Inditex International Expansion
How Inditex became global: from local to global
Established in 1975 in A Coruña (North – Eastern Spain) by Amancio Ortega, Inditex has grown rapidly to become one of the largest fashion retailers in the whole world competing with the American Gap and the Swedish Hennes & Maurizt (H&M). “In addition to Zara, the largest of its retail chains, Inditex has another seven commercial formats: Bershka, Stradivarius, Massimo Dutti, Oysho, Pull and Bear, Skhuaban and Zara Home (all of the targeting different age and disposable income segments). The group also includes more than a hundred companies associated with different textile, manufacturer, infrastructure and distribution businesses” (Inditex 2006 p.2). Inditex is listed since 23 May 2001 in the Spanish Stock Exchange with a market value around the 25,000 million Euros (Inditex 2006).
Until 1990 Inditex´s operations were confined in its domestic market Spain, there it established a competitive advantage: just in time fashion taken directly from the street, nightclubs or fashion weeks which 15 days after is ready to satisfy costumer’s desires (Blanco and Salgado 2004). In addition, “Zara has flourished on the principle of being responsible for its products all the way from initial conception to the customer” (Emerald Group Publishing Limited 2005). By 1990, however, Zara realised that the Spanish market was far too saturated; they had to change their growth strategy. For that reason, they started its global expansion by entering Spanish natural export exit: Portugal. Shortly after, Inditex started its outer expansion in France, the US and the rest of the world. But let’s focus on which entry strategies Inditex had to pursue to become global.
Inditex choose a localization strategy which meant: 1) increasing profitability by customizing their outlets providing a good match to tastes and preferences in different national markets (Hill 2007) and by 2) choosing the perfect location for their stores which will
Established in 1975 in A Coruña (North – Eastern Spain) by Amancio Ortega, Inditex has grown rapidly to become one of the largest fashion retailers in the whole world competing with the American Gap and the Swedish Hennes & Maurizt (H&M). “In addition to Zara, the largest of its retail chains, Inditex has another seven commercial formats: Bershka, Stradivarius, Massimo Dutti, Oysho, Pull and Bear, Skhuaban and Zara Home (all of the targeting different age and disposable income segments). The group also includes more than a hundred companies associated with different textile, manufacturer, infrastructure and distribution businesses” (Inditex 2006 p.2). Inditex is listed since 23 May 2001 in the Spanish Stock Exchange with a market value around the 25,000 million Euros (Inditex 2006).
Until 1990 Inditex´s operations were confined in its domestic market Spain, there it established a competitive advantage: just in time fashion taken directly from the street, nightclubs or fashion weeks which 15 days after is ready to satisfy costumer’s desires (Blanco and Salgado 2004). In addition, “Zara has flourished on the principle of being responsible for its products all the way from initial conception to the customer” (Emerald Group Publishing Limited 2005). By 1990, however, Zara realised that the Spanish market was far too saturated; they had to change their growth strategy. For that reason, they started its global expansion by entering Spanish natural export exit: Portugal. Shortly after, Inditex started its outer expansion in France, the US and the rest of the world. But let’s focus on which entry strategies Inditex had to pursue to become global.
Inditex choose a localization strategy which meant: 1) increasing profitability by customizing their outlets providing a good match to tastes and preferences in different national markets (Hill 2007) and by 2) choosing the perfect location for their stores which will
References: Blanco, J, Salgado, X (2004), Amancio Ortega: De cero a Zara, La esfera de los libros S.L, Madrid. Emerald Group Publishing Limited (2005), How Zara fashions its supply chain, Strategic Direction,21, 10,p.28-31 [online] available from www.emerald.com Fábrega, F (2003), El modelo de negocio de Inditex, Cyan Proyectos y Producciones editorial, Madrid Guillén, M (2005) The rise of Spanish Multinationals, Cambridge University Press, Cambridge. Hill, Charles W. L. (2007) International Business: Competing in the Global Marketplace, (5th Edition), McGraw-Hill College – ISBN-10: 0073102555; ISBN-13: 978-0073102559 Inditex, Press Kit Inditex, [online] available from www.inditex.com Emerald Group Publishing Limited Ohmae, K (1990) The borderless world, power and strategy in the interlinked economy, Fontana, London.