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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About Zara Contd...

The Inditex Group engaged in textile design, manufacturing and distribution, comprised over 100 businesses. Inditex's activities primarily revolved around eight sales formats: Zara, Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Kiddy's Class. Though these retail outlets predominantly sold women's fashion clothing, they also offered offered lingerie, cosmetics, shoe wear, children's clothing and menswear, and accounted for less than 20 % of Inditex's total sales. Zara Home, established in 2003, was a specialty home furnishings chain focusing on textiles such as bed, table and bathroom linens, complemented by tableware, cutlery, glassware and decorative items.

Inditex was expanding Kiddy's Class, a competitor to Gap Kids. Zara was known for stylish designs, many resembling those of the big-name Italian fashion houses, but at moderate prices. Zara also produced seasonal clothing collections. Yet, if it found that customers were coming in asking for, say, a rounded neck on a vest rather than the V neck on display, a new version with a rounded neck could be in the store within about 10 days.

If the movie star, Jennifer Lopez appeared in a ravishing new item, Zara could get a version of it into its stores in a matter of weeks, not months.

After its successes in Spain, Zara had looked for new markets.

Unlike Spain where it owned all its stores, internationally Zara used three different modes of market entry: company-owned stores, joint ventures, and franchises.

Zara usually employed just one of these modes of market participation in a particular country, although it did sometimes shift from one to another.

Thus, it had entered Turkey via franchising in 1998, but had acquired ownership of all its Turkish stores in 1999...

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