Apparel Industry Outlook
The global apparel chain was a typical buyer-driven chain in which upstream structure was fragmented, locally owned, dispersed, and often tiered production whereas downstream structure was relatively concentrated intermediaries. The industry was coordinated and dominated by downstream intermediaries like retailers and branded marketers. A short summary of the apparel industry characteristics was as follows:
Production: Very fragmented apparel production. Developing countries had an unusually large share, about one half in total exports due to cheaper labor and inputs. Proximity was important since it reduced shipping costs and lags. Despite China's existence as an export powerhouse, regionalization was the dominant motif of changes in apparel trade in the 1990s.
Retailing: The increasing concentration of apparel retailing in major markets was thought to be one of the key drivers of increased trade. In order to improve speed and flexibility, large apparel retailers played the leading role in promoting quick response (QR).
Retailing activities remained quite local with respect to other industries.
Customers: Per capita spending on apparel tended to grow less proportionately with increases in per capita income, so that its share of expenditures typically decreased as income increased. Significant local variation in customers' attributes and preferences was an issue not only between regions but also within regions.
ZARA'S BUSINESS MODEL
We mainly analyzed Zara to recommend on Inditex's strategy since it was the flagship of Inditex and the generator of a huge percentage of financial results by itself. Zara used needs-based positioning, targeting a specific segment of customers and providing a tailored set of activities that can serve those needs best, in developing its business model. Its selling ideas was giving middle class customers an exclusivity feeling in its stores with fashionable products, service, store design, and store locations.
Zara's well-designed marketing mix was in consistency...