Zara Case Analysis

1872 WordsAug 21, 20098 Pages
Albert Sedaghatpour Individual Case Analysis-Zara 7/24/09 Introduction Zara is the flagship chain store of Inditex Group owned by Spanish tycoon Amancio Ortega. The group is located in Spain, where the first Zara store was opened. Zara has opposed the industry-wide trend towards turning fast fashion production to low-cost countries. Possibly its most atypical strategy is its policy of zero advertising; the firm opted to invest a portion of revenues in opening new stores instead. At the end of 2001, it ran 507 stores around the world. While its share of the group’s total sales were anticipated to fall by two or three percentage points each year, it would proceed to be the primary driver of the group’s growth for some time to come, and to…show more content…
Weaknesses: A disadvantage of Zara is its euro-centric model. There is an anticipated over saturation of Zara stores in Europe by 2013, which would indicate that running the stores would in fact cost more money than their sales. In addition, the euro-centric model joined with one of the strongest currency in the world is forcing prices of the clothing to increase in locations such as the United States. The identical piece of clothing can be up to 50 percent more in the US than in Spain. Opportunities: Zara presently is still in the process of infiltrating the market in the United States. At this time, the majority of their revenues come from Europe and entering the United States could give them the push required to avoid Gap as the top clothing retailer. Since they have only entered one region of the world completely, probability of expansion is without bounds. Additionally, since Italy has the highest spending market for clothing, Zara intends on opening more and more stores there, on a yearly basis, which could increase Zara’s sales. However, the most significant source of expansion in the near future will likely come from India, where they will develop joint ventures with particular firms to form allocation centers to the public. India has been one of the primary retail investment markets for the last three years and Zara plans to take advantage. In the coming decade, Zara expects the

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