Zara: Expansion Blues


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Case Details:

Case Code : MKTA023
Case Length : 16 Pages
Period : -
Pub Date : 2005
Teaching Note :Not Available
Organization : -
Industry : -
Countries : -

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

Zara in US

In the early 1990s, Zara looked towards the US, but decided against entering it in a big way. Zara believed that it still had plenty of room to grow in Europe before the market became saturated.

Moreover, the experiences of other European retailers like Benetton and H&M had not been encouraging.

In 1989, Zara opened its first store in Manhattan. It continued its 'go slow' strategy in the US till 2003, when it seriously started considering a larger presence in the country.

Till then, clothes were transported to the US stores from Spain by plane. In fact, the two planes Zara sent to America each week, could supply as many as 40 or 50 stores...

Looking Ahead

Zara accounted for over 80% of Inditex's total international sales – a significantly high number for an organization that had seven other chains.

If Zara failed in the future, Inditex would have to reformulate its strategies, apart from facing a financial crisis of sorts.

Inditex was directing much of its new investment into various other retail chains, some that it had created and others that it bought. It was not clear how successfully Inditex could apply the Zara approach to its smaller chains...

Exhibits

Exhibit I: Business Model
Exhibit II: Sales by Format / 2003
Exhibit III: Store Sales / 2003
Exhibit IV: Zara Stores
Exhibit V: Inditex's other Retail Formats
Exhibit VI: International Expansion
Exhibit VII: Five year Financials

 

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