Zara – a Spain-based high-fashion, low-cost retailer, stunned investors and analysts by revealing that its profits climbed 30% in the first quarter of this year along with an increase in sales of 15%. Yet, 70% of its revenues come from Europe, and it is based in a country where the macro economic situation is quite challenging. Zara is the flagship chain store of the Inditex group and is considered a Spanish success story. How is Zara doing it so well while other eurozone firms have stuggled?
Well, Zara has a unique business model. Innovation in business models does create value, and is generally cheaper than product and technology innovations. Countless companies such as IKEA, Dell and Zipcar are highly successful due to innovative business models.
Questions (2nd individual reflection for my 3810 students but open to all to comment):
- What is unique about Zara’s business model compared to more traditional fashion retailers?
- How does Zara create value to customers?
- What do you consider Zara’s competitive advantages to be?
- What about its online strategy?
Diane A. Isabelle 