{"id":5969,"date":"2015-12-09T21:18:18","date_gmt":"2015-12-10T02:18:18","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/inditex-king-of-fast-fashion\/"},"modified":"2015-12-09T21:18:18","modified_gmt":"2015-12-10T02:18:18","slug":"inditex-king-of-fast-fashion","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/inditex-king-of-fast-fashion\/","title":{"rendered":"Inditex, king of fast fashion"},"content":{"rendered":"<p><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/inditex-logo.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-1369 aligncenter\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/inditex-logo-300x52.png\" alt=\"inditex-logo\" width=\"300\" height=\"52\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/inditex-logo-300x52.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/inditex-logo-600x104.png 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/inditex-logo.png 962w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.36.47.png\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-5719 alignleft\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.36.47-300x201.png\" alt=\"Screen Shot 2015-12-09 at 19.36.47\" width=\"281\" height=\"188\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.36.47-300x201.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.36.47-1024x686.png 1024w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.36.47-600x402.png 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.36.47.png 1720w\" sizes=\"auto, (max-width: 281px) 100vw, 281px\" \/><\/a><\/p>\n<p>Sophisticated and tightly run operations have been the key behind Inditex\u2019s success and supported its business model: to quickly respond to fashion trends and consumer demand, offering new collections continuously at a relatively affordable price.<\/p>\n<p>In the United States, the Group\u00a0is most widely known through its brands Zara and Massimo Dutti. Its turnover for 2014 was over 18 billion euros and as of January 2015 it had 137,054 employees and more 6,600 stores around the world.<sup>1<\/sup><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: center\"><strong>Business model<\/strong><\/p>\n<p>Inditex business is centered around one simple premise, to be quick at responding to the market. Whereas it would take almost a year for a traditional fashion company to get its products out, from conception to runway to stores, to Inditex this process takes less than two months.<\/p>\n<p>Speed is a priority, because merchandise needs to be adapted as fast as possible to fashion trends and demand.\u00a0Scarcity\u00a0around products and its life cycle is an additional element; the majority of garments in a store will be available in small amounts per size, to allow the renovation of the stock.<\/p>\n<p>Stores are located in prime retail locations. For instance, both Zara and Massimo Dutti can be found in NY\u2019s Fifth Avenue, Paris\u2019s Champs Elys\u00e9es and London\u2019s Regent &amp; Oxford Streets.\u00a0Stores\u00a0are differentiated\u00a0by concept to\u00a0segment market demand and target specific niches. Each concept&#8217;s management team makes decisions and administers its\u00a0resources independently.\u00a0However, they are all grounded on the same business and operating models. The Group provides support services to the brands such as administration, technology, logistics, general HR, legal and financial advisory.<\/p>\n<p><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.52.39.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-5836\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.52.39-300x202.png\" alt=\"Screen Shot 2015-12-09 at 19.52.39\" width=\"249\" height=\"167\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.52.39-300x202.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.52.39-600x404.png 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.52.39.png 1006w\" sizes=\"auto, (max-width: 249px) 100vw, 249px\" \/><\/a> <a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.52.48.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-5837\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.52.48-300x202.png\" alt=\"Screen Shot 2015-12-09 at 19.52.48\" width=\"249\" height=\"167\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.52.48-300x202.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.52.48-600x404.png 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.52.48.png 1010w\" sizes=\"auto, (max-width: 249px) 100vw, 249px\" \/><\/a> <a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.53.15.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-5838\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.53.15-300x203.png\" alt=\"Screen Shot 2015-12-09 at 19.53.15\" width=\"247\" height=\"167\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.53.15-300x203.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.53.15-600x406.png 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.53.15.png 1008w\" sizes=\"auto, (max-width: 247px) 100vw, 247px\" \/><\/a> <a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.54.16.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-5839\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.54.16-300x201.png\" alt=\"Screen Shot 2015-12-09 at 19.54.16\" width=\"249\" height=\"167\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.54.16-300x201.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.54.16-600x403.png 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/Screen-Shot-2015-12-09-at-19.54.16.png 1010w\" sizes=\"auto, (max-width: 249px) 100vw, 249px\" \/><\/a><\/p>\n<ul>\n<li>Zara is the largest brand and\u00a0most often associated with the fast-fashion model.<\/li>\n<li>Massimo Dutti has a more sophisticated and upmarket image.<\/li>\n<li>Pull&amp;Bear, Bershka and Stradivarius are focused on a younger audience, with more casual personalities.<\/li>\n<li>Uterq\u00fce offers accessories such as leather goods, footwear, eyewear and jewelry.<\/li>\n<li>Oysho offers women\u2019s lingerie and intimate wear.<\/li>\n<li>Zara Home is centered in home furnishings with the same accessible approach.<\/li>\n<\/ul>\n<p style=\"text-align: center\"><strong>Operating model<\/strong><\/p>\n<p>Inditex is highly centralized\u00a0and vertically integrated: its designs, manufactures and distributes its products, which are ultimately sold at its own retail stores. By controlling all four\u00a0stages in the fashion process, it\u00a0is able to ensure that collections are quickly adapted to customers\u2019 tastes.<sup>1<\/sup><\/p>\n<p><span style=\"text-decoration: underline\">Design<\/span><\/p>\n<p>Under this model, the company has to identify and respond to changing trends in fashion by continuously designing new models. Traditional fashion companies like The Gap and luxury firms such as Burberry and Gucci would usually produce up to 4 collections per year: the ever popular Autumn\/Winter and Spring\/Summer, and Resort\/Cruise and Pre-Fall, also known as inter-seasonal collections. Inditex uses its flexible model to produce more collections per year, reacting rapidly to demand and delivering products promptly to stores.<\/p>\n<p>Each season\u2019s merchandising is designed by Inditex\u2019s more than 600 designers, which take inspiration on haute-couture fashion shows, fashion editorials and the feedback they receive from customers at each brand\u2019s retail outlets. Data management\u00a0plays an important role at gathering and transmitting feedback from stores.<\/p>\n<p><span style=\"text-decoration: underline\">Manufacturing<\/span><\/p>\n<p>In accordance with its vertical integration approach, most garments are manufactured at the Group\u2019s own factories. Only some\u00a0production stages, such\u00a0as garment-making, are subcontracted to specialist firms. Inditex has direct control over the fabric supply, the marking and cutting and finishing stages of production. The group handles directly the logistics associated with\u00a0production, primarily through a subsidiary called Tempe.<\/p>\n<p><span style=\"text-decoration: underline\">Logistics &amp; data management<\/span><\/p>\n<p>Each brand or concept has its own distribution hub in Spain, where all the merchandise is delivered from the production centers and suppliers and later distributed to the retail outlets around the world. Furthermore, merchandise is adapted to the store\u2019s customers profile, minimizing the risk of doing sales or not selling the garments. Shipments are frequent and continuous, with merchandise arriving to stores twice a week\u00a0and containing\u00a0new items to continuously refresh the collections on display.<\/p>\n<p>Highly automated systems and a centralized organization allow a continuously updated offering. The company designed its own logistics software to support the high demands of its business model for speed. \u00a0On average, merchandise is delivered from distribution center to store in less than two days for America and Asia and half of that time for Europe.<\/p>\n<p><iframe loading=\"lazy\" title=\"Inditex \u00b7 Logistics\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/iKUmOsmh-Gs?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p><span style=\"text-decoration: underline\">Retail<\/span><\/p>\n<p>The company thinks of its stores as a vehicle for collecting information about consumer tastes and receiving feedback about market demand, this information feeds the design teams and allows them to adapt future merchandising.<\/p>\n<p>Stores also serve as a primary channel for marketing, since they represent the brand personality and storytelling. Exterior design and shop windows act as advertisements for each concept\u2019s most fashion-forward garments.\u00a0To guarantee a standard image and store management, design, logistics and staff training are performed by the Group, regardless of the store&#8217;s ownership. Franchises are limited to smaller or specific markets, with only 13% of its more than 6,600 stores franchised by January 2015.<\/p>\n<p style=\"text-align: center\"><strong>Final note<\/strong><\/p>\n<p>Inditex&#8217;s business and operating models are deeply integrated and allow the company to exert control over the fashion process, to be the king of fast. Benefits of this model, such as keeping low inventory levels and limiting the risk of fashion trends, outweigh additional necessary costs in production, data management and logistics. Hence,\u00a0Index\u00a0relies more in volume than margin compared to traditional fashion.<\/p>\n<p><a href=\"https:\/\/www.youtube.com\/watch?v=y6RcEsnGf8E\">https:\/\/www.youtube.com\/watch?v=y6RcEsnGf8E<\/a><\/p>\n<p><strong>Sources:<\/strong><\/p>\n<ol>\n<li>Inditex \u2013 Press Dossier, <a href=\"https:\/\/www.inditex.com\/documents\/10279\/156946\/inditex_eng.pdf\/72744164-500e-4df6-adaf-e685d1b139c5\">https:\/\/www.inditex.com\/documents\/10279\/156946\/inditex_eng.pdf\/72744164-500e-4df6-adaf-e685d1b139c5<\/a>, accessed November 2015.<\/li>\n<li>Inditex . Logistics \u2013 Youtube, <a href=\"https:\/\/www.youtube.com\/watch?v=iKUmOsmh-Gs\">https:\/\/www.youtube.com\/watch?v=iKUmOsmh-Gs<\/a>, accessed December 2015.<\/li>\n<li>Conversation with James McArthur, ex-CEO of Balenciaga, Harrods and Anya Hindmarch.<\/li>\n<\/ol>\n<p>All images taken from Inditex website.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Over the past 20 years, one word disrupted the fashion industry and changed it more than any other single trend: fast. At the helm of this movement has been Inditex, a Spanish firm that originally started as a dress maker Galicia during the 60\u2019s and has now become a collection of more than 100 companies worldwide.<\/p>\n","protected":false},"author":448,"featured_media":5970,"comment_status":"open","ping_status":"closed","template":"","categories":[15,597,409,947,595],"class_list":["post-5969","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-fashion","category-fast-fashion-uncategorized","category-fast-fashion","category-massimo-dutti","category-zara"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Inditex, king of fast fashion - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/inditex-king-of-fast-fashion\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Inditex, king of fast fashion - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"Over the past 20 years, one word disrupted the fashion industry and changed it more than any other single trend: fast. 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