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Pace-Setting Zara Seeks More Speed To Fight Its Rising Cheap-Chic Riv. .. 1 of 4 7/4/2008 9:25 PM DOW JONES REPRINTS This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visit: . See a sample reprint in PDF format . Order a reprint of this article now . A Zara window in New York was designed at headquarters in Spain. February 20, 2008 Pace-Setting Zara Seeks More Speed To Fight Its Rising Cheap-Chic Rivals By CECILIE ROHWEDDER and KEITH JOHNSON February 20, 2008 ARTEIXO, Spain -- Zara stores have set the pace for retailers around the world in making and shipping trendy clothing. Now Pablo Isla, chief executive of parent company Inditex SA, says Zara needs to speed up. As rivals catch up, Mr. Isla is attempting one of the fastest global expansions the fashion world has ever seen, opening hundreds of new stores and entering new markets. To do that, as an economic downturn threatens sales, Inditex is changing the systems that have driven its success at Zara and its other store brands, to save time and money. Among the innovations, it's introducing new methods to enable store managers to order and display merchandise faster and adding cargo routes for shipping goods. "There has been a clear change of mentality in the company," Mr. Isla, a former tobacco executive who arrived at Inditex in 2005, said in an interview at the company's headquarters here. The world's second largest clothing retailer by sales after Gap Inc., Inditex is responding to a predicament shared by other companies that come up with game-changing formulas: Eventually competitors catch up, forcing the pioneers to do even better to keep their edge. (Please see related story on page B9.) Low-cost carrier Southwest Airlines Co. is making big changes to fend off rivals that have copied its efficient operating model. Inventory-control methods at Wal-Mart Stores Inc. are being mimicked around the world, and Google Inc. is updating its search engine to keep users loyal. The consumer slowdown is adding pressure. Inditex shares have fallen nearly 24% in the last 12 months, in large part because investors are worried about an economic downturn in Spain, where Inditex generates over a third of its $12 billion in annual sales. The company is pressing ahead with its expansion plans even as consumers are slowing down. In the U.S., retailers had their worst monthly sales results in nearly five years in January, and some chains are planning to close stores and cut jobs. U.K. retailer PLC recently reported its worst quarterly sales performance in two years, and warned the pain could extend into 2009. Next month,
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This note was uploaded on 12/31/2009 for the course BIZ 178 taught by Professor Meford during the Fall '09 term at University of California, Berkeley.

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