BUSINESS MANAGEMENT ISSUES

Business Management Issues



Abstract

Purpose - Research on the internationalisation of retailing has been mainly focused on market entry issues. This paper attempts to examine the internationalisation process from an international marketing perspective using Spanish fashion retailer Zara as a case study.Design/methodology/approach - An in-depth case approach was adopted based on extensive secondary research, which includes literature published in English and Spanish as well as internal company documents.Findings - The internationalisation of Zara seems to follow the classic “stage model” by firstly entering geographically or culturally close markets before taking opportunities in more distant markets. This global expansion was triggered by both push and pull factors. Compared with the competition, Zara has three distinctions: vertical integration to achieve a faster turnaround time; use of franchise and joint ventures for rapid expansion; and use of the store as the main tool for promotion, with low spend on advertising.Research limitations/implications - The main drawback in case studies is that of limited validity and representativeness, constraining the potential for making generalisations. However, this case is deemed sufficient to provide valuable insights and improve understanding in this area.Originality/value - Little attention has been devoted to the internationalisation process from an international marketing perspective. Aiming to fill this gap in the literature, this study provides important insights into Zara's internationalisation process.

Business Management Issues

Introduction

Zara is one of the world's most successful fashion retailers, operating in 59 countries. However, there is little research about the firm in English as the majority of publications have been written in Spanish. This paper seeks to address this gap in the literature by examining the internationalisation process of Zara. This study adopts an in-depth case approach based on extensive secondary research. Literature published in both English and Spanish has been reviewed, including company documents such as annual reports. The paper starts with a brief overview of the global textile and clothing industry, followed by the case study of Zara. The main part of the case examines the key aspects in the internationalisation of Zara, namely motives for internationalisation, market selection, entry strategies, and international marketing strategies. In the final section, comparisons are made between Zara and two of its main competitors, H&M and Gap.

The global textile and clothing industry

The removal of all import quotas in the textile and clothing industry from January 2005, involving the unrestricted access of all members of the World Trade Organisation (WTO) to the European, American and Canadian markets, is considered a key driving force in the development of the clothing sector (Keenan et al., 2004). This new scenario has created opportunities for large exporters like China and India that are considerably increasing their market share whilst at the same time creating challenges for European Union member states in order to remain competitive internationally.

The major trends that are restructuring and characterising the textile and clothing sector are as follows:

The European textile and clothing industry is characterised by fragmented production with a large number of small and medium-sized companies mainly located in Italy, Great Britain, France, Germany and ...