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Inditex: A Trendsetter

Industria de Diseno Textil SA (Inditex) was founded in 1963 by Amancio Ortega Gaona. The group opened its first Zara shop in 1975 in A Coruna, Spain and has now become a renowned apparel retailer around the world.

The company has successfully evolved its fashion lines and markets its range of products through eight sales formats: Zara, Bershka, Pull and Bear, Massimo Dutti, Stradivarius, Oysho, Zara Home and Uterque. According to MarketLine the global apparel retail industry is forecast to grow at a moderate rate representing a compound annual growth rate (CAGR) of 2.8% for the period spanning 2008-12; with the Asia-Pacific region being the main driver of growth. However, Inditex has experienced strong growth over the last few years; and is in fact outperforming the market. The group recorded revenues of EUR15, 946m ($20,492.1m) during the financial year ended January 2013 (FY2012), an increase of 16% from the previous year.

Key to Inditex’s success is its unique ‘fast fashion’ model which has changed the fashion industry. This diverse product offering has enabled the Inditex group to carve a niche for itself and emerge as one of the largest fashion distributors globally. Inditex has pioneered this approach and has changed a century of biannual fashion cycles. All Inditex stores receive deliveries of new clothes twice a week and now many companies, including high-end fashion houses such as Louis Vuitton and Prada are changing their own strategies and making four to six collections a year instead of two.

The company is continuing to grow and has now become a leading player in international/ emerging markets. Growth within these markets has been driven by the Asia-Pacific region along with the company entering the online retail market globally. According to Inditex’s CEO, from this year onwards Inditex will broaden its spectrum with the online launch of all the chains in the Group. Zara Inditex’s online store network continues to expand, reaching 23 markets. On the other hand rival retailer H&M delayed its US online launch in 2012 until the following summer.

Inditex is dominating the apparel retail industry and many celebrities have been pictured wearing clothing from Zara. The company has made its mark in the industry for its trendy, innovative designs at affordable prices. Its success has been achieved via a number of strategies and these strategies are being adopted by more retail companies including H&M and GAP who are struggling during an economic downturn.

Read more in our case study titled Inditex: Global fashion powerhouse

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