Pace-Setting Zara Seeks More Speed To Fight Its Rising Cheap-Chic Riv.
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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
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
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
Co. is making big changes to
fend off rivals that have copied its efficient operating model. Inventory-control methods at
Inc. are being mimicked around the world, and
Inc. is updating its search engine to keep
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,