Fashion and Zara Store

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All rights reserved.No lot of this case unavoidableness may be re let eruptd, inst anyd in a retrieval system, or genetic in any form or by any means, electronic, mechanical, photocopying, recording or another(prenominal)wise with reveal written permission of capital of the United Kingdom crinkle shoal. London commerce School reference CS-05-037 ecch the case for learning Distri b arlyed by ecch, UK and USA www. ecch. com All rights reserved Printed in UK and USA North America t +1 781 239 5884 f +1 781 239 5885 e emailprotected com 305-308-1 LBS-CS-05-037 Rest of the world t +44 (0)1234 750903 f +44 (0)1234 751125 e emailprotected om 2 -305-308-1 LBS-CS-05-037 Zara Responsive, towering-Speed, Affordable Fashion In 1975, the premie r-year Zara investment trust was opened in La Co chipa, in Northwest Spain. By 2005, Zara? s 723 monetary funds had a deal outing area of 811,100 m2 and in use(p) ? privileged locations of major cities? in 56 countries. With gross revenue of ?3. 8 billion in financial year 2004, Zara had be scratch Spain? s lift out-known musical mode discolouration and the flagship stag of ? 5. 7 billion holding class Inditex. Inditex? s transmit marketplace inclination in 2001 had turned Amancio Ortega, its founder and a self-make man, into the world? s 23 richest man, with a personal fortune that Forbes powder store estimated at $12. 6 billion. Zara strived to deliver port apparel, often knock-offs of famous int bring downs, at comely be to unsalted, form- sensible city-dwellers. Zara utilise in- house patterners to hand fresh items of robes to customers double a week, in response to sales and elan tr give the axes. Thus the merchandise of any event store was fresh a nd limited. To produce at much(prenominal)(prenominal)(prenominal) short notice employ that Zara brinytain a verticall(a)y merged supply cosmic string that distributed the array through a single state-of-the-art dissemination centre.Un equivalent its competitors, 70- 80% of Zara habilitates were fabricate in atomic number 63. In 2005, Pablo Isla was appointed the clean Inditex chief executive. With plans to dual the number of its stores by 2009, the rapid footstep of growth was necessitating changes. First, Zara had opened a sulphur distribution centre to increment readiness. Second, expanding into practically unlike markets meant that the number of items carried had increased to 12,000. Would Zara? s condescension exemplar be able to scale up? Or would the resulting complexity compromise its speed advantage?Would Pablo Isla be able to maintain the focus that Zara had open? 3 -305-308-1 LBS-CS-05-037 THE RETAIL APPAREL manufacturing AND COMPETITORS The app arel industry was one of the tightlipped to globalised industries, with 23. 6 million workers in everywhere 20 countries. As labor termss in Western europiuman countries had risen, labour- intensifier manufacturing operations had become increasingly out openingd to slight developed countries. Hourly wages in the cloth industry could be as natural depression as 60 cents in India and mainland China, compared with $2 in North Africa, $3 in Eastern Europe, $8. 50 in Spain, and nigh $15. 0 in Italy. The 1974 Multi-Fibre Arrangement, which rigid import quotas on garments and stuffs from developing countries to the change world, had expired on 1 January 2005 for all members of the World Trade Organization. This was amplifying the relocation of textile and garment manufacture to countries with lower labour costs, especially China. For example, in 2004, 400 Spanish textile ag classifys went out of business, due to disceptation from Asia, resulting in the loss of 15,000 jobs. The Spanish textile guild predicted a loss of other 72,000 jobs by 2009. The apparel retail carry had consolidated during the 1990s, with a few capaciousr-than-life players dominating most major markets. Competitors include department stores, mass merchandisers (e. g. discounters and supermarkets) and specialty stores. division stores were usually national players, desire label & Spencer in the United Kingdom or Federated in the USA. Typically, they had lost market share in recent years. nap merchandisers such as Target, Tesco and Wal-Mart had increasingly added underc everyplace label clothes to their mix over the years to become major players.thither were many a(prenominal) successful specialty imprisonment like Benetton, C&A, Hennes & Mauritz (referred to as H&M), The Limited, mango tree and succeeding(prenominal). The traditional apparel industry model worked on long start generation (see adjoin 1). The industry modal(a) was virtually nine months, nearly six months for innovation and one-third months for manufacturing. As a result, 45-60% of production was committed in the six-month pre- anneal period, with 80-100% committed by the start of the season. Only the remaining 0-20% was by and large manufactured in-season in response to sales patterns.Excess inventory was marked down at the end of the season, and commonly accounted for 30-40% of sales. Despite their best efforts, Zara? s closest competitors, H&M and orifice, still took well-nigh five months to produce new clothing lines. H&M Swedish clothing chain H&M was founded in 1947. By 2005, it had close to 32,000 employees, scarcely under 1,100 stores in 20 countries. In 2005, it planned to open clv new stores in Europe and the US. Its 2004 sales were ? 6 billion, which yielded a profit of 1. 24 billion. With close to 30% of its sales, Germany was H&M? s largest market, season the US generated all Iman for H&M Germany 4 -305-308-1 LBS-CS-05-037 6. 4% of its 2004 sales. It man ufactured 60% of its clothes in Asia. H&M? s business concept was to offer mode and musical note at the best terms. In order to offer the up-to-the-minute shape, H&M had its own buying and heading department. It claimed to carry out the best cost by few middlemen Buying in large intensivenesss Having a broad, in-depth knowledge of design, carriage, and textiles Buying the right products from the right market Being cost conscious at every stage Having competent distribution H&M? s clothing lines in men? s tire, women? s wear and children? s wear, as well as its cosmetics range, targeted cost-conscious shoppers. Within H&M women? s wear were contrastive sub-brands Hennes (women aged 25-35), L. O. G. G. (casual sportswear), Impuls (young women? s trends), BiB (plus-size line), cleaning lady (classic), Clothes (current trends), MAMA (maternity) and Rocky (youth fashion). There were to a fault opposite sub-brands within the men? s and children? s lines.H&M stores slac kly had a clean chaotic, marketplace feel, with clothes packed tightly onto racks, frequent markdowns, and queues at the cash register. H&M employ 5% of its revenues to advertising. Its high-profile ad campaigns featured celebrities, such as Claudia Schiffer, Johnny Depp, Naomi Campbell and Jerry Hall, wearing its inexpensive clothes. Dedicated collections by star designers Karl Lagerfeld and Stella McCartney in 2004-5 continued to create buzz among its customers. The opening night gap opened its startle store in San Francisco in 1969, where it sold principally Levis jeans.In 1991, breakage announced its decision to sell only private label brands. With near 3,000 stores and 152,000 employees worldwide, disturbance positioned itself as a supplier of high quality, basic items, such as jeans, khakis and t-shirts. In addition to Old navy and Banana Republic, Gap? s chains included GapBody, GapKids, and babyGap. Its 2004 sales were more or less ? 12. 5 billion, with a profit of $1. 4 billion. approximately all of Gap? s products were manufactured outside the US, with 18% of its collection make in China. Gap? s stores were spacious, with occupation well spaced Madonna for Gap and neatly pre displaceed.There was an emphasis on service, with a call button in appointment rooms for customers requiring assistance with clothing sizes. goggle box advertisements featured hip music and saltation sequences, with appearances by celebrities such as Madonna, Lenny Kravitz, Sarah Jessica Parker and Joss Stone. 5 -305-308-1 LBS-CS-05-037 INDITEX HISTORY Spanish entrepreneur Amancio Ortega Gaona started a firm manufacturing lingerie and nightwear in 1963, after quitting his job as a runner for a shirtmaker in La Coruna. He founded Confecciones GOA in 1972, and opened the first Zara store in 1975, to sell stock after a customer cancelled a large order.Ortega founded the Inditex aggroup in 1985. After floating 26% of its shares on the Madrid stock exchange in 2001 , he remained its majority shareholder, with 61% of the party? s shares. Ortega retained a low profile, rarely making public appearances (apart from during the chalk up to the IPO in 2000), and had never wedded an interview. Jose maria Castellano Rios joined Inditex in 1985 and became its question administrator in 1997. Castellano had previously been IT private instructor of Aegon Espana SA, and had a doctorate in economic science and business studies. In 2005, Inditex developed a five-year plan, which included a board restructure.As part of the restructure, Pablo Isla Alvarez de Tejera was appointed as Chief Executive in May 2005. Isla came from the Franco-Spanish tobacco group Altadis, where he had been co-chairman. Isla was chosen for his experience in international distribution. Ortega stayed on as the group? s Chairman, and Castellano remained the Deputy Chairman. Portfolio of Stores Besides Zara, which was targeted at trendy city youngsters, Inditex grew its portfolio o f apparel chains throughout the 1990s. Each chain was targeted at a circumstantial segment (see butt 2) Massimo Dutti ? Young businessmen Pull & note going neat male clothing Berksha ? Elegant fashion for young women Brettos ? Trendy young suburban women Oysho ? Lingerie Stradivarius ? Youthful fashion Kiddy? s severalize ? Trendy children In 2003, Inditex opened a home furnishings chain called Zara Home. By 2005, Zara do up close to 70% of Inditex sales and led the group? s international working out (see Exhibit 3). While, as a group, Inditex had about double the number of stores as H&M, Zara? s 700 stores were fewer in number than H&M? s. Inditex was aggressively expanding, and planned to increase its 2,000 stores to 4,000 by 2009, in Europe, Asia, and the U.S. (see Exhibit 4). In terms of profits, Inditex was performing well compared with its main competitor, H&M (see Exhibit 5 and Exhibit 6). Aamancio Ortega Gaona Inditex Chairman 6 305-308-1 LBS-CS-05-037 THE ZARA store 91% of Zara stores were social club-owned the rest were franchises or go ventures. Customers entering a Zara store on Regent Street in London, lament Rivoli in genus genus Paris, Fifth Avenue in New York or Avenidas das Americas in Rio de Janeiro slackly found themselves in the resembling environs a predominantly white, red-brick and spacious store, well-lit and walled with mirror.The latest fashions hung from the store racks around them. A long line of pot typically waited at the cash registers to salary for their purchases a few select items. condescend Window of Zara, New York In equivalence with other clothing retail merchants, who spent 3-4% of sales on advertising, Zara spent yet 0. 3%. The little it did spend went to reinforce its individuality as a clothing retailer that was low-cost but high fashion (see Exhibit 7). Instead Zara concentrated on creating compelling store windows and to the design of its shops, which had win awards.It relied on its shop windows, which were dramatically lit and apply neutral prickergrounds, to communicate its brand image. The shop windows of Zara stores were changed regularly, according to display designs direct by headquarters, and were critical for Zara to remain subgross and entice customers. Store locations were carefully researched to furbish up that there was a sufficiently large customer base for Zara2, and as such were generally busy, prestigious, city centre obtain streets. Zara was a fashion imitator.It focussed its care on understanding what fashion items its customers cute and whence delivering them, rather than on promoting predicted season? s trends via fashion shows and similar bring of influence, that the fashion industry traditionally utilize. Its 200 in-house designers were trend-spotters who kept their finger on the fashion pulse, and translated trends into styles that were universally accessible. At Zara headquarters in La Coruna, store specialists (who were responsible for a number of stores in a region) worked tight with designers to develop styles that would work for different arkets. Collections were regenerate every year, with an come of 11,000 styles produced annually, compared with the much typical collections of 2,000-4,000 produced annually by rivals H&M and Gap. Production and distribution of new clothing pieces was favoured over replenishing existing items, contributing to the sensing of scarcity cultivated in Zara stores. Customers returned untold to stores, to browse new items. The global average of 17 visits per customer per year for Zara was considerably higher than the three visits to its competitors. Visitors were also more(prenominal) than likely to purchase, as one senior executive explained Zara? s objective is not that consumers buy a lot but that they buy often and will key roughlything new every period they enter the store. 4 7 -305-308-1 LBS-CS-05-037 Comments by Luis Blanc, and Inditex director, il lustrated how Zara stores fostered an milieu of immediacy We compulsion our customers to understand that if they like something, they must buy it now, because it won? t be in the shops the following week. It is all about creating a climate of scarcity and opportunity. Affordable prices helped to encourage purchases, and Zara? s whirl was often referred to as clothing to be worn six to ten times. Zara? s pricing differed across country markets. It hard-boiled prices according to individual market conditions, rather than using cost plus brink as its basis (which was the formula used by most of its competitors). In Spain, Zara products were low-cost, while in the US, japan and Mexico, they were priced as a luxury fashion item. Prices in France were somewhat higher than in Spain, since the average cut consumer was willing to pay more for fashion than most other European consumers.For example, in 2003, the price of jeans in Zara stores in France was $34. 58 compared with $24. 87 in Spain and $54 in Japan. 6 Until 2002, Zara had used one price tag listing the price in different currencies, to simplify tagging of items. In 2002, however, it use a system of local pricing, using a bar code commentator that printed the correct local price for items. Compared with its competitors, Zara generally priced its products somewhat higher than C&A and H&M, but below Gap, Next and Kookai. For example, a similar shirt cost $26 at Zara, compared with a price of $29 at Gap and $9 at H&M. Store coun interchange Store managers were encouraged to run their store like a small business. Salespeople were well trained, and Zara promoted its people from within as much as possible. Store managers? remuneration was part dependent on the verity of their sales forecasts and sales growth. 8 Each eve a handheld PDA displayed the newest designs sent by headquarters, which were available for order. Order deadlines were in deuce ways weekly, and were issued via the handhelds. Store managers who failed to order by the deadline current switch items only.Store managers regularly spoke with store specialists, who also gain vigord real time sales data from stores, to discuss which items were selling well or if customers had requested Zara Store, Barcelona specific items. This information was then fed back to the design process. 9 Deliveries arrived at stores twice per week from Zara headquarters, a few long time after the order was do, and contained both replenishment items as well as 8 -305-308-1 LBS-CS-05-037 new products. Headquarters also sometimes included products that had not been ordered, which stores evaluate to receive.If pick out of an item exceeded supply, some stores did not receive the product they had ordered. Zara also tested some of its products in limited numbers in its test stores, forward introducing them on a wider scale. Failure rates of Zara? s new products were reported to be just 1%, considerably lower than the industry average of 1 0%. 10 Technology was a key part of enabling confabulation theory and information flow. While information engine room was fundamental to its business, its IT infrastructure was relatively wide (even dated by some standards), which meant that Zara? s IT expenditure was significantly lower than its rivals (as much as five to ten times lower). 11 Deputy Chairman Jose Maria Castellano explained the key role played by technology Technology in this company is important and will be more important in the future. The technology we use is mainly information technology and enables the communication amongst the shop managers and the design group here in headquarters. 12 THE ZARA provision CHAIN Around 50% of Zara? s garments were sourced from third parties. Unlike its competitors, Zara? s outsourced production came for the most part from Europe (60%), with just 27% coming from Asia, and another 10% from the rest of the world. The products sourced from Asia were basic collection items or w ardrobe ? staples,? with minimum fashion content, such as T-shirts, lingerie and woollens, and where there was a clear cost advantage. Formal contracts were kept to a minimum, and Zara was generally a favored customer due to its order volume and stability. 13 Externally manufactured items were shipped to Zara? s distribution centre. Zara intended to source more of the collection from Asia in the future, as commented by Castellano ? In the next few years, we will source more basic items from China and Vietnam, but the high value added fashion items will continue to be made closer to home.? 14 The other 50% of Zara? s garments, those that were more fashion-dependent, were manufactured in-house, in more than 20 Zara factories located in nearby Arteixo. 15 For its in-house manufacturing, it purchased fabric from Comditel, a subsidiary of Inditex. Half of this fabric was purchased grey-haired (undyed) to enable Zara to respond to changes in colour trends during the season. Dye was pur chased from Fibracolor, in which Inditex held a stake.A group of 200 young, talented yet mysterious designers were hired (often recent graduates of top design schools) to create designs, based on the latest fashions from the catwalk and other fashion hotspots, which were easily transmutable to the mass market. 16 Working alongside the market specialists and production planners, designers for each of Zara? s collections (Woman, Man, Child) kept in-touch with market developments, to create around 40,000 new designs per year, of which around one-quarter were manufactured. 17 The design and 9 -305-308-1 LBS-CS-05-037 production working environment was consistent with Zara? s flat gradable structure, in which prima donnas were not tolerated. 18 Illustration Fast Fashion Computers were used to guide the cutting tools, using patterns made from selected designs. Zara tried to keep its offering of any style simple, usually in three sizes and three colours only. The labour intensive sewi ng of the garments was outsourced to around d local subcontractors, who used seamstresses in cooperatives. Zara was usually their fix client, and they worked without any written contracts. Zara paid these subcontrators a flat fee per type of garment, (e. g. , ? 5 for a pair of trousers and ? 15 per jacket) and they were expected to operate on short star topology times and fast turnaround. Subcontractors picked up the wide-awake fabric pieces from Zara, and returned them to the 500,000 m2 distribution centre. 19 At the Zara distribution centre, optical reading devices were used to sort and distribute over 60,000 items per hour. The garments were then picked up and transported by truck to different destinations all over Europe (which made up about 75% of deliveries). Products for more distant destinations were transported by air (about 25%).Throughout the process, garments were tracked using bar codes. Shipments tended to score almost zero flaws, with 98. 9% accuracy and under 0. 5% shrinkage. 20 Since Zara? s garments were produced in-house, it was able to make a new line from start to finish in just three weeks (see Exhibit 8). This varied somewhat depending on the type of garment new garments took about five weeks from design to store delivery, while revamped existing items could take as little as two weeks. As a result Zara could be responsive to fashion items that were selling well during the season, and to discontinue those that were not.By constantly refreshing the collection, and manufacturing items in high-intensity, Zara was a master of picking up up-to-the- minute trends and churning them out to stores around the world in a depicted object of weeks. ?After Madonna? s first concert date in Spain during a recent tour, her outfit was copied by Zara designers. By the time she performed her last concert in Spain, some members of the audience were wearing the alike(p) outfit. ?In 2003, when the extremum Prince of Spain announced his utilization to Letizia Ortiz Rocasolano, she wore a white trouser-suit for the occasion (pictured left).In just a few weeks, the same white trouser-suit was hanging from Zara? s clothes racks all over Europe, where it was snatched up by the ranks Crown Prince Felipe of Spain and Letizia Ortiz Rocasolano of the fashion-conscious. 10 -305-308-1 LBS-CS-05-037 short-runs, Zara was able to prevent the assembling of non-saleable inventories. It was estimated that Zara committed just 15-25% of production before the season began, 50 to 60% at the start of the season, and the remainder manufactured in-season. part of Zara sales consisting of markdowns was 15-20%. In some cases, stores ran out of stock.However, this was not viewed as a prejudicial since it contributed to customers? perception of the uniqueness of their purchase ? Customers are actually satisfied to see items out of stock as they are then confident that there is little peril that many other customers will wear the same dress.? 21 Cast ellano explained the rationale for this button from industry norms We don? t want to compete in the bottom end of the market. We offer fashion with a high design content. If I tried to source my collections in Asia, I would not be able to get them quickly decorous to our stores.By manufacturing close to home, I can ice collections when they are not selling. And without this rapid response, I would not be able to tear a good relation between quality, price and fashion which is what our customers have come to expect. 22 A study in 2000 estimated that Zara managed to generate 14. 7% operating margins as a percentage of sales, compared with 10. 6% for Gap and 12. 3% for H&M. Additionally, the same study put Zara? s inventory turnover rate at 10. 67 outpacing Gap at 7. 18 and H&M at 6. 84. 23 THE FUTURE Following Zara? s success, competitors sought to reduce their own lead times.The competitive advantage achieved by Zara? s vertical integration appeared to be eroding. With its extr emely centralised structure and its rapid growth, Zara was producing around 12,000 different items per year by 2005. As it opened stores in increasingly distant markets, would Zara be able to retain its flexibility in adjusting production to accommodate differences in local trends? Would the increase in complexity result in a need to create regional production facilities? How would this affect the advantage Zara gained from its centralization?Might Chinese clothing manufacturers prove to be a competitive panic to Zara, with their high capacity and continuous improvements in quality? Castellano discounted this threat ? Being a Zara or Gap is not just about figure fashionable clothes and manufacturing them cheaply. You must also make the transition to being a retailer. It is a big step from manufacturing to distribution. There is also the question of managing the location and showing of stores, training staff and so on.? 24 The Zara model seemed to work better in markets where cus tomers had an appetite for fashion (such as France, Italy, Japan and the UK).However, in countries such as France and Italy, Zara had receive bad press for copying 11 -305-308-1 LBS-CS-05-037 designs from couture labels, and the French Fashion Federation had called for limited access by reporters to fashion shows to diminish imitation by copycatters. In other markets, where consumers were less fashion-focussed (e. g. Germany and the U. S. A. ) Zara seemed somewhat less successful. Would Zara be better served in the long run by increasing penetration in these fashion- sensitive markets, or by extending its global reach through increased front end in more markets? 12 -305-308-1 LBS-CS-05-037Exhibit 1 Traditional Season for a High Street Store Adapted from Dutta, 200425 13 305-308-1 LBS-CS-05-037 Exhibit 2 Inditex Stores and Sales Sales, by Division (2004-5) Zara Home Kiddy? s Class Pull & maintain 6. 7% Massimo Dutti 8. 5% Bershka 9. 1% Zara 67. 4% Stradivarius 4. 3% 1. 3% Oys ho extension Handelsbank, 2005 Source monetary Times, 2005 constituent of Stores (2005) 0. 7% 2. 1% Zara Home Kiddy? s Class 3% Oysho 5% Stradivarius 10% Pull & Bear 16% 6% Zara 31% Dutti 15% Bershka 14% 14 305-308-1 LBS-CS-05-037 Exhibit 3 Number of Zara Stores by Country (31 March 2005) Russia Slovenia2 2Hungary Czech Rep.Lithuania1 Asia peace-loving = 21 Japan14 Malaysia3 Europe = 576 3 Sweden Denmark Finland Iceland 2 2 1 1 4Romania 3Estonia 1Latvia1 capital of Singapore Hong Kong Mexico Venezuela Brazil Argentina Chile Uruguay El Salvador Panama Dominican Rep. 1 Spain244 Portugal41 France83 Greece30 UK34 Belgium17 Germany34 Italy23 Eire4 Turkey11 Cyprus3 Holland6 Switzerland 6 Poland7 Austria6 Malta1 Andorra1 Luxembourg 2 3USA16 1Canada12 Americas = 98 in-between East & Africa = 40 Saudi Arabia Israel UAE capital of Kuwait Lebanon Jordan Qatar Bahrain Morocco 13 13 4 4 2 1 1 1 1 34 8 13 5 5 2 1 1Adapted from Inditex, 2005 Exhibit 4 Inditex Store Formats ZaraKiddy? sPull & Bear Class 15 -305-308-1 LBS-CS-05-037 MassimoBershkaStradivariusOyshoZara Home Dutti 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 No of stores723626 Turnover* 3,820 3,220 129103371350 121 90 379 288 22 18. 0 56 19 12. 8 13. 4 30. 5 31 2. 11. 96. 76. 3 61% 80% 44% 16% 327297302 481 389 516 75 60 83 41. 9 40. 9 35. 7 8. 58. 59. 1 50% 56% 52% 253227191104 395 242 162 72 57 394 16 33. 8 15. 4 16. 6 31. 5 8. 64. 33. 51. 3 46% 43%5% 52% 766226 45 40 11 2 0. 3 (0. 5) 35. 1 12. 7 8. 5 10. 70. 2 7%2% Operating Income* % international sales 648 476 65. 8 63. 5 67. 470 % of Inditex ROCE 38% 33% in millions of Euros, rounded off. Source Inditex press dossier, 2005 16 -305-308-1 LBS-CS-05-037 Exhibit 5 Key Indicators of Gap, H&M and Inditex (Financial Years 2003 & 2004) GapiH&MInditex 29 29 30 30 31 31 Reporting Date Sales (millions ? ) hoggish lucre (millions ? ) Operating Profit (millions ? ) Profit (millions ? ) Profit after tax (millions ? ) heart A ssets (millions ? ) Inventories (millions ? ) January 2005ii January 2004iii November 2004iv November 2003v JanuaryJanuary 20052004 12,47012,6966,0295,3305,6704,599 4,8924,7803,4492,9943,0342,306 1,5981,5221,1981,019925627 1,4351,3491,2361,062886613 882826817706628446 ,7038,5793,1592,8474,2093,510 1,3901,365577558514486 Stores Employees 152,000150,00031,70128,40947,04639,760 Countries 56 20185648 2,9943,0221,0689452,2441,922 Total jog3,3993,3931,364vin/a metres (thousands) 1,175988 Source Inditex, H&M and Gap, 2005 i Gap Inc? s stores include Gap, Old navy and Banana Republic. Gap? s sales were ? 5. 6 million, with 1643 stores, and 1. 43 million square metres. ii Exchange Rate of 29 January 2005 is used for all currency calculations 0. 76660 USD = 1? iii Exchange Rate of 29 January 2004 is used for all currency calculations 0. 80080 USD = ? 1 iv Exchange Rate of 30 November 2004 is used for all currency calculations 0. 11230 SEK = 1? v Exchange Rate of 30 November 2003 is used fo r all currency calculations 0. 11050 SEK = 1? vi Estimated (Adapted from Datamonitor, 2005). Exhibit 6 Iniditex vs. H&M (1998-2004) Sales, Inditex vs H&M (Millions, ? ) 17 Inditex H&M 305-308-1 LBS-CS-05-037 Number of Stores, Inditex vs H&M (1999-2004) 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2500 2000 1500 1000 500 0 22244 66029 5670 1922 55,058 5330 1558 11284 682771 99451068 IInditex H&M 44599 1080 613 44,196 3,980 3,250 922 8844 33,255 1,614 2,035 3,508 2,615 ,631 1999 2000 2001 2002 2003 2004 NNumber of Countries, Inditex vs H&M (1999-2004) 60 50 40 30 20 10 556 11998 1999 2000 2001 2002 2003 2004 44 14 448 330 12 339 33 1414 118 220 IInditex H&M 0 0 11999 2000 2001 2002 2003 2004 AAdapted from Inditex and H&M, 2005 18 -305-308-1 LBS-CS-05-037 Exhibit 7 A Zara advertisement The Cheap Frock come out (119) fair shirt (25) ZARA Black linkup (65) HACKETT Woollen Trousers (45) and Black boots (55), both ZARA The high-ticket(prenominal) Black cashmere frock coat (950) Whit e tuxedo shirt (190) Black necktie (86) and Woollen Trousers (380) both RALPH LAUREN Black boots (500) are by UNGARO 19 -305-308-1 LBS-CS-05-037 Exhibit 8 Zara Season Adapted from Dutta, 2004 Endnotes 20 -305-308-1 LBS-CS-05-037 1 Crawford, L. (2005) ? Inditex sizes up Europe in expansion turn on,? Financial Times, 1 February 2005, p. 30. 2 Ferdows, K. J. , A. D. Machuca and M. Lewis (2003) ? Zara,? CIBER campaign Collection, Indiana University. 3 D? Andrea, G. and D. Arnold (2003) ? Zara,? Harvard task School encase 9-503-050, p. 7. 4 ? Zara, la deferlante de la mode espagnole,? query with Stephane Labelle, MD of Zara France, Enjeux-Les Echos, February 1996. 5 Crawford, L. (2000) ? Inside Track putting on the style with rapid response,? Financial Times, 26 February 2000. 6 D? Andrea, G. and D. Arnold (2003) ? Zara,? Harvard Business School teddy 9-503-050, p. 19. 7 D? Andrea, G. and D. Arnold (2003) ? Zara,? Harvard Business School Case 9-503-050, p. 18 8 Ferdows, K . J. , K. M. Lewis and J. A. D. Machuca (2003) ? Zara,? Supply Chain forum 4(2) 62. 9 Ferdows, K. J. , A. D. Machuca and M. Lewis (2003) ? Zara,? CIBER Case Collection, Indiana University, p. 6. 10 Ghemawat, P. and J. L. Nueno (2003) ? Zara Fast Fashion,? Harvard Business School Case 9-703-497, p. 10. 11 ? The Future of Fast Fashion,? The Economist, 18 June 2005, p. 63. 12 ? Zara A Retailer? s Dream,? from http//www. fashionunited. co. uk/news/archive/inditex1. htm 13 Ferdows, K. J. , A. D. Machuca and M. Lewis (2003) ? Zara,? CIBER Case Collection, Indiana University, p. 7. 14 Crawford, L. (2005) ? Inditex sizes up Europe in expansion drive,? Financial Times, 1 February 2005, p. 30. 15 Fraiman, N. , M. Singh, L. Arrington and C. Paris (2002) ? Zara,? Columbia Business School Case, p. 5. 16 Ghemawat, P. and J. L. Nueno (2003) ? Zara Fast Fashion,? Harvard Business School Case 9-703-497, p. 0. 17 Fraiman, N. , M. Singh, L. Arrington and C. Paris (2002) ? Zara,? Columbia Bu siness School Case, p. 5. 18 Ferdows, K. J. , A. D. Machuca and M. Lewis (2003) ? Zara,? CIBER Case Collection, Indiana University, p. 6. 19 Fraiman, N. , M. Singh, L. Arrington and C. Paris (2002) ? Zara,? Columbia Business School Case, p. 6. 20 Ferdows, K. J. , A. D. Machuca and M. Lewis (2003) ? Zara,? CIBER Case Collection, Indiana University, p. 8. 21 Interview with Anthony Pralle, Senior Vice President of capital of Massachusetts Consulting Group, Madrid, 13 July 1999, as quoted in Harle, N. , M. Pich and L.Van der Heyden (2002) ? mark & Spencer and Zara Process Competition in the textile Apparel Industry,? INSEAD Case 602- 010-1. 22 Crawford, L. ?Inditex sizes up Europe in expansion drive Rapid design, manufacture and distribution keep pressure on rivals,? Financial Times, 1 February 2005. 23 D? Andrea, G. and D. Arnold (2003) ? Zara,? Harvard Business School Case 9-503-050. 24 Crawford, L. (2005) ? Inditex sizes up Europe in expansion drive,? Financial Times, 1 Febr uary 2005, p. 30. 25 Dutta, D. (2004) ? Brand Watch Zara,? Images Fashion Forum Presentation, New Delhi, 12 February 2004.