growing at an average rate of 20% annually in the past two decades. No other European retailer has expanded so quickly and so successfully beyond its own borders. At the heart of Zara''s success is a vertically integrated business model spanning design, just-in-time production, marketing and sales. Inditex and its flagship store Zara have been growing at a furious pace. The two European retailers are known for their ''fast fashion'' and have unique business models and growth strategies which have enabled them to expand quickly and successfully beyond their own borders. With the European markets becoming saturated, the two companies are looking for ways to expand outside Europe and establish their hegemony in the US, in many ways the world''s most important market. The case outlines the growth strategy of the two companies in the US, emphasising the similarities and the differences in their approach. H&M has tailored its product strategy to fit the US market. It has headed for more upscale malls and busy downtown centres and decided to open smaller stores. Zara has decided against developing a manufacturing base in the US. However, it has followed the same business model and product strategy that it followed in Europe. Its clothes are however priced higher in the US than in Europe to take account of supply costs.

Settings

Location:
Industry:
Size:
USD8.3 billion
Other setting(s):
2000-2006

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