Caso Zara

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REV: DECEMBER 21, 2006

PANKAJ GHEMAWAT
JOSÉ LUIS NUENO

ZARA: Fast Fashion

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Fashion is the imitation of a given example and satisfies the demand for social adaptation. . . . The more an
article becomes subject to rapid changes of fashion, the greater the demand for cheap products of its kind.
— Georg Simmel, “Fashion” (1904)

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Inditex (Industriade Diseño Textil) of Spain, the owner of Zara and five other apparel retailing
chains, continued a trajectory of rapid, profitable growth by posting net income of € 340 million on
€
revenues of € 3,250 million in its fiscal year 2001 (ending January 31, 2002). Inditex had had a heavily
€
oversubscribed Initial Public Offering in May 2001. Over the next 12 months, its stock price increased
bynearly 50%—despite bearish stock market conditions—to push its market valuation to € 13.4
€
billion. The high stock price made Inditex’s founder, Amancio Ortega, who had begun to work in the
apparel trade as an errand boy half a century earlier, Spain’s richest man. However, it also implied a
significant growth challenge. Based on one set of calculations, for example, 76% of the equity valueimplicit in Inditex’s stock price was based on expectations of future growth—higher than an
estimated 69% for Wal-Mart or, for that matter, other high-performing retailers.1

No

The next section of this case briefly describes the structure of the global apparel chain, from
producers to final customers. The section that follows profiles three of Inditex’s leading international
competitorsin apparel retailing: The Gap (U.S.), Hennes & Mauritz (Sweden), and Benetton (Italy).
The rest of the case focuses on Inditex, particularly the business system and international expansion
of the Zara chain that dominated its results.

The Global Apparel Chain

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The global apparel chain had been characterized as a prototypical example of a buyer-driven
global chain, in which profitsderived from “unique combinations of high-value research, design,
sales, marketing, and financial services that allow retailers, branded marketers, and branded
manufacturers to act as strategic brokers in linking overseas factories”2 with markets. These attributes
were thought to distinguish the vertical structure of commodity chains in apparel and other laborintensive industries such as footwearand toys from producer-driven chains (e.g., in automobiles) that
were coordinated and dominated by upstream manufacturers rather than downstream intermediaries
(see Exhibit 1).

________________________________________________________________________________________________________________
HBS Professor Pankaj Ghemawat and IESE Professor José Luis Nueno prepared this case. HBS cases aredeveloped solely as the basis for class
discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.

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ZARA: Fast Fashion

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Production

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Apparel production was very fragmented. On average, individual apparel manufacturing firms
employed only a few dozen people, although internationally traded production, in particular, could
feature tiered production chains comprising as many as hundreds of firms...