ZARA: Fast Fashion(Point-Wise)

 Georg Simmel's Observation on Fashion:

 Fashion satisfies the demand for social adaptation.

 Rapid changes in fashion increase the demand for cheap products.

 Inditex Overview:

 Inditex, a Spanish company, owns Zara and five other apparel retailing chains.
 Fiscal year 2001 (ending January 31, 2002) results:
o Net income: €340 million.
o Revenues: €3,250 million.

 Stock Market Performance:

 Initial Public Offering (IPO) in May 2001 was heavily oversubscribed.

 Over the next 12 months, the stock price increased by nearly 50%, despite bearish market
conditions.
 Market valuation reached €13.4 billion.

 Founder’s Success:

 Amancio Ortega, the founder, became Spain’s richest man.

 Started in the apparel trade as an errand boy.

 Growth Challenge:

 High stock price implied significant growth expectations.

 76% of Inditex's equity value was based on future growth expectations, higher than 69% for
Wal-Mart.

 Case Structure:

 Description of the global apparel chain from producers to final customers.

 Profiles of three international competitors:
o The Gap (U.S.)
o Hennes & Mauritz (Sweden)
o Benetton (Italy)
 Focus on Inditex's business system and international expansion, particularly of the Zara chain.

The Global Apparel Chain(see Exhibit 1)

1. Buyer-Driven Global Chain:

o Profits derived from high-value research, design, sales, marketing, and financial services.
o Retailers, branded marketers, and branded manufacturers act as strategic brokers linking
overseas factories with markets.
2. Production: (See Exhibit 2 for comparative labor productivity data and Exhibit 3 for an example.)
o Apparel production is fragmented; firms usually employ a few dozen people.
 o Internationally traded production often involves complex, tiered production chains across
multiple countries.
o Developing countries produce about half of all apparel exports, benefiting from cheaper
labor and inputs.
o The Multi-Fiber Arrangement (MFA) regulated world trade in apparel and textiles, but
quotas were set to phase out by 2005.
o Potential for protectionism and concerns over "sweatshop trade" in buyer-driven global
chains.
3. Cross-Border Intermediation:
o Trading companies orchestrate physical flows of apparel from exporting factories to
importing retailers.
o Example: Li & Fung, a Hong Kong trading company, manages multinational supply
chains.
o Branded marketers like Liz Claiborne outsource production but sell under their brand
names.
o Branded manufacturers own some manufacturing and sell products through independent
retail channels.
4. Retailing: (see Exhibit 4)
o Retailers play a dominant role in shaping apparel imports into developed countries.
o Increasing concentration of apparel retailing in major markets; top chains account for
significant portions of sales.
o Promotion of Quick Response (QR) practices to improve coordination between retailing
and manufacturing.
o QR leads to reduced forecast errors and inventory risks.
o Apparel retailing remains local, with limited cross-border operation compared to other
industries.
5. Markets and Customers:
o In 2000, global retail spending on apparel reached approximately €900 billion.
o Significant differences in per capita spending on apparel across regions.
o Local variations in customer attributes and preferences within regions and countries.
o Fashion trends move quickly, especially among young adults and teenagers.
o Strategic implications of the global apparel chain include expansion across borders,
investing in brands, and arbitraging international price differences.
6. Inditex and Zara:
o Zara's business model and international expansion highlight strategic imperatives for
creating and sustaining competitive advantage through cross-border activities.

Key International Competitors(See Exhibit 5 for a positioning map and Exhibit 6 for financial and other
comparisons.)

1. Overview of Competitors:
o Inditex's three closest competitors: The Gap, H&M, and Benetton.
o All three had narrower vertical scope than Zara.
o The Gap and H&M outsourced all production and owned most of their stores.
o Benetton invested heavily in production, with stores run by licensees.
2. The Gap:
o Founded in 1969, based in San Francisco.
o Known for T-shirts, jeans, and "smart casual" work clothes.
o Outsourced over 90% of production outside the U.S.
o Limited international expansion due to difficulties in adapting to different markets.
 o Faced supply chain issues, market saturation, and a failed fashion repositioning.
o Experienced a significant decline by the end of the 1990s and into 2001.
3. Hennes and Mauritz (H&M):
o Founded in 1947 in Sweden.
o Outsourced all production, with half to European suppliers.
o Internationalized quickly, generating over half of sales outside Sweden by 1990.
o Focused on entering one country at a time, with an emphasis on northern Europe.
o Operated a single format but marketed clothes under various labels.
o Lower prices than Zara, extensive advertising, and less frequent store refurbishments.
o Experienced a fashion miss and slowed U.S. expansion efforts.
4. Benetton:
o Founded in 1965 in Italy, known for brightly colored knitwear.
o Prominent in the 1980s and 1990s for controversial advertising and a network
organization.
o Outsourced labor-intensive activities but invested heavily in controlling other production
activities.
o Stores run by licensees, leading to longer lead times.
o Faced saturation and declining profitability in the 1990s.
o Adopted a strategy of narrowing product lines and consolidating production activities.
o Started a program to set up larger company-owned outlets in big cities, with about 100
megastores by 2001.

Inditex Overview

1. Company Profile:
o Global specialty retailer.
o Products: apparel, footwear, accessories for women, men, and children.
o Operates Zara and five other chains.
o At the end of the 2001 fiscal year, operated 1,284 stores worldwide with a total selling
area of 659,400 square meters.
o 515 stores outside Spain, generating 54% of total revenues (€3,250 million).
o Workforce: 26,724 employees (10,919 outside Spain), average age 26, 78% women.
2. Employee Distribution:
o 80% in retail sales.
o 8.5% in manufacturing.
o Remaining in design, logistics, distribution, and headquarters activities.
3. Capital Expenditures:
o 80% on new-store openings.
o 10% on refurbishing.
o 10% on logistics/maintenance.
o Plans for 2002: €510–560 million capital expenditures, mainly for opening 230–275 new
stores.
4. Financial Performance (2001): (See Exhibit 7 for these and other historical financial data.)
o Gross margins: 52%.
o Operating expenses: 30% of revenues (half related to personnel).
o Operating margins: 22%.
o Net margins: Half of operating margins.
o Net income: €340 million from operating profits of €704 million.
5. Home Base: (see Exhibit 9) (see Exhibit 2)
o Headquarters in Galicia, Spain.
 o Galicia: High unemployment (17% vs. national average 14%), poor communication
links, dependent on agriculture and fishing.
o Apparel tradition dating back to the Renaissance but lacks strong textile base,
sophisticated local demand, technical institutes, and industry association.
o Transport costs are a significant concern.
6. Early History: (A timeline, Exhibit 8, summarizes key events over this period chronologically.)
o Founder: Amancio Ortega Gaona.
o Started Confecciones Goa in 1963, first Zara store opened in 1975 in La Coruña.
o By the end of the 1970s, half a dozen Zara stores in Galician cities.
o Expansion into Spanish cities with more than 100,000 inhabitants by the 1980s.
o Began international expansion and investments in manufacturing, logistics, and IT in the
1990s.
7. Company Structure (2002): (as illustrated in Exhibit 10) (see Exhibit 11).
o Operated six chains: Zara, Massimo Dutti, Pull & Bear, Bershka, Stradivarius, Oysho.
o Chains organized as separate business units with six business support areas and nine
corporate departments.
o Retailing generated 82% of net income.
o Coordinated activities, especially in real estate and expansion, with recent focus on
multichain locations.
8. Governance Changes:
o Initial public offering (IPO) in May 2001, selling 26% of shares, founder retained over
60% stake.
o Implemented a social strategy involving dialogue with stakeholders and joining the
Global Compact in August 2001.
o Initiatives included an internal code of conduct, corporate responsibility department,
social audits, and developmental projects

Overview of Zara’s Business System(see Exhibit 12) (see Exhibit 13)

 Largest Inditex Chain: At the end of 2001, Zara operated 507 stores worldwide, with
significant capital investment and high EBIT and sales figures.
 Growth Strategy: Zara's international expansion and emphasis on quick fashion responses were
crucial to Inditex’s growth and international presence.

2. Expansion and Investment

 Spanish Market Completion: Zara completed its Spanish market rollout by 1990.
 International Expansion: Began overseas expansion around 1990.
 Investments: Major investments in manufacturing logistics, IT, and a centralized distribution
system in Arteixo.
 Logistical Innovations: Established a just-in-time manufacturing system and advanced
telecommunications for coordination.

3. Manufacturing and Production

 Internal Manufacturing: Zara produces its most fashion-sensitive products internally and has
significant vertical integration.
 Production Model: Small batch production and quick response time. Designs move from
creation to stores in 4-5 weeks for new designs and 2 weeks for modifications.
 Design Process: 11,000 distinct items annually, with a focus on fast, trend-driven production.
  External Suppliers: 40% of garments made internally; remainder sourced from Europe, North
Africa, and Asia. Long-term relationships with about 20 main suppliers.

4. Sourcing & Logistics

 Fabric Sourcing: 50% of fabric is “gray” for flexibility. Fabric processed through Comditel for
dyeing and finishing.
 Production Distribution: 40% of finished products manufactured internally; 60% sourced
externally (2/3 from Europe/North Africa, 1/3 from Asia).
 Distribution Center: Centralized 400,000 sq. meter facility in Arteixo; shipments made twice a
week to stores with efficient logistics and minimal storage time.

5. Retail Strategy

 Store Locations: Prime locations and sophisticated store designs. Focus on creating a sense of
urgency and exclusivity.
 Merchandising: Broad, changing product lines with high fashion content. Frequent product
turnover (75% of merchandise updated every 3-4 weeks).
 Advertising: Minimal media advertising (0.3% of revenue). Emphasis on store presentation and
word-of-mouth.
 Sales and Markdowns: Limited markdowns (15-20% of sales) compared to competitors.
Strategies to minimize unsold inventory.

6. Store Operations

 Store Design and Layout: Prime locations, high visibility, and attractive presentations. Store
sizes increased from 910 to 1,376 sq. meters.
 Store Management: Centralized decision-making with store managers responsible for orders,
customer feedback, and store performance. Managers receive a mix of fixed and performance-
based compensation.
 Employee Training: Comprehensive training programs for store managers, with a focus on
internal promotion and on-the-job training.

7. Design and Product Development

 Design Teams: Teams for women’s, men’s, and children’s clothing. Designers track trends and
create collections for two main seasons.
 Product Lifecycle: Constant adaptation of designs based on real-time store data and fashion
trends.
 Sample Testing: Limited production of new designs in select stores based on positive consumer
reactions.

8. Challenges and Future Considerations

 Scalability Concerns: Potential diseconomies of scale as the number of stores grows.

 Second Distribution Center: Construction of a new facility in Zaragoza to increase capacity.

Zara's International Expansion (2001)

 Extent and Reach:

 o282 stores in 32 countries outside Spain.
o186 in Europe, 35 in North America, 29 in South America, 27 in the Middle East, 5 in
Japan.
o International sales: €1,506 million.
o International operations accounted for 56% of stores, 61% of sales.
 Market Selection: (Exhibit 14
o Began international expansion in 1988 (Oporto, Portugal).
o Expanded to New York (1989) and Paris (1990).
o Between 1992-1997, entered one country per year (7 European countries, US, Israel).
o Rapid expansion from 1998-2001 (24 countries).
o Planned 2002 entries: Italy, Switzerland, Finland.
o Expansion pattern: Open flagship store, then add stores regionally.
o Criteria: Resemblance to Spanish market, economic development, ease of entry.
 Market Entry Modes:
o Company-owned stores, joint ventures, franchises.
o 231 company-owned stores in 18 countries.
o 31 franchised stores in 12 countries (small, risky, culturally different markets).
o Joint ventures in Germany and Japan (50:50 ownership, Zara control).
 Marketing Strategy: (Exhibit 15 provides more information, for a representative product.)
o Consistent business system across countries.
o Market-based pricing, higher outside Spain.
o Limited advertising, focus on flagship stores.
o 85%-90% common designs across countries.
 Management Structure: (See Exhibit 16 for an old, multi-country price tag.)
o Organized under Zara Holding, B.V. (Netherlands).
o Country operations with local management teams.
o Standardized reporting systems.

Growth Options: (See Exhibit 17 for data on European markets along some of these and other
dimensions.)


o Focus on Europe for sustained growth.
o Limited growth options in Spain (6% market share).
o Example: Italy, a large market with high per capita apparel spending.
o Challenges in North America (retail overcapacity, less fashion-forward) and Asia
(competitive).

Outlook for Inditex and Zara

 Geographic Focus:
o Important to decide future geographic focus for Zara's expansion.
 Management of Non-Zara Chains:
o Non-Zara chains have proliferated but some are of subcritical scale.
o Need to manage multiple chains without compromising the excellence of individual
chains.
o Geographic scope is broad, adding to the complexity.
 Considerations for New Chains:
o Decision whether to start up or acquire additional chains.
o Top management's revenue growth rate requirement: 20%+ per annum.
 Sales and Growth Metrics:
o Recent like-for-like sales growth: 9% per year.
o Future expectation: Might fall to 7% or even 5%.
o Annual increase in selling space required: 15%.
 Maintaining Margins:
o Need to preserve margins despite the growth requirements.
o Address threats to the sustainability of Inditex's competitive advantages.
 Management Insights:
o A roundtable video of Inditex's top management provides further insights on these issues.

ZARA: Fast Fashion 703-497

Exhibit 1 Buyer-Driven vs. Producer-Driven Global Chains

Buyer-Driven Global Chains Producer-Driven Global Chains

(e.g., Apparel) (e.g., Automobiles)
Upstream Structure Fragmented, locally owned, dispersed, and Global oligopolies
often tiered production
Downstream Structure Relatively concentrated intermediaries Relatively fragmented intermediaries
Key Cross-Border Retailers, branded marketers, and branded Producers
Links manufacturers
Rent Concentration Downstream Upstream
Types of Rents Relational Technology
Trade policy Organizational
Brand name
Typical Industries Labor-intensive consumer products Capital- and technology-intensive
products

Source: Casewriter compilation of data from Gary Gereffi, “International Trade and Industrial Upgrading in the Apparel Commodity Chain,”
Journal of International Economics 48 (June 1999): 37–70.

Exhibit 2 Average Labor Costs and Productivity in Apparel ($/hour, 1998)

Labor Cost Value Added

EU Countries
Germany 18 23
Spain 7 11
Italy 14 20
Portugal 4 6
UK 11 13
Major Suppliers
Turkey 2 12
China 0.4 na
India 0.4 2
Egypt 0.7 2
Other Major Markets
 US 10 20
Japan 14 na

Source: Casewriter compilation of data from: Werner Stengg, “The Textile and Clothing Industry in the EU,” Enterprise Papers No. 2,
June 2001; and http://europa.eu.int/comm/enterprise/textiles/statistics.htm, accessed December 17, 2002.

21
703-497 ZARA: Fast Fashion

Exhibit 3 Landed Costs of a Large Men’s Shirt in S pain: Illustra tive

Manufactured in Spain Manufactured in Asia

Fabric Costs €17.20 €25.32 Purchasing costs
Other input costs €13.25 €1.49 Transportation costs
Labor Costs €11.79 €2.28 Rehandling costs
Total €42.24 €29.09 Total

Source: Confidential industry sources.

Exhibit 4 Cycle Time Compression through Quick Response

Source: Inditex.
22
ZARA: Fast Fashion 703-497

Exhibit 5 A Product Market Positioning Map

PRICE +

Benetton

GAP Massimo Dutti

FASHION -
FASHION +
Pull
& ZARA
Pull
Bear
Bea
&
r H&M

Bershk
a

PRICE -

Source: Adapted from Morgan Stanley Dean Witter, “Inditex,” 1998.

Note: Zara, Massimo Dutti, Pull & Bear, Bershka, and Stradivarius were separate Inditex chains, as described in the

Inditex/Structure section of this case.

 703-497 ZARA: Fast Fashion

Exhibit 6 Key Competitors and Inditex, 2001

Gap H&M Benetton Inditex

Operating Results (€ Millions)

Net Operating Revenues 15,559 4,269 2,098 3,250
Cost of Goods Sold 10,904 2,064 1,189 1,563
Gross Margin 4,656 2,204 909 1,687
Operating Expenses 4,276 1,615 624 982
Operating Profits 379 589 286 704
Non-operating Expenses 108 -28 43 209
Pre-tax Income 272 617 243 495
Income Tax 280 206 92 150
Minority Interests 0 0 2 5
Net Income -9 410* 148 340

Financial Position (€ Millions,

except where noted
otherwise)
Current Assets 3,436 1,468 1,558 854
Property, Plant, and Equipment 4,695 661 720 1,228
Other Noncurrent Assets 435 54 543 523
Total Assets 8,566 2,183 2,821 2,605
Current Liabilities 2,320 432 956 834
Noncurrent Liabilities 2,850 101 625 285
Total Liabilities 5,170 532* 1,580 1,119
Equity--Book Value 3,396 1,650 1,241 1,486
Equity--Market Valuea 12,687 15,564 2,605 13,433
One Year Change in Market Value (%)b -60% 8% -20% 47%

Other Statistics
Employees 166,000 22,944 6,672 26,724
Number of Countries of Operation 6 14 120 39
Sales in Home Country (%) 87% 12% 44% 46%
Sales in Home Continent (%) NA 96% 78% 77%
Number of Store Locationsc 3,097 771 5,456 1,284
Stores in Home country (%) 87% 15% 40% 60%
Stores in Home Continent (%) 92% 96% 80% 86%
Average Store Size (sq. meter) 632 1,201 279 514

SM
Sources: Compiled from annual reports; analyst reports; Bloomberg; Standard & Poor’s Compustat® data via Research Insight ; J. P.
Morgan, “Hennes & Mauritz,” company report, February 10, 1999, p. 89, Compustat.

* Totals off due to rounding.

a
On May 22, 2002.

b
In-home currency.

c
Includes franchised stores.
ZARA: Fast Fashion 703-497

Exhibit 7 Inditex Historical Financials (millions of euros)

Year 2001 2000 1999 1998 1997 1996

Net Operating Revenues 3,249.8 2,614.7 2,035.1 1,614.7 1,217.4 1,008.5

Cost of Goods Sold 1,563.1 1,277.0 988.4 799.9 618.3 521.0
Gross Margin 1,686.7 1,337.7 1,046.7 814.8 599.1 487.5
Operating Expenses 982.3 816.2 636.2 489.2 345.5 285.4
Operating Profits 704.4 521.5 410.5 325.6 253.6 202.1
Non-Operating Expenses 209.3 152.7 118.1 96.7
Pre-Tax Income 495.1 368.8 292.4 228.9
Income Tax 149.9 106.9 86.2 76.1
Minority Interest 4.8 2.7 1.5 -0.2
Net Income 340.4 259.2 204.7 153.0 117.4 72.7
Net Margin 10.47% 9.91% 10.06% 9.48% 9.64% 7.21%
Inventories 353.8 245.1 188.5 157.7
Accounts Receivable 184.2 145.2 121.6 75
Cash and Cash Equivalents 315.7 210 171.8 158.8
Total Current Assets 853.7 600.3 481.9 391.5 274.0 190.3
Property, Plant, and Equipment 1,336.8 1,339.5 1,127.4 880.4 635.7
Other Non Current Assets 414.5 167.8 163.6 54.4 67.5
Total Assets 2,605 2,107.6 1,772.9 1,326.3 977.2 820.3
Asset Turnover 1.25 1.24 1.15 1.2 1.2 1.2
ROA 13.07% 12.30% 11.54% 11.54% 12.01% 8.86%

Accounts Payable 426.3 323.0 276.1 215.6 131.4

Other Current Liabilities 407.9 347.3 275.6 229.1 141.5
Total Current Liabilities 834.2 670.3 551.7 444.7 272.9 234.1
Non Current Liabilities 284.5 1,437.7 1,221.3 881.6 704.3 586.2
Total Liabilities 1,118.7 2,108 1,773 1,326.3 977.2 820.3
Equity 1,486.2 1,170.9 893.2 673.4 529.9 414.9
Leverage 1.75 1.80 1.98 1.97 1.84 1.98

ROE 22.9% 22.1% 22.9% 22.7% 25.0% 20.0%

Source: Inditex.
703-497 ZARA: Fast Fashion

Exhibit 8 Inditex Timeline

No. of
Year Stores Event
1963  Establishment of Confecciones Gao, S.A. Beginning of the company’s activities
1975 2  Opening of 1st Zara store in La Coruña
1976 2  Establishment of Goasam as the owner of the Zara chain stores
 Purchase of 1st computer
1985 37  Reorganization of group structure with Inditex at the apex
1988 71  Formation of Zara B. V. in the Netherlands as holding company for international
activities
1989 88  International rollout begins with opening of a Zara store in Portugal
1990 105  Opening of fully automated 130,000-square-meter central warehouse
 Joint venture with Toyota (Japan) introduces just-in-time system at one of the factories
1991 218  Establishment of commercial office in Bejing to handle purchase of supplies in Asia
 Diversification into new segments
 Acquisition of 65% of Massimo Dutti
 Implementation of telecommunications system between headquarters and the supply,
production, and sales centers
 Launch of the Pull & Bear chain
1993 369  Preparation/implementation of expansion plan for Zara in the French market
1995 508  Acquisition of all of the share capital of Massimo Dutti
1996 541  Expansion of central warehouse to cope with the increase in the number of points of sale

1998 748  Creation of the Amancio Ortega Foundation

 Alliance with Otto Versand to enter the German market
 Launch of the Bershka chain, targeting the younger female market
1999 922  Acquisition of Stradivarius makes it the fifth chain of the Group
2000 1,080  Opening of new Inditex headquarters complex in Arteixo, near La Coruña
2001 1,284  Initial public offering of 26% of Inditex’s shares
 Launch of the Oysho lingerie chain
2002  Alliance with Percassi results in opening of first Italian store

Source: Inditex.
ZARA: Fast Fashion 703-497

Exhibit 9 Map of Spain

Source: Adapted from The Encyclopedia of World Geography (New York: Barnes and Noble, 1996).
703-497 ZARA: Fast Fashion

Exhibit 10 Inditex Chains

Zara Massimo Dutti

 500 stores in 30 countries  200 stores in 12 countries
 Created in 1975  Acquired by Inditex in 1995
 Continuous innovation based on customer desires  Fashion variety, from sophisticated to sporty
 For women, men, and youth, from infants to age 45  For men & women, ages 25-45
 Web link: www.zara.com  Web link: www.massimodutti.com

Bershka Pull and Bear

 Founded by Inditex in 1998  225 stores in 9 countries
 170 stores in 8 countries  Founded by Inditex in 1991
 Trendy clothing for a younger female target  Casual clothing at affordable prices
audience, ages 13-23  For men and women, ages 14-28
 Stores are designed as a social hot-spot,  Web link: www.pullbear.com
highlighting fashion, music, and street art
 Web link: www.bershka.com

Stradivarius Oysho
 Acquired in 1999  Inditex's newest chain
 100 stores in 7 countries  25 stores in 6 European countries
 Youthful urban fashion  Latest trends in lingerie
 For young men & women, ages 15-25  Quality products at reasonable prices
 Web link: www.e-stradivarius.com  Web link: www.oysho.com

Source: Inditex.
28ZARA: Fast Fashion 703-497

Exhibit 11 Inditex Management Structure

Source: Inditex.
703-497 ZARA: Fast Fashion

Exhibit 12 Zara’s Business System

Design

Retailing Sourcing &

Manufacturing

Distribution

Source: Casewriter.

Exhibit 13 Product Precommitments: Zara vs. Traditional Industry

Source: Inditex.
Exhibit 14 Globalization of Inditex

Zara Stores

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Only (2001)

Europe
Spain 57 70 85 99 201 266 323 350 391 399 433 489
769 603 692 225
Portugal 1 2 4 11 17 28 38 49 60 74 87
140 97 104 38
France 1 3 5 13 20 30 36 47 55
68 59 64 67
Greece 1 6 8 10 14 17
29 17 19 20
Belgium 4 8 11 13 17
28 20 21 14
Sweden 1 3 3 4 6 3 6 5 0
Malta 1 1 1 1 2 2 2 0
Cyprus 1 2 4 9 5 8 2
Norway 1 1 1 1 1 0
Great Britain 111 3 7 11
Germany 17 2 7 15
Netherlands 6 2 2 3
Poland 2 2 2 2
Andorra 2 1 1
Austria 3 3 3
Denmark 2 1 2
Czech Rep. 1 1
Iceland 1 1
Ireland 2 0
Italy 3 0
Luxembourg 2 1
Subtotal 57 71 87 104 215 288 365 419 490 521 589 678 819 939 1101 406
Americas
United States 1 1 3 3 3 4 6 6 7 7 6 6 8 8
Mexico 1 1 7 12 14 20 25 29 41 55 27
Argentina 4 8 8 8 8
Venezuela 1 3 4 20 7
Canada 1 3 4 4
Chile 2 2 3 3
Brazil 3 5 7 7
Uruguay 2 2 2 2
Subtotal 0 0 1 1 3 4 4 11 18 20 27 37 54 71 107 66
Middle East/Asia
Israel 6 16 22 23 24 9
Lebanon 1 3 4 4 2
Turkey 3 3 4 5 5
Kuwait 1 2 4 4 2
United Arab Emirates 1 3 5 15 4
China 1 1 0 0 0
Japan 10 11 17 5 5
Saudi Arabia 3 11 14 6
Bahrain 1 1 2 1
Qatar 1 2 1
Jordan 1 0
Subtotal 0 0 0 0 0 0 0 0 0 0 6 33 49 70 76 35
TOTAL 57 71 88 105 218 292 369 430 508 541 622 748 922 1080 1284 507

Source: Inditex.

31
 703-497 ZARA: Fast Fashion

Exhibit 15 The Price of a T-shirt at Zara

Country Relative Price Level

Spain 100%
United Kingdom 151%
Denmark 153%
Poland 158%
Cyprus 136%
Lebanon 152%
Kuwait 171%
Saudi Arabia 170%
Bahrain 170%
Qatar 160%
Canada 178%
USA 209%
Mexico 164%
Venezuela 147%
Japan 231%

Source: Inditex.

Exhibit 16 Sample Garment Price Tag

Source: Inditex.

32

This document is authorized for use only in Prof. Rohit Kumar's Executive MBA 2023-25/ Cooperative and Competitive Strategy at Indian Institute of Management - Ranchi from May 2024 to Nov 2024.
This document is authorized for use only in Prof. Rohit Kumar's Executive MBA 2023-25/ Cooperative and Competitive Strategy at Indian Institute of Management - Ranchi from May 2024 to Nov 2024.

703-497 -33-

Exhibit 17 European Markets for Apparel, 1999

Total Sales Apparel Outlets per Specialist Share of Specialist Sales Total GNP Population GNP per Distance from
(€ billion) Million Inhabitants Apparel Sales (%) (€/sq. meter) (€ billion) (million) Capita (€) Spain (km)

Austria 8 416 40 2,500 229 8 28,280 1,809

Belgium 8 845 50 3,500 283 10 27,489 1,314
Denmark 4 702 25 3,100 192 5 36,183 2,072
Finland 3 493 33 2,100 145 5 27,822 2,949
France 41 640 56 3,400 1,603 59 27,217 1,053
Germany 61 725 69 4,500 2,308 82 28,073 1,870
Greece 8 1,416 36 1,700 142 11 13,357 2,366
Ireland 3 934 30 2,500 98 4 25,708 1,458
Italy 63 1,725 70 5,600 1,295 58 22,435 1,377
Netherlands 11 1,049 64 4,000 449 16 28,234 1,480
Poland 906 182 39 4,700 2,289
Portugal 5 25 1,900 124 10 12,412 503
Spain 25 1,599 57 3,100 662 40 16,756
Sweden 6 76 4,000 307 9 34,461 2,592
Switzerland 7 800 39 1,400 307 7 42,631 1,148
United Kingdom 55 560 67 5,600 1,641 60 27,492 1,263

Total 308 9,965 422

Average 21 915 49 3,260 623 26 25,203 1,703

Source: Compiled from Verdict, Retail Intelligence, and UBS Warburg estimates
This document is authorized for use only in Prof. Rohit Kumar's Executive MBA 2023-25/ Cooperative and Competitive Strategy at Indian Institute of Management - Ranchi from May 2024 to Nov 2024.