Zara Case

What are the key success factors of the Inditex business model (of the Zara brand in particular)?

Since almost 10 years, Zara has become the largest and the most successful brand in the world. This is due to the Inditex business model, group to which Zara belongs. This Spanish company, which started to sell nightwear and bathrobes in a small town, has now more than 5150 stores in 78 countries.

First of all, the Inditex business model is succeeding since the last 10 years because of its eight different versions of fashion clothing under the Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Zara Home, Oysho and Uterqüe brand. All these brands are targeting different market with their own logo, their own world and their own shop atmosphere. The group also gave them the necessary autonomy in order to develop and expand their products, distribution, image, personnel and financial outcomes. This freedom gave to the headquarters the role of “Strategic Controller “ which helped the company to become successful.

Zara is the flagship brand of Inditex and was also the first shop the company opened. The core concept of Zara's business model is the "medium quality fashion clothing at affordable prices" which goes with four fundamental success factors: short cycle time, small batches per product, extensive variety of product every season and heavy investment in information and communication technology.

Innovation and flexibility are one of the most important factors to the brand. Zara's designers track consumer preferences and place orders with both internal and external designers. Zara is able to accomplish this huge variance due to ordering small batches and internal production of the most stylish pieces, and therefore most time-sensitive items, which permit a very short production and delivering cycle. Every two weeks, the brand refurbishes its products, which is a very successful strategy, as the customer can’t

get easily bored. This brings also the customer to think that what he is buying is unique and won’t be available in a few weeks anymore, as the stock on Zara stores is limited. Moreover, Zara (and the other brands) have never advertised anywhere and avoid outsourcing its production, which are clearly huge savings. That explains why the company is able to have a low pricing policy.

Another key factor to the success of the international brand is the aggressive expansion strategy. It all began at the end of the 1980’s when Zara entered Portugal in 1988 and then France, Mexico, Greece, Belgium, Sweden, Israel, Norway, Turkey, UK, Argentina, Venezuela and others, all before 1998. Zara was given the autonomy to choose its own stores, like for example the one on the famous avenue in the world, the Champs Elysées in Paris.

Last but not least, quick response and vertical integration are other key factors to the business model success. Constant