What is Inditex strategy?

Despite the fact that Inditex's philosophy has remained substantially unchanged since its inception — to bring fashion trends closer to the population under a model focused on speed and synchronization — the group has not stopped moving.

In 2013, Inditex began betting on the opening of larger establishments: a new business model was beginning to take shape.

After the impact that the pandemic caused on its business, the Galician giant assumed an obligatory metamorphosis and did so under the umbrella of Inditex Open Platform (IOP): a new framework that sought that any customer could find the same online as in a store.

All of the above required a complete reformulation and the group then decided to absorb 1,200 establishments, of which between 250 and 300 were in Spain. An operation that has almost culminated, although not without controversy for the way he executed the process.

But if the total integration between the physical and the online channel was the key, the incorporation of SINT technology and RFID was the tool.

Inditex strategy

The first, an integrated inventory management program, had allowed, in the midst of the pandemic, to distribute 46 million deliveries from physical points and thereby generate about 1,156 million euros through the online channel. For its part, RFID made it possible, through radio frequency, to instantly locate a product and facilitate it to reach any store in the world in 48 hours.

All this commitment to online has paid off. Ecommerce already accounts for 25.5% of the group's total turnover: 27.7 billion euros. Now, the group's expectations contemplate that its weight will exceed 30% in 2024.

What is Inditex's business model?

Inditex releases new products 2 times a week in its more than 6,400 stores. The owner of Zara is also able to deliver anywhere in the world - it operates in 215 markets - in a maximum of 48 hours.

Each of its products is designed by a team of about 700 who work from the headquarters, in Arteixo (Galicia). Its manufacture, on the other hand, falls on 12 production centers that go from China to Brazil.

But, if creation is important, its logistics are no less important. The company has 10 centers in Spain that operate near the headquarters of its brands, in addition to countless platforms that service its ecommerce around the world.

Inditex strategy details

Among the national centers, Plataforma Europa stands out, in Zaragoza, responsible for moving about 400 million Zara garments annually and which has experienced its own war with the group.

lgual de clave is the bidding headquarters of Tempe, in charge of supplying the footwear to the entire group and that has also lived its lowest hours with its partner, Inditex.

Together, the entire logistics and manufacturing division employs about 10,167 people, 6% of its workforce, according to the company's annual report. The bulk, of course, is its store staff — 143,592 people. The remaining more than 11,000 workers work in the central services.

All this precise gearing generates more than 27,700 million euros in annual sales and a profit of 3,240 million.

To the question of where Inditex manufactures from, the most accurate answer would be to say that anywhere in the world, but not with the same dependence on each of them.

Inditex strategy report

From its annual report for 2021 -the year ended in January of this year-it follows that more than half (4,567) of the factories it works with (8,756) are on Asian soil: India, Bangladesh, China, Pakistan, Cambodia and Vietnam. There are 499 more factories than in 2020.

Specifically, its distribution chain consists of 12 production clusters, which are located in these 6 Asian countries, but also in Spain, Portugal, Morocco, Turkey, Argentina and Brazil.

Among all of them, and despite the attempts to produce in proximity, it is China, with 415 suppliers, who shines with its own light. This country alone has more than 600,000 workers in more than 3,000 factories.

After China, the main productive pole is Turkey, with 194 suppliers; it is followed by Morocco, with 173, and Spain, with 162.

The challenges and challenges of Inditex strategy

The challenges that Inditex faces undoubtedly go through a complex economic scenario that it will have to weather without the one that has been its main bulwark: Pablo Isla.

As a result of the complex context, Inditex has already been forced to raise its prices to protect its margins from rising inflation.

Now, the task is to ensure that, with this, the giant does not damage its competitiveness, especially when the siege of Shein does not cease, not to gain followers.

But the challenges don't end there. "Inditex and its trading are extremely strong, but this strength is not likely to last as the year progresses," Credit Suisse said after the company signed one of the best starts to the year in its history.

Inditex strategy focus

The diagnosis focused on the temporary cessation of operations in Russia after the outbreak of the war in Ukraine. The decision meant saying goodbye to a market with more than 500 stores that generated 240 million before taxes in the last full year available.

But the entity also did not overlook the "diminished position" of the group in China. A weakness that only worsens after the recent cessation of sales in the Asian country with its young fashion brands: Bershka, Pull & Bear and Stradivarius.

All these commercial withdrawals make the group now look to the United States, where growth is being as undeniable as the group's dependence on its main lifeline, Zara.