Zara

Topics: Inditex, Retailing, Zara Pages: 5 (1682 words) Published: July 23, 2013
ZARA in Indian and Chinese market
Zara is a very renowned brand for its latest designs and is among the top 100 best global brands in 2010 and its unusual strategy of zero advertising and instead invests the revenue in opening new stores across the world. The middle-aged mother buys clothes at Zara chain because they are cheap, while her daughter aged in the mid 20’s buys Zara clothing because it is fashionable. Clearly Zara is riding two of the winning retail trends firstly, being in fashion and secondly being low in price making a very effective combination out of it. The creator of Zara, Amancio Ortega who also owns, other brands such as Massimo Dutti, Pull and Bear and many others, opened the first Zara store in 1977 in a central street in A Coruña, Spain, which is also the headquarter. Zara have opened 95 stores around the world in Quarter 1 2009 alone, bringing the total to 4359 stores in 73 countries worldwide. The Louis Vuitton fashion director Daniel Piette also described it as “possibly the most innovative and devastating retailer in the world.” It controls most of the steps in the supply chain and also it designs, produces and supplies itself. Taking into consideration the amount of competition and the need for sustainability in the human race, running a business or a brand is not an easy task. With existing big brands and busy markets around the world, it takes more than what is required to make a name for oneself and to succeed in it. Proper management and marketing strategies are required along with the detailed knowledge of the economy and the earning and spending of the locality or the country’s GDP (Gross Domestic Product) which measures the country’s economy and their ability to spend and grow should be known before taking a leap and spreading the arms around the world. This essay discusses about which mode of entry strategy Zara adapted to entered into the Indian and Chinese market and whether the strategy proved to be beneficial for the company and the benefits / disadvantage sit is going tackling and lastly it also analyses in which country it is doing better and why. Zara adopts a ‘Fast Fashion’ supply chain model. The latest fashions are supplied from design to delivery in just 2 weeks, compared to the 6‐month industry average. They operate a vertical supply chain, so they themselves undertake everything from design, manufacture, sourcing and distribution. This allows them total control over the business, and leaves them less vulnerable to accusations of unethical practices such as sweatshop labor. Entry strategy of Zara in India

While Zara owns a majority of its stores in Spain, the international expansion has adopted three different entry modes: Own subsidiaries, Joint ventures and Franchising. In accordance with Indian regulations on foreign direct investment (FDI), the Spanish fast-fashion retailer partnered with the Tata Group, India, to form a joint venture in February 2009. Inditex owns fifty one percent of this partnership while Tata’s subsidiary Trent Limited holds forty nine percent Due to various challenges the company faces, store expansion will remain slow, with only one further store op Zara is the second Spanish Retailer to enter India, after Mango. Although Mango expanded in India, by the franchise route. Ending planned for 2010. Jesus Echevarria Hernandez, Chief Communication Officer at Inditex Group. Says that “The entry in the Indian market has a significant strategic importance for Inditex. India is one of the top priorities in the Asia region when our retail offering has been very well received,” it took up joint ventures in India because this is a co-operative strategy in which the manufacturing facilities and know-how of the local company are combined with the expertise of the foreign firm in the market, especially in large, competitive markets where it is difficult to acquire property to set up retail outlets or where there are other kinds of obstacles that require...
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