Bonnie Strong at Inditex

Abstract

Inditex, Zara's parent company, is known for its success in “fast fashion,” the ability to respond quickly to changes in the retail apparel industry. This case examines the reasons for its success by tying its strategy to its design, production, distribution, and retailing practices from both a process and people perspective. The links between this strategy and performance measures such as ROE and ROA can be discussed. Inditex's strategy can be directly linked to retail apparel industry challenges such as long lead times, fickle customers, and constantly changing fashions. Links among customers, capabilities, control, coordination, competition, context, culture, community, and cash (profitability) can be emphasized. Excerpt UVA-OM-1558 Rev. May 11, 2018 Bonnie Strong at Inditex Bonnie Strong had only been working at Industria de Diseno Textil, S.A. (Inditex), at the company's Arteixo, Spain, headquarters for two months in June 2016 when the email popped into her in-box one morning. It was an invitation to be a breakfast speaker at the Darden School of Business's Spanish alumni meeting and describe her experiences working for Inditex. In one week. With the dean in attendance! Strong set down her coffee and began to type a response. Her mind was already racing with ideas for a presentation for the alumni breakfast. Strong worked in the product store team for Zara, Inditex's flagship “chic cheap” clothing store, which accounted for 65% of Inditex sales and 67% of its EBIT. (See Exhibit1 for Inditex income statements and balance sheets.) In 2015, Inditex opened 77 net new Zara stores. Due to Zara's unique focus on store-level sales trends and an iron grip on each stage of its supply chain, the fast-fashion company was able to migrate product designs to its stores in three to five weeks—something that took the typical retailer six to nine months. This meant fewer fashion misses, fewer markdowns, and happier customers. Over the previous decade, this strategy had driven enormous global growth for Zara and parts of the promising business model had been replicated in seven other retail brands Inditex owned. Optimism—and opportunity—was high for customers, stockholders, and employees. At 28, Strong was young for someone holding such an important role at Inditex—responsibility over the Zara stores in the East Coast region of the United States—but she felt ready. While she had only been store manager at the New York Zara store on an interim basis for one year before heading to Darden for an MBA, Strong's passion for retail and her natural leadership abilities had convinced Inditex to take a chance on her. The breakfast meeting was Strong's chance to synthesize all she had learned and to show Darden that it should be proud of her as a graduate. Armed with the analytical tools gained at business school, Strong hoped to impress the alumni chapter with her take on the company's logistics, marketing, design, manufacturing, supply chain, and financial performance. She had a lot of work to do to prepare. . . .