NLIinasC's Profile

You are right Sam! They rarely spend on advertising, their marketing is more centered around the store shopping experience.
Although there would seem to be a degree of cannibalization in their portfolio, particularly with the brands you mentioned, Inditex does encourage creating a unique image and profile for the brands. For instance, Stradivarius is more bohemian and hippy, Bershka is much more fashion-forward and Pull&Bear is much more casual (generally jeans, t-shirts and hoodies) and has a significantly lower price range.

“Tested to Wear” is one of Inditex’s goals for Sustainability, which according to the company aims to ensure “that working conditions for all workers in our supply chain meet Inditex’s high ethical standards”. While certainly the debate is to be settled, it looks like incorporating sustainability as a pillar in the strategy is a step towards that.

Very interesting post. Given your experience, I would also add great customer service to their pillars.

I also found their Home Try-On campaign interesting, where you get 5 pairs of glasses shipped and 5 days to try them out. To be able to do this, WP has to have the keep its operating model as lean and techno-savvy as possible.
I wonder as well which products could this approach be extended to.

Great post Sinem. It’s interesting hearing how large companies are putting sustainability as a #1 item on their agenda, but to change a business model is even greater. Given the scale and reach of Unilever worldwide, the impact of this decision is considerable.
I am curious to know how the company’s manufacturing operations will change with this business model. Also, it will be interesting to see how they adapt the offering and product formulation, considering that many of its products source raw materials that have often been put under controversy (e.g. palm oil).

Great post! Although typical fast fashion brands have also started to offer more high-end minimalistic offerings (like COS for H&M), Everlane stays unique in its radical transparency vs. the customer. I wonder how this model is extendable to other industries or products.
Also, it seems the fashion industry has heavily relied on the blurry lines between cost and margin to sell their products. Would transparent pricing be sustainable if lower priced but similarly transparent brands enter the market, putting into question the company’s level of margins?

Very interesting to see how a company had to adapt both its business and operating models to be successful in a foreign market. The differences between the three brands mean that they need to over invest in some aspects vs. others (e.g. Walmart stores investing more to manage larger inventories of SKUs, Superama investing more in store layout and decoration). I imagine that intangible investments, such as human capital and culture, also shape this differentiation between outlets.
However, being part of larger group allows them to take advantage of synergies, such as shared transportation, logistics and supplier management. This advantage is even greater because the three formats are fundamentally the same business and share product categories.
In other emerging countries such as Colombia, large retail groups also have a three tiered offering. Because of their significant market share and broad consumer targeting, they are able to have a high bargaining power vs. CPG companies and suppliers.

I wonder how the Local Pride program is transferable to other geographies or mid-market segments.

Sorry, repeat comment by mistake.

Thanks Sinem for sharing your experience. I agree that the availability of space in prime retail locations is a constraint for Inditex’s expansion. However, it also feeds into their model of creating scarcity around its offering. A few years ago, the firm began experimenting with online shopping, being able to offer a wider selection of items online and reaching customers where they don’t have brick-and-mortar stores.

Sustainability is certainly a pressure for these companies, particularly because they are associated with mass production. The topic is central in Inditex’s agenda. For example, they introduced a new store model focused on sustainability by addressing 5 points: the stores surroundings, water efficiency, energy savings, materials and recycling, and process and training (more details available in https://www.inditex.com/documents/10279/26311/eco_store.pdf/643f79dd-c1b3-494d-a703-ac972ef3dc97). Also the company is implementing changes in its processes, introducing its Sustainability Inditex framework. Examples of these initiatives are sustainable sourcing of materials, recycling fashion and right to wear (“Green to Wear”, “Clear to Wear” and “Safe to Wear”, “Tested to Wear”).

Thanks Sinem for sharing your experience. I agree that the availability of space in prime retail locations is a constraint for Inditex’s expansion. However, it also feeds into their model of creating scarcity around its offering. A few years ago, the firm began experimenting with online shopping, being able to offer a wider selection of items online and reaching customers where they don’t have brick-and-mortar stores.

Sustainability is certainly a pressure for these companies, particularly because they are associated with mass production. The topic is central in Inditex’s agenda. For example, they introduced a new store model focused on sustainability by addressing 5 points: the stores surroundings, water efficiency, energy savings, materials and recycling, and process and training (more details available in https://www.inditex.com/documents/10279/26311/eco_store.pdf/643f79dd-c1b3-494d-a703-ac972ef3dc97). Also the company is implementing changes in its processes, introducing its Sustainability Inditex framework. Examples of these initiatives are sustainable sourcing of materials, recycling fashion and right to wear (“Green to Wear”, “Clear to Wear” and “Safe to Wear”, “Tested to Wear”).

Janiki, Iniditex directly controls all the logistic and supply chain so it is able to capture the margin that global partners would earn if the company outsourced or sub-contracted these activities. However, it is aware that it still has very high supply chain costs compared to some of its peers but it sees it as a sacrifice in order to be able to sustain its business model. In its press dossier, it acknowledges that “speed is the No. 1 priority, above and beyond production costs”.
Because production is relatively centralized in Western Europe, the brands prefer to have manufacturing centers relatively concentrated to ensure global consistency. This is relevant for Inditex because, although it adapts to customer preferences, the Group’s objective is to build global brands that have the same personality.

Inditex took a very long time to enter the online marketplace. This model has proven very successful at expanding brands like Massimo Dutti in the US, being able to reach a broader base of customers.
For Inditex, even if online offers many advantages, it makes more difficult for the company to recreate the storytelling and brand experience of its brick-and-mortar outlets.

Interesting post. I wonder how the rise of flash sales sites like Gilt will affect the modus operandi of off-season sites like Yoox and the Outnet. Will they consider moving towards that model?
How does the company approach the cannibalization between the mono and the multi-brand platforms? Does it have the same margin in the two?
Also, online pure plays like Amazon and Etsy opened brick-an-mortar stores with various degrees of success. Will Net-A-Porter continue to jump on the bandwagon with its pop-up walls?

Very interesting choice. I agree, it seems the support from music superstars was not enough to beat the advantage that Spotify gained as a pioneer.
Apple encountered similar issues in launching their streaming service, in spite of having the advantage of integrated operating eco-system with iOS, iPhone, Mac (which was a key determinant for the iTune’s store success).
In an era where most of people became used to download or stream music for free, to support artists is not enough particularly when the service offers to the customer very little differentiation in quality and user experience vs. Spotify.