INDITEX INSIGHT DECK Growth markets and strategic initiatives April 2013 1 A Service ISABEL CAVILL Senior Retail Analyst Contents 1. Introduction 2. Major Strategic Initiatives 3. Key Markets 4. Conclusions & Implications 5. Further Reading 2 All data correct at time of publishing. 1. Introduction Inditex 1. Introduction Industria de Diseño Textil, S.A. (Inditex) and its subsidiaries form the Inditex Group. Inditex manages these companies on a centralised basis by applying policies and strategies at group level. The head office in La Coruňa (Spain) sets Inditex strategy, coordinates the brands and provides centralised IT, HR, Logistics, design and real estate functions. Corporate Structure Textile Sourcing Manufacturing Brand Divisions Logistics (Zara) Comditel S.A (La Coruňa,) Internal Choolet SA, Confecciones Fios, Gonfecciones Goa, Denlio, Hampston, Jema Creacione Infantiles, Samlor, Stear, Trisko, Zintura, Glencare, Indipunt (all based in La Coruňa) Zara Zara Logistica SA (La Coruňa, Spain) - 50% of Zara women and menswear, serving Iberia, Americas and Middle East Zara Asia Ltd (Hong Kong) Nikole S.A (La Coruňa) ITX Trading S.A (Freiburg, CH) Uterqüe S.A (La Coruňa) Lefties Espaňa (La Coruňa,) Tempe S.A. (Alicante) 4 Massimo Dutti Bershka Stradivarius External Inditex works with around 1,500 external suppliers around the world. E-commerce Tempe, Inditex’s footwear company is only 50% consolidated at corporate level, but is solely responsible for sourcing, manufacturing and distributing footwear for the group. Pull & Bear Oysho Uterqüe Uterqüe Zara ZaraHome Home ITX Fashions Ltd 100% (Ireland) Each Inditex brand is managed independently with its own logistics and production facilities. Plataforma Europa SA (Zaragoza, Spain) - 50% of Zara women and menswear, serving non-Iberian Europe, Russia and Asia Plataforma Logistica Leon SA (Leon, Spain) Zara Home and Zara distribution Plataforma Logistica Meco SA (Madrid, Spain) manages Zara childrenswear 1. Introduction The Inditex model of production is a reversal of traditional clothing cycles as it is a ‘pull’ type production process rather than ‘push’. Zara responds quickly to demand via a pull model which responds to realtime sales information from its stores. Small batch quantities allow the retailer to see what items are working with shoppers. A central distribution centre in Arteixo, with strong IT systems developed by Inditex and third parties, back up its supply chain model. All items are shipped back to Spain where they are then shipped out to stores around the world. 5 Traditional model Inditex model Design Customer Sourcing Store Store Design Customer Sourcing