Case Assignment - 4

Topics - ZARA: Fast Fashion

Batch - PGCBM 28

Group - 1

Candidate name - Sumanta Bhattacharya (2231455)

Akshay Nigam (2231342)

Anil C Dhyani (2231430)

ZARA: Fast Fashion

ZARA is one of Retail chain amongst six retail chain of Inditex Group & operating arround the world. Zara is having 1284 store across world with 659400 square meters selling area & total revenues of 3,250 million euro. Inditex employed 26,724 people with an avearge age of 26 years. 46% of total revenue is outside spain with 10,919 people outside Spain.

Inditex is having six different retail chains targetting customer of various segment. ZARA is broadly targetting infant, Youth, Men & Women upto age 45.

From the data, We could see that relative labour price in spain is low which placed zara as competitive with respect to their competitor like H&M,GAP,benetton etc.

Low cost structure of Zara is also reflected in Inditex finacial statement with 10.47% Net income, 13.07% ROA & 22.9% ROE as on 2001 which is above their major competitors.

Unlike other competitors, Inditex is there in the complete value chain like Design, Manufacturing, Warehusing, Retailing.

While catering Market out side spain, ZARA is having different approach according the Macro environment of that economy I,e Own outlet, Franchise Model & Joint venture Model.

Looking at future where ZARA is targetting at 20% per annum growth which means 15% annual increase in selling space maintaining profitability which mens that ZARA has to look for not only new market but also new products looking at new targets.

We could able to see that ZARA is only having a single outlet at China who is having the largest population in the world & ZARA does not have any out let in India the second largest pouplation in world. With the increase in percapital income due to rapid growth in China & percapital income in India has also changed due to rapid growth in service sector.

Looking at future, ZARA should take necessary steps to start their activity in India & China. It is expected that price level in both these countries would be low compared to Spain/Europe. From the data, we could see that production cost of products manufactured in India is 33% less compared to products manufactured in Spain. Considering this mind & future aspiration of growth, ZARA should look into the possibilities of outsource production/ manufacturing facilities in India & China to surve respective market. This will not bring the overall cost down but it will also reduce

transportation cost. This will also ensure products are manufactured keeping local culture & diversification in mind.