Inditex SA is a parent company that specializes with the manufacture and shipment of trendy clothing. It has stores globally including a Zara store located in Arteixo, Spain (Tokatli, 2014). Inditex SA is the second prevalent retailer in the clothing industry after Gap Inc, in terms of sales. In the case study we seek to answer the following fundamental questions relating to Inditex SA operations.
Question 1
What are the ways that Inditex ensures that “fast fashion” is truly fast?
Inditex stores are stocked with latest fashion items twice every week. The collections are usually small in quantity and sell out faster making the markdowns of the goods to reduce. They have a bunch of sales manager who sits along computers in La Coruna to monitor sales all over the World. That ensures that ensures that new designs are quickly replaced by flopping garments.
Question 2
What are the essential attributes of a “fast fashion” retailer to a consumer? Attributes to a store manager?
They get trendy clothes on request as warehouses and distribution centers are located near the production plant. The garments come at a reduced price due to their short period that they take before selling to the consumers. The consumers can be able to acquire brands that are uniform if they are shipped in large volumes and from a central point. To the store managers, it is essential as they don’t have stock that will be complex for them to maintain.
Question 3
Why would a retailer introduce its online store country-by-country? Why was Inditex slow to embrace online sales when it is so tech-savvy in other ways?
The internet is becoming a more relevant channel in terms of sales and stock management. The new hand-held computers can now assist store managers to know how each garment in terms of sales. Therefore, the results can aid the clerks in identifying the bestsellers garments and how they can re-order them in a period of less than one hour. It beats the norms as previously the order would take an estimated three hours.
It will assist the company to have a strong internal control system in terms of inventory, and production. Inditex was slow in embracing sales online because of the complexity involved in online management and sale of collections that are fast-changing.
Question 4
Briefly describe five opportunities for continued growth during the next five years for Zara’s parent, Inditex SA.
- Market – Inditex has market niche/gap in small towns beyond giant cities where it has set its stores.
- Information Technology – Inditex can utilize the opportunity gap that exists in IT to boost its online sales across the globe. Internet sales are becoming more widespread in the 21st
- Customer service – Through such software App downloaded through a phone, users can be able to access what is new in Inditex SA stores.
- Opening of new stores – Inditex is opening new stores outside its home market that is majorly the Spanish market.
- Access to raw materials – New cities may open up to new places where the industry may get new materials at cheap prices.
Question 5
Pick one of the five opportunities and outline the advantages and disadvantages of pursuing it.
Market
A research on the market is something that the business continues to do to strengthen its presence. It is so because of continually change in business conditions. The company must ensure that information used in decision making is up to date to avoid the failure of the company. Eriksson et al. 2011 p.14)
Advantages
- Broad market – Inditex SA will be able to increase its net worth by setting up companies in smaller cities. That will contribute to increased brand presence and consequently increase in sales. That will eventually in the long run leads to an increase in the profit margin of the company (Merchante and Juan, 2013)
Disadvantages
- Skills and attitudes – As the business expands its operations to smaller towns, they are required to hire new employees. The employees support the business by producing the human resource needed in production of goods and services. Some of these employees may not be having such skills, thus hindering the operation of the company (Viardot, 2013 p.27).
- Location – It is the place where the business is situated. The best place to locate a business is where cost of production is minimized. The small cities may be away from the manufacturing and warehousing location, thus increasing the cost of the garments.
Inditex SA under the leadership of the chief executive, Pablo Isla is set up for higher growth with the implementation of new policies. Such new ways operations such as online sales will enhance the company’s growth making it even faster in its functioning. There are also many booming opportunities that need to be utilized by the corporation is as to achieve maximum potential. Each opportunity is analyzed so as to weigh on its merit and demerits. After my analysis, I think the company is in its way to becoming the leading clothing retailer globally, both in sales and revenue.
References
Eriksson, Carina, and Simon Jonsson (2011), ‘Inditex-A company analysis with focus on growth’.
Merchante Rubio, Juan (2013), ‘INDITEX Valuation’.
Tokatli, Nebahat (2014), ‘Single-firm case studies in economic geography: some methodological
reflections on the case of Zara’, Journal of Economic Geography: lbu013.
Viardot, Eric (2013), ‘Always Trust the Customer: How Zara has Revolutionized’, Cases on
Consumer-Centric Marketing Management: 68.
