ZARA: Chic and Fast Fashion

Abstract

The world’s largest clothing retailer has been able to cope with the financial crisis better than most of its rivals, helped in part by the expansion of shops in fast, growing commercial centers and also by offering affordable fashion at a fraction of the cost of designer fashions. This case provides information on Zara and its major rivals in the industry to highlight the challenges and opportunities facing companies who are competing on a global basis. A comparison of key financial ratios for Inditex (the parent company of Zara), Benneton, the Gap and H&M shows that Inditex’s strategy has resulted in outstanding financial results as compared with its competitors. In 2011, sales increased by 10% while profitability rose by 12%. Over the same period, revenues of Benetton, The Gap and H&M changed by -1%, -1% and 1% respectively, while profits fell by 25%, 31% and 15% respectively. Zara has evolved into an international success by effective supply chain management, responsive marketing, and excellent human resource management.