N A M E : - N E H A S H AW

BBA (2nd year)

A s s i g n m e n t : - P ro d u c t M a n a g e m e nt a n d B r a n d i n g i s a n
i n t e g r a l p a rt o f a c o m p an y ’s s u c c e s s i n I n d i a n m a r k e t
INTRODUCTION

I n d u s t r i a d e D i s e ñ o Te x t i l S . A . , a l s o k n o w n a s T h e I n d i t e x G r o u p , i s a
S p a n i s h M u l t i n a t i o n a l C l o t h i n g C o m p a n y a n d i s t h e w o r l d ’s l e a d i n g a n d
f a s t e s t g r o w i n g f a s h i o n p r o d u c e r a n d r e t a i l e r, h e a d q u a r t e r e d i n A r t e i x o ,
Spain. The Inditex Group is made up of more than 100 companies
operating in textile design, manufacturing, and distribution, and is
r e s p o n s i b l e f o r p r o d u c i n g 8 4 0 m i l l i o n g a r m e n t s a y e a r, w i t h e i g h t r e t a i l
s t o r e f o r m a t s : B e r s h k a , M a s s i m o D u t t i , O y s h o , P u l l & B e a r,
Stradivarius, Uterqüe, Zara, and Zara Home. These retail formats
collectively occupy 7,490 stores in 96 markets or 202 markets through
its online platforms.

In the variable and fast changing fashion world, Inditex prioritizes

time-to-market through vertical integration, making them the pioneer of
“fast fashion.” Inditex does not employ well-known designers but
instead draws from a team of 300 to come up with products that mirror
t h e s e t r e n d s i n m o r e a ff o r d a b l e f a b r i c , w h i c h i t m a n u f a c t u r e s t h r o u g h a
partially vertically integrated process that occurs largely in close
proximity to headquarters.

F r a n c h i s i n g i s n o t a p a r t o f I n d i t e x ’s o v e r a l l c o r p o r a t e s t r a t e g y, a n d i t
is only utilized in markets with strict foreign regulations. The company
currently owns 88% of its retail stores. Inditex is also unique because
it does not have any advertising budget. While Gap, H&M, and the
other clothing industry spend 5%, 4%, and 3.5% of revenues on
a d v e r t i s i n g r e s p e c t i v e l y, w h e r e a s I n d i t e x o n l y s p e n d s 0 . 3 % o f r e v e n u e s
on advertising. Instead, Inditex relies on prime storefronts in chic
locations and lets this strategy do the signaling to customers,
supporting a high-end image despite their lower price point.

I n d i t e x h a s a b r o a d r e a c h , b o t h g l o b a l l y a n d w i t h i n t h e i n d u s t r y. Wi t h
stores currently in 86 countries, Inditex captures a wide range of global
shoppers. This global reach also minimizes the risk associated with
regional economic fluctuations. For example, even as the Spanish
economy stalls, Inditex was able to have a highly successful 2012
because of its expanding presence in Asia. The rollout of online retail
formats also allows Inditex to reach shoppers farther from its
storefronts who are time sensitive. Geographic reach is not the
c o m p a n y ’s o n l y a s s e t h o w e v e r, a s i t s b r a n d p o r t f o l i o a l s o g i v e s i t a n
advantage through broad presence in almost all market segments.
B A C K G R O U N D O F T H E C O M PA N Y

Amancio Ortega started the clothing industry in the early 1960s while
working for a local shirt maker in La Coruña, Spain. Ortega began
developing his own designs with his wife, Rosalia Mera, and they began
making clothes from their home. Ortega had saved up enough money to
open up a small factory and sold garments to his former employer
amongst others.

In 1975, the couple opened their first store, Zara, which produced
p o p u l a r f a s h i o n a t l o w p r i c e s . T h e f o l l o w i n g y e a r, Z a r a w a s
incorporated and began opening more stores and factories in Spain.
L a t e r t h a t y e a r, a f t e r O r t e g a n o t i c e d t h e g r o w i n g i m p o r t a n c e o f
c o m p u t e r s , a l o c a l p r o f e s s o r, J o s é M a r í a C a s t e l l a n o , w a s h i r e d t o g r o w
t h e c o m p a n y ' s c o m p u t i n g p o w e r.

In the 1980s the company implemented a new design and distribution

method that drastically reduced the time between design, production,
and arrival at retail sites. In 1988, the company began expanding
internationally with the opening of a Zara store in Oporto, Portugal. In
1 9 9 0 , t h e c o m p a n y o w n e d f o o t w e a r c o l l e c t i o n , Te m p e , p o p u l a t e d i n t h e
children's section of Zara stores.

I n 1 9 9 1 , I n d i t e x c r e a t e d t h e c o m p a n y P u l l a n d B e a r, a c a s u a l m e n s w e a r
c o m p a n y. L a t e r t h a t y e a r, t h e c o m p a n y a l s o a c q u i r e d a 6 5 p e r c e n t s h a r e
in the upscale Massimo Dutti brand. Inditex created Lefties in 1993;
the name is taken from the term leftovers and it was created to sell old
Zara clothing. In 1995, Inditex purchased the remaining Massimo Dutti
shares and began expanding the brand to include a women's line.

In 1998, Inditex launched the Bershka brand that was aimed at urban
hip fashion. The company bought Stradivarius in 1999, a youthful
female fashion brand.

In 2001, the company launched the lingerie and women's clothing store
O y s h o . I n 2 0 0 3 , I n d i t e x l a u n c h e d t h e Z a r a H o m e b r a n d , w h i c h o ff e r s
b e d d i n g , c u t l e r y, g l a s s w a r e a n d o t h e r h o m e d e c o r a t i o n a c c e s s o r i e s . I n
2004, with the opening of store number 2,000 in Hong Kong, Inditex
had established its presence in 56 countries. In 2008, the company
o p e n e d i t s 4 , 0 0 0 t h s t o r e i n To k y o a f t e r d o u b l i n g i n s i z e w i t h i n f o u r
years.

BRANDS OF THE INDITEX GROUP

Z a r a : - Z a r a i s t h e f o u n d a t i o n o f I n d i t e x ’s s u c c e s s a s w e l l a s t h e i r f i r s t
retail format established in 1975. This brand generates about two-thirds
o f g r o u p s a l e s b y o ff e r i n g h i g h l y i m i t a t i v e f a s h i o n t r e n d s a t a ff o r d a b l e
p r i c e s . Z a r a ’s c o r e c o n s u m e r s a r e 2 0 - 4 5 y e a r o l d w o m e n , t h o u g h t h e y
a l s o h a v e k i d s a n d m e n s w e a r o ff e r i n g s . Z a r a i s t h e g r o u p ’s m o s t
geographically diverse retail concept with 80% of its full line stores
located outside of Spain. Rather than advertising, Zara relies on chic
l o c a t i o n s a n d l i g h t , a i r y, P r a d a i n s p i r e d s t o r e l a y o u t s a n d s h o p - w i n d o w
d i s p l a y s . To d a y, t h e r e a r e 1 , 7 2 1 Z a r a s t o r e s i n 8 6 c o u n t r i e s . Z a r a ’s
online retail format launched in 2010, and is now available in 21
countries, covering most of Europe, Japan, China, and the United
States, and will continue to be rolled out in smaller markets.

Pull & Bear:- Inditex launched the Pull & Bear retail format in 1991,
focusing on young urban fashion. The concept also occupies prime
high-street shopping locations, though its average store size is
t y p i c a l l y s m a l l e r t h a n Z a r a . P u l l & B e a r t a rg e t s y o u n g m e n a n d w o m e n
f r o m t e e n s t o e a r l y 2 0 ’s , a n d o ff e r s t h e m o s t c a s u a l c l o t h i n g o f
I n d i t e x ’s f o r m a t s t a r g e t i n g t h i s a g e g r o u p . T h e c o m p a n y h a s g r o w n t h e
brand into 816 stores in 59 countries.

Massimo Dutti:- Inditex first acquired 65% of Massimo Dutti in 1991,

a n d g a i n e d f u l l o w n e r s h i p i n 1 9 9 5 . M a s s i m o D u t t i o ff e r s m o r e t a i l o r e d ,
s o p h i s t i c a t e d c l o t h i n g t h a t t a r g e t s m e n a n d w o m e n i n t h e i r m i d - 2 0 ’s
a n d h i g h e r. T h i s b r a n d o c c u p i e s s m a l l e r p r i m e r e t a i l l o c a t i o n s , a n d i s
t h e g r o u p ’s m o s t u p s c a l e f o r m a t w i t h a s t r o n g e m p h a s i s o n d e s i g n a n d
quality fabrics. Despite its comparatively higher price point, the
Massimo Dutti concept adheres to the same flexible distribution model
as the other Inditex brands, and now has 630 stores in 60 countries.
B e r k s h a : - I n d i t e x l a u n c h e d t h e B e r k s h a b r a n d i n 1 9 9 8 t o t a rg e t t h e i r
youngest demographic of consumers, age 13-25. Berksha has a strong
international presence with 67% of stores located outside of Spain.
To d a y t h e r e a r e 8 8 5 B e r k s h a s t o r e s i n 6 2 c o u n t r i e s .

Stradivarius:- In 1999, Inditex acquired the youth fashion chain

Stradivarius with a presence in nine countries. As a part of Inditex,
there are now 780 Stradivarius stores in 52 countries, occupying high-
s t r e e t o r m a l l l o c a t i o n s . S t r a d i v a r i u s o ff e r s o n l y w o m e n ’s c l o t h i n g a n d
its core consumers are between 16 and 30 years of age. Though they
t a rg e t a s i m i l a r a g e d e m o g r a p h i c , S t r a d i v a r i u s ’ p r o d u c t l i n e s a r e m o r e
focused on cutting-edge design than those of Pull & Bear

Oysho:- Inditex opened their lingerie and loungewear retail format

“Oysho” in 2001, now with 524 stores in 35 countries. Oysho has
s l o w l y s t a r t e d t o a l s o o ff e r c a s u a l o u t e r w e a r, a c c e s s o r i e s , a n d
s p o r t s w e a r.

Zara Home:- In 2003 Inditex made its first move outside of fashion
retail when it launched Zara Home. Zara Home sells constantly updated
home décor and linen reflecting the latest trends in 357 stores in 35
c o u n t r i e s . I n d i t e x ’s i n t e n t i o n w a s t o c a p i t a l i z e o n i t s e x i s t i n g f l e x i b l e
sourcing model to introduce more “fashion” into a traditionally slower
m o v i n g m a r k e t . S t o r e s a r e l a i d o u t s u c h t h a t d i ff e r e n t a r e a s d i s p l a y
d i ff e r e n t t h e m e s r a t h e r t h a n d i ff e r e n t p r o d u c t c a t e g o r i e s , m a k i n g
shopping more about a complete vision of trends and styles.

U t e rq ü e : - T h e c o m p a n y ’s l a t e s t r e t a i l f o r m a t w a s l a u n c h e d i n 2 0 0 8 a n d
is a reasonably upmarket and fashionable accessories chain. Uterqüe
occupies 92 stores in 18 countries with chic an stylish layouts, and
o ff e r s f a s h i o n a c c e s s o r i e s , l e a t h e r g o o d s , h a n d b a g s , s h o e s , a n d c o s t u m e
j e w e l l e r y a t a ff o r d a b l e p r i c e s .

POSITION IN THE INDIAN MARKET

In 2015, Spanish fashion brand Zara became the first apparel brand in
India to cross the $100-million sales mark, five years after it opened its
first shop here in Delhi as part of a joint venture with Indian
c o n g l o m e r a t e Ta t a G r o u p .
S p a i n ’s I n d i t e x , t h e o w n e r o f Z a r a f a s h i o n b r a n d , s a w t h e b r a n d ’s n e t
p r o f i t s u rg e m o r e t h a n 7 0 % i n I n d i a i n 2 0 1 7 - 1 8 , e v e n a s t h e w o r l d ’s
l a rg e s t f a s h i o n g r o u p g r e w a t o n e o f i t s s l o w e s t r a t e s i n t h e c o u n t r y
amid increasing competition from global rivals.

I n d i t e x o p e r a t e s i n I n d i a t h r o u g h t w o j o i n t v e n t u r e s w i t h Tr e n t , t h e
Ta t a G r o u p ’s r e t a i l a r m , o n e f o r Z a r a a n d a n o t h e r f o r b r i d g e - t o - l u x u r y
label Massimo Dutti. Zara and Massimo Dutti collectively saw 20%
r e v e n u e g r o w t h i n I n d i a d u r i n g t h e y e a r. W h i l e t h e f l a g s h i p Z a r a p o s t e d
73% growth in net profit to Rs 82.59 from Rs 47.6 crore a year ago,
I n d i t e x ’s o v e r a l l p r o f i t s i n t h e c o u n t r y w e r e e r o d e d b y a n e t l o s s o f R s
2 . 7 3 c r o r e t h a t M a s s i m o D u t t i s u ff e r e d d u r i n g t h e y e a r.

I n d i t e x Tr e n t , w h i c h r u n s 2 0 o f Z a r a s t o r e s i n I n d i a , s a w i t s r e v e n u e
increase 19% to Rs.1,221.67 crore in 2017-18 from Rs.1,023 crore in
t h e p r e v i o u s y e a r, a c c o r d i n g t o Tr e n t ’s a n n u a l r e p o r t 1 7 - 1 8 . T h e o t h e r
joint venture that operates three Massimo Dutti stores reported revenue
of Rs 45.75 crore for 2017-18, up from Rs 30 crore a year ago.

A s I n d i t e x ’s c o n c e p t w i t h t h e b r o a d e s t a p p e a l f o r m e n , w o m e n , a n d
c h i l d r e n , Z a r a f i t s w e l l a m o n g I n d i a n ’s f a m i l y o r i e n t e d c o n s u m e r h a b i t s
a n d w i l l i n g n e s s t o p a y f o r s p e c i a l o c c a s i o n s w i t h i n I n d i a ’s h i g h e s t
c l a s s . H o w e v e r, I n d i t e x ’s s p e c i a l i z e d y o u n g a n d f e m a l e b r a n d s s u c h a s
Berksha and Stradivarius are limited in this market.

Plans are on to open a few more Zara stores in India over the next three
to four years in the major cities. The primary challenge to faster
expansion is the availability of high quality retail spaces, which can be
expected to generate reasonable sales through. In addition to expanding
i t s n u m b e r o f s t o r e s , I n d i t e x i s c u r r e n t l y b u y i n g l a rg e r n e w s t o r e s ,
u n d e rg o i n g e n l a r g e m e n t o f i t s f l a g s h i p s t o r e s p a c e , a n d r e v a m p i n g s t o r e
images in a handful of its most prime real estate locations. This space
e x p a n s i o n a i m s t o i n c r e a s e p r o d u c t v i s i b i l i t y, c r e a t i n g s t r o n g e r v i s u a l
merchandising and enhancing the in-store experience.

Wi t h 2 0 s t o r e s n o w, a v e r a g e s a l e s p e r s t o r e o f Z a r a i s a b o u t R s . 4 5
c r o r e a y e a r, f a r m o r e t h a n t o p a p p a r e l b r a n d s s u c h a s L o u i s P h i l i p p e ,
L e v i ’s a n d M a r k s & S p e n c e r, a n d e v e n s l i g h t l y h i g h e r t h a n d e p a r t m e n t
store chains Shoppers Stop and Lifestyle. Its closest rivals in India —
B e n e t t o n ( w h o l e s a l e ) a n d L e v i ’s — h a d p o s t e d a r o u n d R s . 5 9 9 c r o r e
e a c h i n s a l e s a y e a r a g o . A n a l y s t s d o n ’t e x p e c t t h e m t o o v e r t a k e Z a r a
though.

H o w e v e r, I n d i t e x ’s s p e c i a l i z e d y o u n g a n d f e m a l e b r a n d s s u c h a s
Berksha and Stradivarius are limited in this market.

Z a r a h a s b e e n a s u c c e s s i n I n d i a s i n c e i t s a r r i v a l i n t h e c o u n t r y, i n
2010. According to market watchers, it has been going strong despite
c o m p e t i t i o n f r o m i t s g l o b a l r i v a l s i n c l u d i n g S w e d e n ’s H e n n e s &
Mauritz (H&M).

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