HBP# CU280

PUBLISHED ON
AUGUST 14, 2019

THE JEROME
CHAZEN CASE
SERIES

ZARA:
Fast Fashion in the Digital Age
BY VANESSA BURBANO, * BENNETT CHILES, * AND DAN J. WANG ‡

In 2017, Amazon, the global behemoth in online retailing, became the largest clothing retailer
in the United States, with apparel sales of $28 billion.1 One research analyst predicted that
Amazon’s market share of the U.S. apparel market would increase from less than 7% to more
than 16% over the next five years.2 Amazon and other online apparel retailers were making
strides internationally as well; an estimated 16% of global apparel and footwear market sales
in 2017 occurred online.3
For Inditex, the international apparel and home goods retailer with €25.3 billion in 2017 sales
and more than 2,100 stores in 96 countries, the principal concern in recent years was
determining how to adapt its business strategy to the digitization of retail. Over the past 20
years, Inditex had expanded its business from only 622 stores and €1.2 billion in sales (a 16%
CAGR in sales), utilizing what analysts referred to as a “fast-fashion” retailing strategy.
Inditex, operating primarily through its flagship brand, Zara, and other fast-fashion retailers,
including H&M, had made significant inroads into the apparel retail industry.
However, these companies were now facing numerous challenges. In addition to the threat
from online sales, they faced ongoing pressure from newer industry competitors, from
traditional apparel retailers who were adapting their strategies to compete more effectively,
and from companies exploiting new technologies to improve their business models. Apparel
manufacturers such as Nike, which had traditionally offered their product through third-party
distributors, were utilizing the online channel to sell direct to consumers. With technological
advances in manufacturing, such as the increased mechanization of the manufacturing
process, retailers were able to improve their efficiency. In 2016, Adidas opened its

Author affiliation Copyright information

*
Assistant Professor of Business, Management © 2018-2019 by The Trustees of Columbia University in the City
‡
David W. Zalaznick Associate Professor of Business, of New York. This version of the case replaces an earlier version
Management that was published on August 30, 2018.

This case is for teaching purposes only and does not represent an
endorsement or judgment of the material included.

This case cannot be used or reproduced without explicit permission

from Columbia CaseWorks. To obtain permission, please visit
www.gsb.columbia.edu/caseworks, or e-mail
ColumbiaCaseWorks@gsb.columbia.edu

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 “speedfactory” in Ansbach, Germany, which used robots, 3-D printers, and computerized
knitting in the apparel manufacture process.4
These trends had resulted in an increasingly competitive operating environment. In March
2018, Inditex had seen its share price fall following its 2017 earnings report. While sales and
net income had both increased, gross margins had declined to their lowest level in more than
10 years.5 And some analysts were expressing concern about the way Zara and other fast-
fashion retailers had responded to the online trend.6
Was Inditex well positioned to compete in the ever-evolving retail business? As the
digitization of apparel retailing increased, would Zara’s competitive advantage in traditional
retail extend to e-commerce?

The Origins of Zara

Industria de Diseño Textil (Inditex) was founded in 1963 in Spain. The company was founded
by Amancio Ortega, who began by making and selling dresses and dressing gowns. In 1975,
the first Zara store opened in A Coruña, in northwest Spain, a region known for its
concentration of textile factories. More Zara locations were opened throughout Spain, and in
1988 Zara expanded internationally, opening a store in Porto, Portugal.
By 2018, Inditex had 2,118 stores in 96 countries. Via its eight retail concepts, Zara, Pull & Bear,
Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, and Uterqüe, Inditex offered its
customers “the latest fashion trends (clothing, footwear, accessories and household textile
products) at attractive prices, in due time and with high quality and sustainability standards.”7
Inditex operated what its management described as a “fully integrated online and store
business,”8 and each of its retail concepts was carried out through a store and online model.
Zara, Inditex’s flagship retail concept, contributed 66% of the company’s sales and 70% of
Ebitda. (See Exhibit 1 for a company time line, Exhibit 2 for Inditex’s historic sales growth,
Exhibit 3 for a financial summary for each retail concept and a breakdown of sales by country,
and Exhibit 4 for a breakdown of Zara stores by country.)

Zara’s Business Model

Product Design
Commercial and design teams have a clear customer orientation. Inditex listens and
transmits the demands of the clients both in stores and online to the teams…[who] use this
information to react quickly, manufacturing the desired items in very short lead times, in
order to make them available for sale as soon as possible.9
—Inditex 2017 Annual Report
Inditex employed more than 700 designers, based exclusively at its headquarters in Spain.
These designers produced 65,000 new designs per year, utilizing technology, such as radio
frequency identification (RFID) chips embedded in Inditex products, to understand consumer

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 demand. This “hard data” on which styles, colors, etc. were selling was supplemented by the
use of “soft data.” Soft data included feedback from frontline store personnel on what
customers in the stores were saying. Inditex had worked hard to ensure that information
flowed efficiently throughout the company.10 One article described that this was reinforced by:
…getting various business functions to sit together at the headquarters and also by
encouraging a culture (through structures and processes) where people continuously
talk to each other. The sales and marketing teams who receive trend feedback talk
regularly with designers and merchandisers. It is important that there is constant
two-way communication so that sales and marketing teams can talk about new lines
to customers and designers/merchandisers have a strong visibility of customers’
needs and preferences enacted at a store level.11
Manufacturing and Distribution
It took 15 business days on average for Inditex’s designs to move “from drawing board to
store.”12, 13 This compared with industry norms of a six- to nine-month product cycle for “basic
items” and 16 weeks for seasonal items.14 One analyst explained that the quick product cycle
enabled Inditex to “exist on the curve, evaluating trends first, then following.”15
Inditex would generally cut fabric in its company-owned factories and then ship the fabric
pieces out to small studios to be sewed. The completed garment would then be returned to the
factory, where it was ironed, wrapped in plastic, and shipped.16 Fifty-nine percent of Inditex’s
products were manufactured in factories and studios in Spain, Portugal, North Africa, and
Turkey, many of which Inditex owned. 17 By contrast, competitors like Gap sourced almost
exclusively from countries in Asia and Latin America through partnerships.18 (See Exhibit 5
for labor costs in the textiles industry globally.) Overall, Inditex worked with 824 suppliers in
7,210 factories in 47 countries. Factories farther from Inditex’s Spanish headquarters produced
items considered to be less trendy—and, as such, time to market was less of a concern. They
also produced large quantities of unfinished “greige goods,” raw fabric that had not yet been
dyed or printed, which sat ready so that finishers could quickly transform it into products for
sale based on demand. This kept waste to a minimum, lowering material costs. Inditex’s
factories generally operated very leanly on a 4½-day workweek, allowing for excess capacity
to respond to increased demand as needed.19 (See Exhibit 6 for a list of countries in which
Inditex factories were located.)
New merchandise was delivered to each Inditex store at least two times per week.20 From its
10 company-owned logistics centers in Spain, 21 Inditex was able to get products to every
company store in less than 48 hours via the selected use of air shipping. 22 That way, if a
particular color was selling out or a style was selling slowly, the company could adjust its
orders accordingly. Airfreight was also used selectively to transport goods from factories in
Asia to distribution centers in Europe. One analyst estimated that 36% of Inditex’s inbound
shipments to the Americas, Asia, and Africa traveled via air, and 15% of goods traveling
inbound to Europe were shipped via airfreight. 23 By contrast, traditional fashion retailers
relied almost entirely on sea-based shipping. A study by the World Bank concluded that

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 airfreight was “typically priced 4–5 times that of road transport and 12–16 times that of sea
transport.”24
Inditex produced most items in small batches. Because of this, one industry observer
commented, “With Zara, you know that if you don’t buy it, right then and there, within 11
days the entire stock will change. You buy it now or never.”25 Inditex embedded RFID chips
in the plastic security tags attached to each garment (allowing the chips to be reused, because
the security tags were detached at the point of sale). RFID was piloted by Inditex in 2007, and
the company eventually purchased 500 million RFID chips in order to roll out the technology
to all its stores.26 The chips emitted radio signals to scanners transmitting detailed product
information. This allowed inventory to be tracked real-time and allowed for automated
inventory reordering. A periodic stock take could be completed in half the time—with store
personnel simply waving a scanner as they walked across the floor to pick up the RFID chip
data. (Previously, each item’s tag would have been individually scanned.) Sales associates also
used the RFID chip data to help customers find items not available at a particular store. While
many other retailers were experimenting with RFID technology, Inditex was the first to
implement it on a wide-scale basis.27
In 2015, Stanford professor Dr. Warren H. Hausman analyzed data from 53 businesses in an
effort to understand the impact that promotional and markdown strategies had on prices. He
determined that discounted items at U.S. apparel retailers and department stores generally
constituted 50% to 70% of total items. However, Zara typically discounted only 15% of total
items. The percentage discount that Zara employed on marked-down items also tended to be
lower than that of its competitors. Hausman dubbed this differential the “Zara Gap.”28 (See
Exhibit 7 for more details on this gap.)
Store Network
Inditex’s stores were largely company owned. (See Exhibit 8 for a breakdown of company-
owned and franchised stores.) The company utilized an “oil stain” pattern when launching in
a new market; it would open a large flagship store and follow up with smaller stores in the
same market, allowing for greater economies of scale. 29 Inditex’s communications director,
Jesus Echevarría, elaborated, “When we open a market, everyone asks, ‘How many stores will
you open?’…Honestly, I didn’t know. It depends on the customer and how big the demand is.
We must have the dialogue with the customers and learn from them. It’s not us saying you
must have this. It’s you saying it.”30
Stores were in high-profile shopping areas, often next to high-end designers like Gucci and
Prada. The company made its stores look like designer boutiques; with the appearance and
positioning of these stores effectively acting as brand advertising,31 and each of Inditex brand’s
stores had a “distinctive store aesthetic.”32 As the company website stated, “Our stores are
where our relationship with customers is forged… Everyday face-to-face interaction between
our customers and store staff is all-important for our fashion decisions, helping us understand
customer needs.”33 This focus on the customer experience was important to Zara’s strategy. As

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 one industry analyst noted, shoppers visited Zara stores two to three times more frequently
than a typical women’s apparel retailer. 34
In 2011, Inditex paid $324 million for retail space in 666 Fifth Avenue, one of New York’s most
high-profile commercial addresses.35 The company had invested in other highly visible and
costly metropolitan locations globally. Between 2014 and 2017, Inditex’s leasing costs averaged
10% of revenues. And capital expenditure, which was largely driven by the opening of new
physical space, averaged 7.5% of revenues.36
Marketing
Inditex did very little marketing. However, the firm had worked to develop a strong brand—
Zara ranked number 24 on Interbrand’s Best Global Brands of 2017.37 One analyst described
the company’s approach to marketing: “Our billboards are our store windows.”38 Whereas
most fashion retailers spent 3% to 4% of sales on advertising, Inditex’s advertising expense
was just one-tenth of this industry average.39
(See Exhibit 9 for selected financial data for Inditex.)

Apparel Industry
The global apparel and footwear market generated $1.7 trillion in sales in 2016 and 2017.
Industry sales grew at only a 1% CAGR over the 2012-2017 time frame. Industry volumes grew
at a 3% CAGR over the same period, reflecting ongoing price declines.40 Sportswear had been
a key area of strength for the industry, increasing from 12% of sales in 2015 to 18% in 2017.41
Geographically, the biggest growth markets over the next few years were expected to be India
and China.42 (See Exhibit 10 for a breakdown of industry sales by category and region.)
The retail fashion landscape included a range of players: department stores (e.g., Macy’s,
Nordstrom), discount stores (e.g., Target), online-only retailers (e.g., Amazon, ASOS), and
specialty retailers (e.g., Zara, Gap, Abercrombie & Fitch). Globally, specialty retailers
accounted for 58% of apparel and footwear sales, representing the largest retail channel.
Department stores accounted for 15% of sales.43

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 SELECTED COMPETITORS
Gap
The first Gap store was opened in 1969 in San Francisco. The company went public in 1976. In
1993, it acquired Banana Republic (an apparel chain with a more upscale focus), and in 1994
Gap launched Old Navy (an apparel chain with a discount focus). Gap also owned Athleta, an
athletic apparel retailer, and Intermix, a retail concept focused on younger customers and up-
and-coming third-party designers.
It achieved high growth and profitability through the 1980s and much of the 1990s, with its
extensive collections of T-shirts, jeans, and “smart casual” work clothes. More than 90% of
Gap’s production was outsourced from outside the United States and shipped to its stores,
most of which were based in the United States. Like many typical industry competitors, it had
long lead times between design, manufacturing, and in-store arrival.
Gap had experienced challenging results in recent years. Supply chains had become too long,
the market was saturated, and the company lacked a clear positioning. A failed attempt to
reposition to more fashion-forward clothing in 2001 led to the departure of its CEO. In June
2015, Gap announced it would close 25% of its North American stores over the next few years.44
One analyst complained that the company’s response to weak sales growth had been to take
the “easy” way out of this problem by pushing lower-priced products in order to generate
sales rather than focusing on its higher-end brand, Banana Republic.45 Moreover, while Gap’s
sticker prices tended to be, on average, similar to those at Zara, Gap relied heavily on
promotional pricing, including “Gap Cash,” where customers who purchased goods could
credit a percentage of that purchase price when buying items at a later date. Art Peck, who
was named CEO of Gap in 2015, had described attempts to wean customers off the constant
promotional pricing cycle as a “game of chicken”—with decreased promotional activity
leading to weak sales.46
As of 2017, Gap had 3,165 company-owned and 429 franchised locations in North America,
Europe, and Asia. Gap’s products were manufactured by third party factories, none of which.
Gap owned. The company utilized 800 vendors in 50 countries. Substantially all of these
factories were outside the United States, with 25% of 2017 inventory purchases from factories
in Vietnam, and 22% from China.
Peck favored a decentralized approach to product design. Following the 2015 departure of
Gap’s creative director, Rebekka Bay, who had joined the company in 2012 from H&M, Peck
opted not to replace her and to let go of the creative directors for the company’s other brands,
calling them “false messiahs.” In their place, Peck installed operational executives at the head
of each of the company’s brands and pushed product teams to focus on increasingly available
data on customer tastes. “There is now science and art, and they can come together,” Peck
stated.47 Peck also focused on reducing product lead times. In 2017, he announced that the time
frame from design board to store on some products had fallen from 10 months to 10 weeks.48

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 Gap began selling clothes online in the United States in 1997 and started online sales outside
the United States in August 2010. To support its online operations, Gap had invested in local
distribution centers in the U.K., from which it serviced online operations in Europe, Canada,
China, and the United States. Additionally, in countries where some Gap brands did not have
a physical presence, Gap partnered with online vendors.49 Approximately 16% of Gap’s total
sales were online. 50 In the United States, Gap charged $7 for standard shipping on orders
below $50; shipping was free on orders of $50 or more. Items purchased online could be
returned or exchanged online or in store for no charge.
(See Exhibit 11 for selected financial data.)
Hennes & Mauritz

Hennes & Mauritz (H&M) was founded in Västerås, Sweden, in 1947. By 2018, H&M had
more than 4,700 stores in 69 markets. Only 219 of the company’s stores were franchised.
Franchised stores were primarily in the Middle East. The company also offered online sales
in 44 markets. H&M had a number of retail concepts, including H&M; COS; Weekday;
Cheap Monday; Monki; H&M Home; & Other Stories; and Arket. H&M put out a spring and
a fall collection, in line with traditional apparel industry practices, but also offered a number
of sub-collections to keep merchandise fresh.

In 2008, H&M expanded into home furnishings. Over the years, H&M had launched a number
of high-profile collaborations with well-known designers, including Karl Lagerfeld, Stella
McCartney, Viktor & Rolf, Roberto Cavalli, Marimekko, Matthew Williamson, and Jimmy
Choo. The company had also released clothing collections designed with pop stars, including
Madonna and Kylie Minogue.
Like Zara, H&M was considered a “fast-fashion” retailer. It aimed to “offer fashion and quality
at the best price in a sustainable way.”51 H&M’s sticker prices were slightly below Zara’s, and
its stores tended to offer a larger product assortment, i.e., more stock keeping units (SKUs). At
H&M, however, stock was replenished less frequently. And its customer base was younger
than the typical Zara customer—15 to 25 years old, versus 18 to 35 for Zara.52

H&M had a team of approximately 150 designers and 100 buyers based in Sweden who
created its clothing collections. Production was outsourced to a network of 800 suppliers;
40% of production was done in Europe, and 60% in Asia. (At Inditex, on the other hand, 59%
of items were produced at factories in Spain and neighboring countries.)53 Product logistics
were managed by a network of nearly 30 production offices, close to the company’s
suppliers. These offices selected suppliers, reviewed samples, and checked quality. Similar to
the method employed by Inditex, trendier products with shorter lead times were produced
in Europe.54

H&M’s online business accounted for 13% of the company’s total 2017 sales, and 22% of H&M
profits. 55 Analysts criticized the lack of integration between H&M’s online and physical

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 shopping channels—in-store pickups were available only in the U.K., and in-store returns
were available in only one-third of markets where H&M had an online presence. 56 In the
United States, H&M offered free shipping on orders over $40. Below that amount, standard
shipping was $3.99 per order. Items could be returned in store (no charge) or via mail (at a cost
of $5.99).57 In the United Kingdom, H&M launched H&M Club in 2017. Shoppers who signed
up for this free loyalty program earned points with every purchase and received other perks,
such as free online shipping and birthday discounts.58
In recent years, H&M had struggled. Sales grew only 4% in 2017, and profits declined. Analyst
Michael Dart commented,
Consumers have felt that H&M has been somewhat drab and not on trend as much
as competitors…With a slower supply chain (unlike super-fast Zara), they have not
responded as quickly to rapid shifts in taste and increasing fragmentation in the
consumer market with many more small segments. As a result, they have had more
markdowns, promotions and less inspiration for the consumer. It’s a formula for
sagging results.59
In response to its recent challenges, H&M had launched a turnaround plan that included
improved online offering and improved stock management using RFID technology.60 Looking
forward, company targets included 10% to 15% sales growth in local currencies, diversification
of categories to reduce dependence on apparel, expansion of its brand portfolio, and online
growth.61
H&M planned to open 220 new stores (net of store closings) in 2018. Most of the openings were
to be H&M stores, and 45 would have H&M Home shop-in-shops.
(See Exhibit 12 for selected financial data.)
Fast Retailing Co.
Fast Retailing was established in Japan in 1963. It opened its first Uniqlo store in Hiroshima in
1984. In 2001, the first international Uniqlo store was opened in London. By 2017, Uniqlo’s
international business contributed 47% of total Uniqlo sales, with 1,089 stores. Uniqlo Japan
comprised 831 stores, including 41 franchised stores. Uniqlo was the largest apparel retailer in
Asia.62 Fast Retailing also operated GU, a lower-price retail concept targeted at women in their
teens to early 30s. GU operated only in Japan, with 372 stores and sales of over ¥100 billion.
Uniqlo had a production staff of 450 people in Shanghai, Ho Chi Minh City, and Dhaka. It also
had partnerships with factories in China, Vietnam, Bangladesh, and Indonesia. However, the
company stated that it was “developing relationships with factories closer to UNIQLO stores
in Europe, the United States and elsewhere.” 63 The company attributed its success to an
integrated business model, which it continually refined to keep costs low.
Rather than offering trendy items, Uniqlo focused on quality basics at an inexpensive price
point.64 Uniqlo had a group of core apparel product lines, including fleece, Ultra Light Down
jackets, AIRism and Heattech. The company’s slogan was “Made for All.”

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 Uniqlo’s online sales varied dramatically by region—they accounted for more than 10% of
total sales to China and more than 20% of total sales to the United States. In Japan, online sales
represented only 6% of total sales. The company was focused on increasing its online business.
Fast Retailing president Tadashi Yanai commented, “We want to raise the results on the
Internet…The online channel represents between 5 and 6 percent of sales, but we want to grow
to 30 percent as soon as possible. I think to buy the clothes we have to touch it and check the
quality, but we need both channels, the online and the physical store.”65 In the United States,
Uniqlo offered $5 standard shipping or free standard shipping on orders over $75. Full refunds
were offered on returns made within 60 days; online purchases were required to be returned
by mail. Uniqlo did not accept online returns in stores.66
(See Exhibit 13 for selected financial data.)
THE DIGITIZATION OF RETAIL
Across all shopping categories, online sales constituted 7.4% of total global sales in 2015 and
10.2% of global sales in 2017. That percentage was projected to continue increasing, reaching
17.5% by 2021.67 14% of global apparel and footwear sales were online in 2016,68 and 16% were
online in 2017.69 Online sales of apparel and footwear grew at a 19% CAGR over 2012-2017,70
and the research firm Technavio projected that global online apparel sales would grow by
nearly 14% per annum over the 2017-2021 time frame.71 The penetration of online sales varied
widely by industry and by country. Spain and Portugal, where Zara had a high percentage of
its sales, had relatively low penetration of online sales to date.72 Within the online space in
apparel, online-only retailers saw faster growth than online sales overall in 2016.73
Among traditional apparel retailers, those who had increased their online channels to more
than 25% of total sales included J.Crew (38%), Urban Outfitters (35%), Neiman Marcus (30.1%),
and Abercrombie & Fitch (25%).74 However, for many other retailers, online sales remained a
relatively small percentage of their overall business. (See Exhibit 14 for a list of top U.S.
retailers ranked by online sales and Exhibit 15 for a list of the top fashion e-commerce
websites.)
For traditional brick-and-mortar retailers, the growth in online sales presented a number of
challenges. Stores, which had high fixed costs, were seeing traffic decline due to
cannibalization from online sales. These retailers were required to compete with online-only
players and with online retailers that offered specialized services (like Stitch Fix’s personal box
service). Online customers had high expectations with respect to online shopping platforms.
They looked for wide selections, attractive and easy to navigate websites and apps, rapid and
affordable shipping, and easy returns. Building and maintaining a system that met these
demands required a significant capital investment on the part of retailers. 75 Distribution
models had to allow for timely delivery of products to customers’ homes. Product return rates
tended to be higher for online sales, and the return process was often costly—30% of all
products ordered online were returned, compared with a 9% return rate for brick-and-mortar
stores. 76 The costs and logistics associated with returns were challenging to manage. In a
survey of customers returning online apparel purchases, 72% identified a “no questions

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 asked” policy as the most important piece of a retailer’s return policy. The second most
important thing was free return shipping. 77 (However, retailers with large physical-store
networks were able to lower the costs of returns with an “omni-channel” approach to sales.
Online purchases that were returned in-store involved lower costs, and the increased in-store
traffic drove incremental sales.)78
Online retailing also made pricing more challenging. “People can compare prices in an instant
[online] and are more price sensitive, potentially putting downward pressure on margins as a
whole,” says Richard Chamberlain, an analyst at RBC Capital Markets.79
However, the growth in the online sales channel was just part of the retail industry digitization
story. As one industry analyst opined, “Retailers are realizing that the biggest impact that
digital can have on their business is in-store. Some of the most innovative and compelling
stores make digital a core part of the store experience.”80 According to a survey conducted by
Deloitte Consulting, digital technologies “influenced” 49% of in-store sales in 2014. This was
up from 14% in 2012.81 Mobile technologies influenced 28% of in-store sales in 2016, up from
5% in 2012.82 This “influence” came in a wide range of forms, with consumers using digital
and mobile technologies to find inspiration, to research options, validate their choices via
online reviews, purchase and pay (utilizing in-store pickup), and return purchases. Twenty-
nine percent of consumers indicated that they used social media at some point during their
shopping experience. 83

Zara.com
Internet and the world of social networking are indispensable tools and extraordinary channels for
communication, and fit perfectly with our Group's philosophy.
—Pablo Isla, Inditex deputy chairman and CEO84
In their early days, the Inditex brand websites represented “another window display of Inditex
chains.”85 That is, they offered a platform for customers to view company products, but they
were not enabled for online sales. In 2007, its first year online, piloting sales via its Zara Home
website in selected countries, the company recorded 20.3 million visits to the Zara website
(representing 50% of total website visits across all Inditex brands). By August 2010, Zara had
more than 4.3 million fans on Facebook, H&M had 3.2 million, and Gap had 600,000.86 Zara
was described as “an online phenomenon,” leading all other apparel retailers with respect to
“Facebook fans” and downloads of its app on iTunes. Its app had already been downloaded
more than 3.5 million times—while neither Gap nor H&M had launched an app as of mid-
2010.87
In 2010, Zara began selling apparel online in Germany, the U.K., France, Italy, Spain, and
Portugal. These markets constituted about 40% of company sales at the time.88 This launch
came directly on the heels of Gap’s online sales platform launch in Europe and preceded
H&M’s online launch by mere weeks.89 Some analysts criticized Zara for being slow to come
to market with an online platform. A Wall Street Journal article describing the launch was titled

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 “Zara Wakes Up to Online Sales.” However, others praised the company for coming to market
with a fully developed online product. As one analyst described, “It was not a half-hearted
effort but a full corporate bet that forced competitors to play catch up to a fully integrated store
and online platform proposal: a well-designed app, affordable shipping rates (free shipping to
an Inditex store), and an easy return policy.”90 The company did not disclose how much was
invested in the launch, but Zara did reveal that a team of 50 people worked full-time on it, that
they had spent a year designing the online sales process, and that they had redesigned a
company logistics site in Meco, Spain, to support home delivery. 91 Inditex also hired 40
workers (who between them spoke six languages) to staff a call center that provided customer
support for online sales.92 And the company had an app for each of its retail concepts that
allowed for mobile shopping. At the outset, Inditex charged a small fee (e.g., £3.95 in the
United Kingdom) for home delivery of online purchases. Alternatively, customers could pick
up online purchases for free in stores.
In 2011, Zara launched online sales in the United States. By this time, the company had more
than 400,000 Facebook fans in the United States and had recently opened up a Twitter account,
@ZARA_US. Customers were encouraged to post with the hashtags #DearAmerica and
#ZARAShopOnline. Zara advertised its online rollout by commissioning photographers to
take and post pictures of all 50 states. As was the case in Europe, the U.S. site offered an
integrated shopping experience—consumers could purchase an item online and have it
delivered to them at home or pick it up in-store (for no charge). Standard home delivery (two
to four business days) was offered for $4.95, and free standard shipping was offered on orders
over $50.
The company had a 30-day exchange policy in line with its in-store policy. Customers’
returned items could be picked up at home, or they could return them to a store. Inditex hired
a U.S.-based logistics company to support its online operations.93 Again, some criticized Zara
for being slow to launch its online business. WWD, the U.S. fashion publication, commented
on Zara’s online rollout: “The fast-fashion retailer might be ahead when it comes to the latest
trends, but it’s taken a little longer for the company to embrace the digital world.”94
Inditex websites had 2.42 billion visits in 2017, and Inditex’s brands had 121 million followers
across social media platforms. In 2017, Inditex reported that online sales grew by 41% over the
previous year and equaled 10% of total sales. (Online sales in markets where Inditex had an
internet presence totaled 12% of sales.) 95 Inditex was continuing to roll out online sales
platforms across all of its markets—in some of its markets, the website only served as a
“showroom,” and customers still had to go to the physical store to make purchases. (See
Exhibit 16 for details on the rollout of Inditex’s online platform.) In 2018, Zara launched online
shopping in Australia. (See Exhibit 17 for an advertisement for Zara.com’s launch in Australia
and Exhibit 18 for a list of Zara’s online markets.)
Zara was also using digital technology to improve its store-based operations, including
enhancing the in-store customer experience. In 2018, when one of its London shops was being
renovated, Zara opened its first pop-up online store. This 2,000-square-foot pop-up allowed

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Fast Fashion in the Digital Age
BY VANESSA BURBANO,* BENNETT CHILES,* AND DAN J. WANG‡

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 customers to view and try on a small collection of women’s and men’s clothing. Staff members
were available with mobile devices to help customers order from Zara’s website, and
purchases were delivered to the customer’s home that day.96 Pablo Isla described the retail
concept as “another milestone in our strategy of integrating our stores with the online world,
which defines our identity as a business.”97 The company also launched the Zara AR app. This
“augmented reality” app allowed users to point their phone camera at Zara store displays or
Zara “boxes” throughout stores and see the looks brought to life on runway models. To speed
up lines in-store, Zara has launched self-checkout facilities. Zara dressing rooms had RFID
technology—when a customer held up an item to the scanner, it would suggest coordinating
items.98
In 2018, Zara began shipping online purchases from stores as well as distribution centers; 2,000
stores in 48 countries were equipped with this functionality. While most retailers managed
online and in-store inventory separately, the hope was that, by integrating the inventory
channels, Zara could lower costs and improve in-stock rates. CEO Isla explained, “This is
something very, very strategic for us, this idea of full integration between store and online
stockrooms.”99 Gap had launched a ship-from-store initiative in 2012.100
In recent years, partially in response to growth in online sales channels, Inditex had embarked
upon a strategy of slower square footage growth. This strategy entailed closing smaller, older
stores and opening new flagship stores. For example, in 2017, Zara opened a flagship store in
La Coruña, Spain, with more than 54,000 square feet spread over five stories. At the same time,
the company closed four smaller stores in the area.
Isla explained that the company’s goal was “full integration of the brick-and-mortar stores and
online businesses, with store openings that are increasingly more relevant.” In 2017, Inditex
had 524 openings and 341 closures. However, selling space still increased—by 7% (relative to
an 8% increase in 2015 and 2016, 10% in 2014, and 9% in 2013). Analyst Jamie Merriman
commented, “We believe that Inditex has made the right choice to slow space growth…We
believe that Inditex is clearly able to grow market share with the less capital intensive e-
commerce approach.”101

Looking Ahead
While Inditex’s Zara concept had experienced significant growth in recent years, the
competitive threats facing the business were only increasing. In 2016, Amazon launched Lark
& Ro, a private-label women’s apparel brand that many analysts compared to Zara in terms
of style and market segment. Additionally, new retail concepts such as Primark, a subsidiary
of Associated British Foods that focused on low costs and low prices and operated 345 retail
stores across Europe, were successfully making inroads with younger customer segments.
Primark had more than 10 million followers on social media.
As online and mobile technologies became an even greater driver of sales, how would this
impact Zara? How would its unique business model withstand the ever-changing retail
landscape?

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 Guiding Questions
1. In traditional retail, does Zara have a competitive advantage over competitors like Gap? If
so, what trade-offs make Zara’s strategy difficult for competitors to implement?
2. Would you describe Zara’s manufacturing and distribution strategies as efficient? Why or
why not?
3. Why are Zara’s physical stores important to its overall strategy?
4. Are online and offline retail in the fashion industry “complements” or “substitutes” for one
another?

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 Exhibits
Exhibit 1
Inditex—Time Line

1963 Inditex is founded in La Coruña, northwest Spain.

1975 The first Zara store opens.

1983 Zara expands across Spain.

1984 Zara builds a state-of-the-art logistics center in Arteixo, Spain.

1988 Zara goes international, opening a store in Porto, Portugal.

1989 Zara goes transatlantic, opening its first U.S. store on Lexington Avenue in NYC.

1991 Pull&Bear and Massimo Dutti join Inditex.

2001 Oysho is launched, and Inditex goes public.

2003 Zara Home is launched.

2004 Inditex reaches the 2,000-store milestone.

2005 Pablo Isla becomes deputy chairman and CEO.

2007 Zarahome.com launches, becoming Inditex’s first online store.

2008 Inditex creates its eighth brand, Uterqüe.

Zara begins to sell its products online in September, and by the end of 2010,
2010
the online platform is live in 16 European markets.

Inditex opens new high-profile flagship stores: Zara on the Champs-Élysées

2013
in Paris, Oysho and Zara Home in Shanghai, etc.

2014 Inditex opens a new logistics center in Cabanillas, Spain.

Inditex reaches the 7,000-store milestone and starts a profit-sharing plan for
2015
employees.

2017 Zara.com is launched in India, Malaysia, Singapore, Thailand, and Vietnam.

Source: Casewriter from company website, https://www.inditex.com/about-us/our-story.

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 Exhibit 2
Inditex—Sales Growth

€ 30.0

€ 25.3
€ 25.0 € 23.3
€ 20.9
€ 20.0 € 18.1
€ 16.7
€ 15.9
€ 15.0 € 13.8
€ 12.5
€ 11.1
€ 10.4
€ 9.4
€ 10.0

€ 5.0

€-
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: Company financials.

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 Exhibit 3
Inditex—Segment Financial Summary and Sales by Region

(euros in millions)
Segment Financials, 2017
ZARA Bershka Other Intersegment Total
Sales to third parties €16,721 €2,228 €6,491 €(104) €25,336
Segment EBIT 3,027 354 948 -14 4,314
Amortization and depreciation 450 110 389 15 963
Segment total assets 15,420 993 3,818 20,231
ROCE 30% 57% 38% 33%
Number of stores 2,251 1,098 4,126 7,475

Sales by Region
2017 2016 2015 2014
Spain €4,424 €4,251 €3,056 €2,806
Rest of Europe 11,954 10,796 3,458 3,188
Americas 3,877 3,484 1,421 1,495
Asia and rest of world 5,081 4,779 884 958
Total 25,336 23,311 8,820 8,447

Note: Data is for the fiscal year ended January 31, 2018. Store count is average for the period.
Source: Inditex, “Group Consolidated Annual Accounts as at 31 January 2018,”
https://www.inditex.com/documents/10279/563475/Annual+Accounts%2C+management+report+and+
audit+report+of+Inditex+Group+2017/77a7def2-b502-ac22-003e-d1e7c900233c.

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 Exhibit 4
Zara Locations by Country

Spain 306 Croatia 10 Guatemala 3

China 183 Malaysia 10 Jordan 3
France 127 Chile 9 Luxembourg 3
Italy 104 Taiwan 9 Panama 3
Japan 98 Ireland 9 Puerto Rico* 3
Dominican
Russia 98 Singapore 9 3
Republic
United States 87 South Africa 9 Tunisia 3
Mexico 83 Ukraine 9 Armenia 2
Germany 78 Philippines 8 Bahrain 2
Portugal 70 Hungary 8 Macau SAR 2
United Kingdom 65 Venezuela 8 Costa Rica 2
Brazil 56 Lebanon 7 Ecuador 2
Poland 46 Bulgaria 6 El Salvador 2
South Korea 42 Cyprus 6 Honduras 2
Turkey 42 Egypt 6 Uruguay 2
Greece 40 Czech Republic 6 Vietnam 2
Saudi Arabia 39 Slovenia 5 Albania 1
Canada 32 Finland 5 Andorra 1
Belgium 31 Kazakhstan 5 Algeria 1
Netherlands 29 Kuwait 5 Aruba 1
Israel 24 Lithuania 5 Belarus 1
Romania 24 Morocco 5 Iceland 1
India 20 Norway 5 Macedonia 1
Switzerland 20 Qatar 5 Malta 1
Australia 19 Serbia 5 Monaco 1
Indonesia 17 Denmark 4 Montenegro 1
Hong Kong 14 Latvia 4 Nicaragua 1
Colombia 14 Peru 4 New Zealand 1
Austria 13 Azerbaijan 3 Oman 1
UAE 11 Bosnia 3 Paraguay 1
Sweden 11 Slovakia 3 Total 2,118
Thailand 11 Estonia 3
Argentina 10 Georgia 3

* Puerto Rico is an unincorporated territory of the United States of America.

Note: Store count is as of January 31, 2018.
Source: Inditex, “Group Consolidated Annual Accounts as at 31 January 2018,”
https://www.inditex.com/documents/10279/563475/Annual+Accounts%2C+management+report+and+
audit+report+of+Inditex+Group+2017/77a7def2-b502-ac22-003e-d1e7c900233c.

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 Exhibit 5
Hourly Labor Cost Textile Industry, 2014
USD / Indexed to USD / Indexed to
Hour U.S. = 100 Hour U.S. = 100
Switzerland $51.36 290 Estonia $8.09 46
Australia $38.67 218 Czech Republic $7.89 45
Austria $35.42 200 Latvia $7.25 41
Belgium $34.77 196 Poland $5.70 32
France $31.61 179 Turkey $5.48 31
Germany $30.03 170 Argentina $3.82 22
Ireland $25.33 143 Colombia $3.27 18
Japan $25.10 142 Brazil $3.22 18
UK $24.01 136 Tunisia $3.18 18
Italy $22.67 128 Morocco $3.12 18
Spain $19.37 109 Mexico $3.06 17
U.S. $17.71 100 South Africa $2.94 17
Israel $12.86 73 Peru $2.78 16
Taiwan $10.61 60 China $2.65 15
South Korea $10.22 58 Bulgaria $2.33 13
Portugal $9.64 54 Thailand $2.26 13
Slovenia $9.39 53 Malaysia $2.12 12

Source: Werner International, http://www.werner-newtwist.com/en/newsl-vol-011/index.htm.

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 Exhibit 6
Suppliers and Factories by Country

Spain Portugal Morocco Turkey India Bangladesh

Suppliers with purchase
during the year 208 170 121 175 136 94

Active factories in the year 466 1,357 283 1,427 394 262

Workers in active factories 10,298 49,714 73,772 192,173 200,139 479,859

Vietnam Cambodia China Brazil Argentina Pakistan

Suppliers with purchase
during the year 4 1 393 15 45 42

Active factories in the year 134 125 1,654 65 83 107

Workers in active factories 152,101 126,843 368,428 10,712 5,099 125,316

Source: Company website, http://static.inditex.com/annual_report_2016/en/our-priorities/sustainable-

management-of-the-supply-chain/strategic-plan-2014-2018-2016-review.php.

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 Exhibit 7
The “Zara Gap”

Typical European Typical U.S.

Specialty Apparel Specialty Apparel Typical U.S.
Zara Retailer Retailer Department Store
15% of items 30%-40% of items 50%-60% of items 60%-70% of items
15% markdown 30% markdown 40% markdown 40% markdown

Source: Bain & Co., from “The Zara Gap: Retail’s Big Arbitrage,” October 28, 2014,
https://sourcingjournal.com/topics/retail/zara-gap-retails-big-arbitrage-18976/.

Exhibit 8
Inditex—Company Managed and Franchised Stores

Managed Franchised Total

Zara 1,873 245 2,118
Zara Kids 133 0 133
Pull & Bear 824 155 979
Massimo
666 114 780
Dutti
Bershka 926 172 1,098
Stradivarius 820 197 1,017
Oysho 588 82 670
Zara Home 516 74 590
Uterqüe 74 16 90
Total 6,420 1,055 7,475

Note: Store count is as of January 31, 2018.

Source: Inditex, “Group Consolidated Annual Accounts as at 31 January 2018,”
https://www.inditex.com/documents/10279/563475/Annual+Accounts%2C+management+report+and+
audit+report+of+Inditex+Group+2017/77a7def2-b502-ac22-003e-d1e7c900233c.

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 Exhibit 9
Inditex—Selected Financial Data (€ in millions)
Fiscal year ended January 31*
2018 2017 2016 2015 2014
Income Statement Key Items
Revenues 25,336 23,311 20,900 18,117 16,724
COGS** 13,878 12,671 10,899 9,397 8,458
Gross Profit 11,458 10,640 10,002 8,719 8,267
Gross Margin 45.2% 45.6% 47.9% 48.1% 49.4%
SG&A 6,142 5,537 5,304 4,608 4,342
Ebitda 5,511 5,001 4,663 4,047 3,873
Ebitda Margin 21.8% 21.5% 22.3% 22.3% 23.2%
Operating Income 4,429 4,056 3,705 3,199 3,078
Net Income 3,368 3,157 2,875 2,501 2,377

Balance Sheet Key Items

Total Assets 20,231 19,621 17,357 15,377 13,756
Total Cash and ST Investments 6,403 6,153 5,311 4,020 4,060
Total Receivables 888 968 758 930 911
Inventories 2,685 2,549 2,195 1,860 1,677
Total Current Assets 10,147 9,898 8,449 7,106 6,765
Net Property Plant & Equipment 7,644 7,283 6,597 6,041 5,138
Accounts Payable 3,577 3,471 2,995 2,483 2,371
Total Current Liabilities 5,173 5,451 4,670 3,749 3,462
LT Debt & Capital Leases 4 0 1 2 2
Total Liabilities 6,709 6,870 5,906 4,908 4,478
Total Equity 13,522 12,751 11,451 10,469 9,278
Common Shares Outstanding 3,114 3,113 3,113 3,113 3,114

*For example, 2018 indicates Fiscal Year running from February 1, 2017 through January 31, 2018.
**COGS include occupancy expenses.
Source: Capital IQ, August 2018.

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 Exhibit 10
Global Apparel and Footwear Sales—By Category and Region

Hosiery
3% Apparel Accessories
4%

Footwear
21%

Womens Wear
38%

Children's Wear
9%

Menswear
25%

Source: “World Market for Apparel and Footwear,” Euromonitor International, April 2018.

Australasia
Middle East and Africa 1%
7%

Western Europe Asia Pacific

22% 36%

Eastern Europe
5%

Latin America
North America 7%
22%

Source: “World Market for Apparel and Footwear,” Euromonitor International, April 2018.

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 Exhibit 11
Gap: Selected Financial Data ($ in millions)
Fiscal year ended:
2/3/2018 1/28/2017 1/30/2016 1/31/2015 2/1/2014
Income Statement Key Items
Revenues 15,855 15,516 15,797 16,435 16,148

COGS * 9,789 9,876 10,043 10,146 9,855

Gross Profit 6,066 5,640 5,754 6,289 6,293
Gross Margin 38.3% 36.3% 36.4% 38.3% 39.0%
SG&A 4,624 4,193 4,101 4,229 4,171
EBITDA 2,001 2,040 2,245 2,624 2,658
EBITDA Margin 12.6% 13.1% 14.2% 16.0% 16.5%
Operating Income 1,442 1,447 1,653 2,060 2,122
Net Income 848 676 920 1,262 1,280

Balance Sheet Key Items

Total Assets 7,989 7,610 7,473 7,690 7,849
Total Cash and ST Investments 1,783 1,783 1,370 1,515 1,510
Total Receivables 282 335 282 275 462
Inventories 1,997 1,830 1,873 1,889 1,928
Total Current Assets 4,568 4,315 3,985 4,317 4,430
Net Property Plant & Equipment 2,805 2,616 2,850 2,773 2,758
Accounts Payable 1,181 1,243 1,112 1,173 1,242
Total Current Liabilities 2,461 2,453 2,535 2,234 2,445
LT Debt & Capital Leases 1,249 1,248 1,310 1,332 1,369
Total Liabilities 4,845 4,706 4,928 4,707 4,787
Total Equity 3,144 2,904 2,545 2,983 3,062
Common Shares Outstanding 389 399 397 419 447

*COGS include occupancy expenses.

Source: Capital IQ, August 2018.

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 Exhibit 12
H&M: Selected Financial Data (SEK in millions)
Fiscal year ended November 30
2017 2016 2015 2014 2013
Income Statement Key Items
Revenues 200,004 192,267 180,861 151,419 128,562
COGS 91,914 86,090 77,694 62,367 52,537
Gross Profit 108,090 106,177 103,167 89.052 76,025
Gross Margin 54.0% 55.2% 57.0% 58.8% 59.1%
SG&A 87,521 82,354 76,225 63,469 53,935
EBITDA 29,793 31,274 33,264 30,588 26,267
EBITDA Margin 14.4% 16.3% 18.4% 20.2% 20.4%
Operating Income 20,569 23,823 26,942 25,583 22,090
Net Income 16,184 18,636 20,898 19,976 17,093

Balance Sheet Key Items

Total Assets 106,562 98,579 85,813 75,597 65,676
Total Cash and ST Investments 9,718 9,446 12,950 16,693 17,224
Total Receivables 9,049 6,566 5,162 4,686 3,828
Inventories 33,712 31,732 24,833 19,403 16,695
Total Current Assets 55,746 50,663 45,536 42,741 39,188
Net Property Plant & Equipment 39,818 38,693 32,962 26,948 22,186
Accounts Payable 7,215 7,262 6,000 5,520 4,870
Total Current Liabilities 40,723 31,705 22,937 20,303 17,397
LT Debt & Capital Leases 350 213 - - -
Total Liabilities 46,849 37,343 27,764 24,041 20,428
Total Equity 59,713 61,236 58,049 51,556 45,248
Common Shares Outstanding 1,655 1,655 1,655 1,655 1,655

Source: Capital IQ, August 2018.

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 Exhibit 13
Fast Retailing: Selected Financial Data (JYY in millions)
Fiscal year ended August 31
2017 2016 2015 2014 2013
Income Statement Key Items
Revenues 1,861,917 1,786,473 1,681,781 1,382,935 1,142,971
COGS 952,667 921,475 833,243 683,161 577,826
Gross Profit 909,250 864,998 848,538 699,774 565,145
Gross Margin 48.8% 48.4% 50.5% 50.6% 49.4%
SG&A 725,215 702,956 671,863 549,195 426,177
EBITDA 217,360 193,621 208,821 176,148 157,998
EBITDA Margin 11.7% 10.8% 12.4% 12.7% 13.8%
Operating Income 183,571 161,559 177,209 149,838 137,977
Net Income 119,280 48,052 110,027 74,546 104,595

Balance Sheet Key Items

Total Assets 1,388,486 1,238,119 1,163,706 992,307 901,208
Total Cash & ST Investments 714,228 569,670 377,805 323,168 299,169
Total Receivables 50,116 66,804 63,341 59,379 46,913
Inventories 289,675 270,004 260,006 223,223 167,521
Total Current Assets 1,077,598 924,583 874,394 717,037 637,537
Net Property Plant & Equipment 136,979 121,853 129,340 114,398 91,385
Accounts Payable 137,325 130,745 122,620 137,069 121,960
Total Current Liabilities 311,421 338,046 292,242 273,196 217,578
LT Debt & Capital Leases 271,843 272,688 23,957 26,000 28,346
Total Liabilities 626,443 640,458 388,902 356,266 311,482
Total Equity 762,043 597,661 774,804 636,041 589,726
Common Shares Outstanding 102 102 102 102 102

Source: Capital IQ, August 2018.

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 Exhibit 14
Top 25 U.S. Retailers (Ranked by Online Sales, $ in millions)

E-commerce E-commerce E-commerce

Company
Sales Sales Growth % of Revenue
1. Amazon Inc. $94,665 19% 70%
2. Apple $16,800 40% 8%
3. Wal-Mart Stores Inc. $14,430 9% 3%
4. Macy’s Inc. $4,622 13% 18%
5. Costco Wholesale $4,227 11% 4%
6. QVC $4,047 5% 47%
7. Nordstrom $3,219 14% 22%
8. Target Corp. $3,082 23% 4%
9. Kohl’s Corp. $2,870 14% 15%
10. Gap Inc. $2,531 0% 16%
11. Nike $2,168 54% 7%
12. Sears Holdings $2,061 -2% 9%
13. L Brands $2,034 6% 16%
14. Walgreens Boots Alliance $1,952 8% 2%
15. HSN $1,894 3% 53%
16. Hudson’s Bay Co. $1,555 76% 14%
17 J.C. Penney & Co. $1,550 12% 12%
18. Neiman Marcus $1,434 1% 30%
19. Ascena Retail Group $1,295 50% 19%
20. Zulily $1,281 35% 100%
21. Urban Outfitters Inc. $1,239 11% 35%
22. Lands’ End $1,160 -6% 86%
23. Foot Locker $1,022 8% 13%
24. Dick’s Sporting Goods $943 26% 12%
25. J.Crew $915 6% 38%

Source: Arthur Zaczkiewicz, “Amazon, Wal-Mart and Apple Top List of Biggest E-commerce
Retailers,” WWD (April 7, 2017), http://wwd.com/business-news/business-features/amazon-wal-mart-
apple-biggest-e-commerce-retailers-10862796/.

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 Exhibit 15
Top 25 Fashion E-commerce Websites (Ranked by Website Traffic)

1. hm.com
2. asos.com
3. zara.com
4. wildberries.ru
5. macys.com
6. myntra.com
7. nordstrom.com
8. jabong.com
9. adidas.com
10. urbanoutfitters.com
11. uniqlo.com
12. farfetch.com
13. gap.com
14. forever21.com
15. trendyol.com
16. rosegal.com
17. gamiss.com
18. lamoda.ru
19. zappos.com
20. victoriassecret.com
21. jcpenney.com
22. mango.com
23. teespring.com
24. gucci.com
25. ae.com

Source: SEMrush, http://wwd.com/business-news/business-features/semrush-ecommerce-list-

1202566734/.

Page 27 | ZARA:
Fast Fashion in the Digital Age
BY VANESSA BURBANO,* BENNETT CHILES,* AND DAN J. WANG‡

This document is authorized for use only in Prof. Utkarsh's Retail Management-2020-22 at Indian Institute of Management - Kashipur from Jan 2022 to Jun 2022.
 Exhibit 16
Rollout of Inditex’s Online Platform

Europe: Austria, Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg,
Monaco, Netherlands, Portugal, Spain, Sweden, UK, Switzerland, Norway, Finland, Poland,
2007
Romania, Croatia, Slovakia, Czech Republic, Bulgaria, Hungary, Lithuania, Latvia, Estonia,
Slovenia, Malta, and Turkey
2011 Zara United States, Japan
2012 All Concepts China
Massimo Dutti, Zara Home United States
2013 All Concepts Russian Federation
Zara Canada
2014 All Concepts Mexico
Zara South Korea
2015 Zara Taiwan, Hong Kong, Macau
Zara Home Australia
Zara Home Dubai
Zara Singapore
2016 All Concepts Turkey
2017 Zara Singapore, Malaysia, Thailand, Vietnam, and India

Source: Inditex, “Group Consolidated Annual Accounts as at 31 January 2018,”

https://www.inditex.com/documents/10279/563475/Annual+Accounts%2C+management+report+and+
audit+report+of+Inditex+Group+2017/77a7def2-b502-ac22-003e-d1e7c900233c;
Inditex, Annual Report 2016,
https://www.inditex.com/documents/10279/319575/Inditex+Annual+Report+2016/6f8a6f55-ed5b-41f4-
b043-6c104a305035.

ZARA:
Fast Fashion in the Digital Age | Page 28
BY VANESSA BURBANO,* BENNETT CHILES,* AND DAN J. WANG‡

This document is authorized for use only in Prof. Utkarsh's Retail Management-2020-22 at Indian Institute of Management - Kashipur from Jan 2022 to Jun 2022.
 Exhibit 17
Zara.com Advertisement

Source: Simone Mitchell, “Zara is launching its online store in Australia on March 14. Get excited”
(March 9, 2018), http://www.news.com.au/lifestyle/fashion/designers/zara-is-launching-its-online-store-
in-australia-on-march-14-get-excited/news-story/c28784ab97edb6f019996a17d5c7cfae.

Page 29 | ZARA:
Fast Fashion in the Digital Age
BY VANESSA BURBANO,* BENNETT CHILES,* AND DAN J. WANG‡

This document is authorized for use only in Prof. Utkarsh's Retail Management-2020-22 at Indian Institute of Management - Kashipur from Jan 2022 to Jun 2022.
 Exhibit 18
Markets and Concepts with Online Sales
Australia Zara
Austria Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Belgium Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Bulgaria Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Canada Zara, Massimo Dutti, Zara Home
China Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho
Hong Kong Zara
Macau Zara
Taiwan Zara
Croatia Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Czech Republic Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Denmark Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Estonia Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Finland Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
France Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Germany Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Greece Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Hungary Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
India Zara
Ireland Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Italy Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Japan Zara, Bershka, Zara Home
Latvia Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Lithuania Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Luxembourg Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Malaysia Zara
Malta Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Mexico Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home
Monaco Zara, Pull&Bear, Massimo Dutti, Zara Home, Uterqüe
Netherlands Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
New Zealand Zara
Norway Zara, Massimo Dutti, Zara Home
Poland Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Portugal Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Romania Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Russia Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Singapore Zara
Slovakia Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Slovenia Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
South Korea Zara, Massimo Dutti, Bershka, Oysho
Spain Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Sweden Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Switzerland Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
Thailand Zara
Turkey Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home
United Arab Emirates Zara Home
United Kingdom Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home, Uterqüe
United States Zara, Pull&Bear, Massimo Dutti, Bershka, Zara Home
Vietnam Zara

Source: Inditex, “Group Consolidated Annual Accounts as at 31 January 2018,”

https://www.inditex.com/documents/10279/563475/Annual+Accounts%2C+management+report+and+
audit+report+of+Inditex+Group+2017/77a7def2-b502-ac22-003e-d1e7c900233c.

ZARA:
Fast Fashion in the Digital Age | Page 30
BY VANESSA BURBANO,* BENNETT CHILES,* AND DAN J. WANG‡

This document is authorized for use only in Prof. Utkarsh's Retail Management-2020-22 at Indian Institute of Management - Kashipur from Jan 2022 to Jun 2022.
 Endnotes

1 Galileo Russell, “Amazon: The Fashion Company,” Seeking Alpha (September 7, 2017),
https://seekingalpha.com/article/4104880-amazon-fashion-company.
2 Russell, “Amazon: The Fashion Company.”

3 “World Market for Apparel and Footwear,” Euromonitor International (April 2018).

4 Bankinter Securities, “Inditex: Initiation of coverage” (April 13, 2018).

5 Michael Stothard, “Inditex sales and profits rise but margins feel the squeeze,” Financial

Times (March 14, 2018), https://www.ft.com/content/aed7257e-276a-11e8-b27e-cc62a39d57a0.

6 Sarah Shannon, “Fast Fashion Slow to E-Commerce,” The Business of Fashion (August 17,

2017), https://www.businessoffashion.com/articles/intelligence/fast-fashion-slow-to-e-
commerce.
7 “Group Consolidated Annual Accounts as at 31 January 2018,” Inditex,

https://www.inditex.com/documents/10279/563475/Annual+Accounts%2C+management+rep
ort+and+audit+report+of+Inditex+Group+2017/77a7def2-b502-ac22-003e-d1e7c900233c.
8 “Group Consolidated Annual Accounts, 2018.”

9 “Group Consolidated Annual Accounts, 2018.”

10 Bankinter Securities, “Inditex: Initiation of coverage.”

11 “The Secret of Zara’s Success: A Culture of Customer Co-creation,” MartinRoll.com (March

2018), https://martinroll.com/resources/articles/strategy/the-secret-of-zaras-success-a-culture-
of-customer-co-creation/.
12 “Design,” How We Do Business, Inditex, https://www.inditex.com/how-we-do-

business/our-model/design.
13 Greg Petro, “The Future Of Fashion Retailing: The Zara Approach (Part 2 of 3),” Forbes

(October 25, 2012), https://www.forbes.com/sites/gregpetro/2012/10/25/the-future-of-fashion-

retailing-the-zara-approach-part-2-of-3/.
14 Bloomberg, “‘Speed up or die’ is the new reality for U.S. apparel retailers,” Chicago Tribune

(March 26, 2018), http://www.chicagotribune.com/business/ct-apparel-retailers-speed-

20180326-story.html.
15 Greg Petro, “The Future Of Fashion Retailing: The Zara Approach (Part 2 of 3).”

16 “The future of fast fashion,” The Economist (January 16, 2015),

https://www.economist.com/business/2005/06/16/the-future-of-fast-fashion.
17 Greg Petro, “The Future Of Fashion Retailing, Revisited: Part 2—Zara,” Forbes (July 23,

2015), https://www.forbes.com/sites/gregpetro/2015/07/23/the-future-of-fashion-retailing-
revisited-part-2-zara/.
18 “Gap Inc. Factory List” (May 2018),

http://www.gapincsustainability.com/sites/default/files/Gap%20Inc%20Factory%20List.pdf.
19 “Zara supply chain analysis—the secret behind Zara’s retail success,” TradeGecko.com

(June 25, 2018), https://www.tradegecko.com/blog/zara-supply-chain-its-secret-to-retail-

success.

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Fast Fashion in the Digital Age
BY VANESSA BURBANO,* BENNETT CHILES,* AND DAN J. WANG‡

This document is authorized for use only in Prof. Utkarsh's Retail Management-2020-22 at Indian Institute of Management - Kashipur from Jan 2022 to Jun 2022.
 20 “Global Growth Opportunities,” Inditex,
https://www.inditex.com/documents/10279/245194/Group+Profile/7e81b535-64aa-40bf-8625-
c498a72be73d.
21 “Logistics,” How We Do Business, Inditex, https://www.inditex.com/en/how-we-do-

business/our-model/logistics.
22 “Logistics,” How We Do Business, Inditex.

23 Gavin van Marle, “Inditex invests in its supply chain as its global retail empire grows by

330 stores,” The Loadstar (March 19, 2014), https://theloadstar.co.uk/inditex-invests-supply-

chain-following-gloabls-sales-growth/.
24 The World Bank Group, “Air Freight: A Market Study with Implications for Landlocked

Countries” (August 2009),

http://siteresources.worldbank.org/EXTAIRTRANSPORT/Resources/515180-
1262792532589/6683177-1268747346047/air_cargo_study.pdf.
25 Suzy Hansen, “How Zara Grew Into the World’s Largest Fashion Retailer,” The New York

Times Magazine (November 9, 2012), https://www.nytimes.com/2012/11/11/magazine/how-

zara-grew-into-the-worlds-largest-fashion-retailer.html?pagewanted=all.
26 Christopher Bjørk, “Zara Builds Its Business Around RFID,” The Wall Street Journal

(September 16, 2014), https://www.wsj.com/articles/at-zara-fast-fashion-meets-smarter-

inventory-1410884519.
27 Bjørk, “Zara Builds Its Business.”

28 “The Zara Gap: Retail’s Big Arbitrage,” Sourcing Journal (October 28, 2014),

https://sourcingjournal.com/topics/retail/zara-gap-retails-big-arbitrage-18976/.
29 Graham Keeley and Andrew Clark, “Retail: Zara bridges Gap to become world’s biggest

fashion retailer,” The Guardian (August 11, 2008),

https://www.theguardian.com/business/2008/aug/12/retail.spain.
30 Hansen, “How Zara Grew.”

31 Keeley and Clark, “Retail: Zara bridges Gap.”

32 “Stores,” How We Do Business, Inditex, https://www.inditex.com/en/how-we-do-

business/our-model/stores.
33 “Stores,” How We Do Business, Inditex.

34 Pamela N. Danziger, “Why Zara Succeeds: It Focuses On Pulling People In, Not Pushing

Product Out,” Forbes (April 23, 2018),

https://www.forbes.com/sites/pamdanziger/2018/04/23/zaras-difference-pull-people-in-not-
push-product-out/.
35 Hansen, “How Zara Grew.”

36 Bankinter Securities, “Inditex: Initiation of coverage.”

37 Interbrand, “Best Global Brands 2017,” https://www.interbrand.com/best-brands/best-

global-brands/2017/ranking/.
38 Bankinter Securities, “Inditex: Initiation of coverage.”

39 “The future of fast fashion,” The Economist (June 16, 2015),

https://www.economist.com/business/2005/06/16/the-future-of-fast-fashion.

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Fast Fashion in the Digital Age | Page 32
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 40 “World Market for Apparel and Footwear,” Euromonitor International (April 2018).
41 “Channel Overview in Apparel and Footwear,” Euromonitor International (March 2018).
42 “World Market for Apparel and Footwear,” Euromonitor International (April 2018).

43 “Channel Overview in Apparel and Footwear,” Euromonitor International (March 2018).

44 Hiroko Tabuchi and Hilary Stout, “Gap’s Fashion-Backward Moment,” The New York Times

(June 20, 2015), https://www.nytimes.com/2015/06/21/business/gaps-fashion-backward-

moment.html.
45 Bankinter Securities, “Inditex: Initiation of coverage.”

46 Mallory Schlossberg, “Gap and Abercrombie are trapped in retail’s nightmarish cycle,”

Business Insider (August 26, 2016), http://www.businessinsider.com/gap-and-abercrombie-

are-discounting-excessively-2016-8.
47 Khadeeja Safdar, “As Gap Struggles, Its Analytical CEO Prizes Data Over Design,” The

Wall Street Journal (November 27, 2016), https://www.wsj.com/articles/as-gap-struggles-its-

analytical-ceo-prizes-data-over-design-1480282911.
48 Mary Hanbury, “Gap’s constant discounts come with a hidden downside that’s infuriating

loyal customers,” Business Insider (May 19, 2018), http://www.businessinsider.com/gap-

discount-strategy-angers-loyal-customers-2018-5.
49 Christopher Bjørk, “Zara Wakes Up to Online Sales,” The Wall Street Journal (August 26,

2010), https://www.wsj.com/articles/SB10001424052748703632304575451282067480988.
50 Arthur Zaczkiewicz, “Amazon, Wal-Mart and Apple Top List of Biggest E-commerce

Retailers,” WWD (April 7, 2017), http://wwd.com/business-news/business-features/amazon-

wal-mart-apple-biggest-e-commerce-retailers-10862796/.
51 H&M, Annual Report 2017 (February 19, 2018),

https://about.hm.com/content/dam/hmgroup/groupsite/documents/masterlanguage/Annual
%20Report/Annual%20Report%202017.pdf.
52 Shannon, “Fast Fashion Slow to E-Commerce.”

53 Katie Hope, “Has this dress been to more countries than you?” BBC News (March 22,

2017), https://www.bbc.com/news/business-39337204.
54 Greg Petro, “The Future Of Fashion Retailing—The H&M Approach (Part 3 of 3),” Forbes

(November 5, 2012), https://www.forbes.com/sites/gregpetro/2012/11/05/the-future-of-

fashion-retailing-the-hm-approach-part-3-of-3/
55 Richard Milne, “H&M predicts tough year ahead as it focuses online,” Financial Times

(February 14, 2018), https://www.ft.com/content/53da5158-116e-11e8-940e-08320fc2a277.

56 “H&M: Hennes & Mauritz AB in Apparel and Footwear (World),” Euromonitor

International (March 2018).

57 H&M website, http://www2.hm.com/en_us/customer-service/returns/online-

purchases.html.
58 Fiona Briggs, “H&M launches loyalty scheme, H&M Club, in UK,” Retail Times (May 30,

2017), https://www.retailtimes.co.uk/hm-launches-launches-loyalty-scheme-hm-club-uk/.
59 Pamela Danziger, “Why Fast-Fashion H&M Is Losing Favor With American Fashionistas:

It’s A Mess,” Forbes (February 4, 2018),

Page 33 | ZARA:
Fast Fashion in the Digital Age
BY VANESSA BURBANO,* BENNETT CHILES,* AND DAN J. WANG‡

This document is authorized for use only in Prof. Utkarsh's Retail Management-2020-22 at Indian Institute of Management - Kashipur from Jan 2022 to Jun 2022.
 https://www.forbes.com/sites/pamdanziger/2018/02/04/why-fast-fashion-hm-is-losing-favor-
with-american-fashionistas-its-a-mess/.
60 Bankinter Securities, “Inditex: Initiation of coverage.”

61 “H&M: Hennes & Mauritz AB in Apparel and Footwear (World),” Euromonitor

International (March 2018).

62 Kieron Johnson, “Uniqlo’s Four Secrets for Building a Global Brand,” Fortune (October 12,

2017), http://fortune.com/2017/10/12/uniqlo-clothing-global/.
63 Fast Retailing, Annual Report 2017 (January 2018),

http://www.fastretailing.com/eng/ir/library/pdf/ar2017_en.pdf.
64 “5 Best UNIQLO Products to Buy,” JW Web Magazine, https://jw-webmagazine.com/what-

you-should-buy-best-budget-fashion-retailer-uniqlo-16a1829740b5.
65 Don-Alvin Adegeest, “Is Uniqlo on its way to become bigger than Zara?” FashionUnited

(September 26, 2017), https://fashionunited.com/news/retail/is-uniqlo-on-its-way-to-become-

bigger-than-zara/2017092617531.
66 “Help,” Returns/Exchanges, Uniqlo, https://www.uniqlo.com/us/en/help/returns.

67 Statista, “E-commerce share of total global retail sales from 2015 to 2021,”

https://www.statista.com/statistics/534123/e-commerce-share-of-retail-sales-worldwide/.
68 Shannon, “Fast Fashion Slow to E-Commerce.”

69 “Key Facts: Apparel and Footwear in 2018,” Euromonitor International (February 8, 2018),

https://blog.euromonitor.com/2018/02/key-facts-apparel-and-footwear-2018.html.
70 “Channel Overview in Apparel and Footwear,” Euromonitor International (March 2018).

71 “Global Online Apparel Retailing Market Projected to be Worth USD 167.25 Billion by

2021: Technavio,” BusinessWire (May 30, 2017),

https://www.businesswire.com/news/home/20170530006244/en/Global-Online-Apparel-
Retailing-Market-Projected-Worth.
72 Barclays, “Inditex: FY preview: short-term pain” (March 12, 2018).

73 “Online’s Impact and Shifting Shopping Dynamics Resulted in Steady 2016 Apparel Sales

Growth, Reports NPD,” NPD Group (March 6, 2017),

https://www.npd.com/wps/portal/npd/us/news/press-releases/2017/onlines-impact-and-
shifting-shopping-dynamics-resulted-in-steady-2016-apparel-sales-growth--reports-npd/.
74 Zaczkiewicz, “Amazon, Wal-Mart and Apple.”

75 Bankinter Securities, “Inditex: Initiation of coverage.”

76 Khalid Saleh, “E-commerce Product Return Rate—Statistics and Trends,” Inespcro.com,

https://www.invespcro.com/blog/ecommerce-product-return-rate-statistics/.
77 Sucharita Mulpuru, “Think Tank: The Opportunity in Online Returns for Apparel

Retailers,” WWD (July 6, 2017), https://wwd.com/business-news/business-features/sucharita-

mulpuru-think-tank-returns-10939339/.
78 Steve Dennis, “Many Unhappy Returns: E-commerce’s Achilles Heel,” Forbes (August 9,

2017), https://www.forbes.com/sites/stevendennis/2017/08/09/many-unhappy-returns-e-
commerces-achilles-heel/.

ZARA:
Fast Fashion in the Digital Age | Page 34
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This document is authorized for use only in Prof. Utkarsh's Retail Management-2020-22 at Indian Institute of Management - Kashipur from Jan 2022 to Jun 2022.
 79 Michael Stothard, “Zara owner Inditex ramps up digital assault,” Financial Times (April 2,
2018), https://www.ft.com/content/0b892c0c-32c1-11e8-b5bf-23cb17fd1498.
80 Declan Kennedy, “Retailers Need To Bridge The Gap Between Online And Offline,”

BusinessComputingWorld.com (April 25, 2018),

https://www.digitaldoughnut.com/articles/2018/april/retailers-to-bridge-gap-between-
online-and-offline.
81 Deloitte, “Navigating the new digital divide” (2015),

https://www2.deloitte.com/us/en/pages/consumer-business/articles/navigating-the-new-
digital-divide-retail.html.
82 Deloitte, “Navigating the new digital divide.”

83 Deloitte, “Navigating the new digital divide.”

84 Danien Pearse, “Fashion Label Zara Launches Stores Online,” Sky News Online

(September 2, 2010), https://news.sky.com/story/fashion-label-zara-launches-stores-online-

10492200.
85“Group Consolidated Annual Accounts as at 31 January 2007,” Inditex,

https://www.inditex.com/documents/10279/245901/AnnualReport2007.pdf/4882f0f1-3157-
4335-863b-3c0a0a0bad86.
86 Bjørk, “Zara Wakes Up to Online Sales.”

87 Bjørk, “Zara Wakes Up to Online Sales.”

88 Bjørk, “Zara Wakes Up to Online Sales.”

89 Julia Caesar, “Zara launches online retail store,” BBC News (September 2, 2010),

https://www.bbc.com/news/business-11155437.
90 Bankinter Securities, “Inditex: Initiation of coverage.”

91 Bjørk, “Zara Wakes Up to Online Sales.”

92 Bjørk, “Zara Wakes Up to Online Sales.”

93 “Zara Launches Online Shopping in the U.S.” (September 6, 2011),

https://www.prnewswire.com/news-releases/zara-launches-online-shopping-in-the-us-
129296873.html.
94 Rachel Strugatz, “Zara to Launch E-Commerce in U.S.,” WWD (September 6, 2011),

https://wwd.com/business-news/media/zara-to-launch-e-commerce-in-us-5111201/.
95 “Group Consolidated Annual Accounts,2018.”

96 Chloe Street, “Zara launches an online-only shopping experience,” Evening Standard

(January 26, 2018), https://www.standard.co.uk/fashion/news/zara-westfield-london-popup-

store-a3750226.html.
97 “Zara débuts pop-up store focused on online orders in London,” Inditex (January 25, 2018),

https://www.inditex.com/article?articleId=544094&title=Zara+d%C3%A9buts+pop-
up+store+focused+on+online+orders+in+London.
98 Nikki Gilliland, “How Zara is using in-store tech to improve its frustrating shopper

experience,” Econsultancy (April 20, 2018), https://www.econsultancy.com/blog/69960-how-

zara-is-using-in-store-tech-to-improve-its-frustrating-shopper-experience.

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Fast Fashion in the Digital Age
BY VANESSA BURBANO,* BENNETT CHILES,* AND DAN J. WANG‡

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 99 Jeannette Neumann, “Out of Stock Online? Zara Hopes Shipping From Stores Will Boost
Sales,” The Wall Street Journal (July 31, 2018), https://www.wsj.com/articles/out-of-stock-
online-zara-hopes-shipping-from-stores-will-boost-sales-1533034800.
100 Jeannette Neumann, “Out of Stock Online.”

101 “Zara Looks to Online Growth as It Cuts Store Sales Forecast,” Reuters (March 9, 2016),

http://fortune.com/2016/03/09/zara-stores-online-sales-forecast/.

ZARA:
Fast Fashion in the Digital Age | Page 36
BY VANESSA BURBANO,* BENNETT CHILES,* AND DAN J. WANG‡

This document is authorized for use only in Prof. Utkarsh's Retail Management-2020-22 at Indian Institute of Management - Kashipur from Jan 2022 to Jun 2022.