Presentacin de PowerPoint

1
goes to India
Capturing the Indian market
Pedro Baquero Carlos Calandra Kai Geese Mandeep
Grover Sonia Marin Tomas Patrick Riviere
2
Agenda

• Introduction
• Overview Zara
• Zaras Success Its Business Model
• Zara in the Fashion Industry Value Chain
• Zaras Supply Chain Management
• Zaras Expansion Strategy
• Indian Market analysis
• Indian Environment PEST Analysis
• Market Attractiveness Supply and Demand
• Learning from Competitors Benetton and Lacoste
  in India
• Market Structure Porters Five Forces
• Threats and Opportunities
• Key Success Factors to enter the Market
• Strategic Recommendations

3
Overview

• Business
• The worlds fastest growing fashion retailer
• Ranks among the three global winners with Gap
  and HM
• Zara has filled untapped Armani at moderate
  prices niche
• ? Compelling mix of fashion, price and
  quality
• First store in 1975. Today 536 stores within 30
  countries worldwide
• ? 199 openings in 2002
• Financials
• Sales 2.5 Bn in 2001
• International sales 60 of total turnover
• Gross Margin 52.6 of net sales in 3rd Q2002
• ROCE 42 in 2001

4
Business Model

• Supply
• Whereas most retailers designed 60 at start
  season, Zara designed 15 ?
  Dump unpopular product line
• Deliver fashion when the customer desires
• Twice a week delivery schedule
• Demand
• No advertising or promotions
• 10,000 new items at highly competitive price

5
Around the world
6
Fashion Value Chain
Auxiliary Enterprises
Selling Agents
Wholesale Jobbers
Finishers
Contractors
7
Supply Chain
8
Expansion Strategy
High growth through international
expansion Capitalize competitive advantages
Business Goal

• Supply Side
• Just-in-time
• Low inventory costs
• Logistic Network (high technology)
• Short lead times (2 weeks)
• Source close to markets

• Demand Side
• Promotion Word of mouth (low costs)
• Product Mass customization
• Price Attractive prices / good quality
• Place Great store locations

9
Indian Environment PEST Analysis

• Indian Economy
• GNP per capita 2432
• GDP growth of 16
• Industry/service economy

• Social Structure
• 16 national languages
• Traditional culture rural areas while
• Country of two speeds urban vs. rural
• New middle class with purchasing
• Cultural shift in urban areas

• Government Politics
• Deregulation of most sectors
• Joining the WTO
• New textile policy (2000)
• Stable democracy with corruption

The industry Environment

• Demographic Structure
• 1.1 billion people
• 52 literacy rate
• Skilled labour available
• English speakers

• The Natural Environment
• Free access to natural
• resources for textile clothing

• Technology
• Easy access
• Financial benefits

10
India Market attractiveness

• Demand
• Industry
• Estimated GDP growth
• of 6-7 in fashion industry
• Undersupply for
• branded fashion products
• Target markets
• 30 MM potential customers
• for branded fashion products
• 60 MM estimated for 2010
• Behaviour Trends
• Changing buying pattern
• Growing awareness of
• fashion trends

• Supply
• Design
• World class design schools
• Production
• High innovation potential
• for manufacturing
• procedures
• High productivity potential
• Cheap and skilled labour
• force
• High investment in
• technology
• Distribution
• High investment in

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India Market Potential
12
Learning from Competitors Benetton and Lacoste
in India
13
Market Structure Porters Five Forces
14
India Threats and Opportunities
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Key Success Factors

• Value
• Latest fashion with Indian touch
• Best Prices
• Product quality
• Variety
• Cost/Speed
• Local sourcing of raw material
• Vertical Integration of supply chain
• Fast time-to-customer
• Mass customization
• Low process costs

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Strategic Recommendations to Capture the Indian
Market
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Business Strategy

• Goal
• Fast growth in India
• Two waves
• Serving unmet demand
• Gaining share from competitors
• How
• Implement Zara business model
• Introduce European supply chain system with fine
  tuning to suit the Indian market
• Customise the marketing mix

18
Logistics Procurement Strategy

• Localise and implement just-in-time and quick
  response times to demand
• Modernising the supply chain with the use of
  information technology
• Forge strong relationships with value chain
  partners (suppliers and delivery co)
• Procure raw material for garments locally

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Marketing Strategy

• Product
• Introduce the occidental range of clothes for men
  and women
• Introduce a small section of Indian clothes
  designed by upcoming Indian designers
  through mass customisation
• Introduce cotton garments for the summer and
  woollen/synthetic garments for the winter
  collections
• Price
• Use penetration pricing (20 lower than Benetton)
• Stay away from the promotion by sale paradigm
  of Benetton

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Marketing Strategy

• Promotion
• Promotion targeted at increasing awareness about
  Zara and the concept of Fashion at great value
• Use of print and television media
• Tie up with colleges to sponsor their festivals
  to increase awareness and catch them young
• Place
• Set up factory in Western India -Pimpri
  (Maharashtra)
• Launch in 5 cities initially Delhi, Bangalore
  (software capital of India), Calcutta, Mumbai,
  Pune
• Open Zara stores in prime locations in these
  cities

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Questions
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Exhibits
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Ambitious International Expansion
  Having more than five hundred stores worldwide,
Zaras short-term development is to focus on
consolidating its presence in Europe. It has
entered in new markets such as Ireland,
Luxemburg, Finland, Czech Republic, Switzerland,
Iceland and in three of Europes four biggest
markets- Germany, Italy and Great Britain- Zara
has just started.   To date, USA has a small part
in its plans, with a total of nine stores, a
full-scale assault on the United States would
almost certainly require Zara to duplicate its
manufacturing and distribution nearby. At the
moment, garments for Zaras U.S stores are
delivered from Spain in under 35 hours, but this
would likely prove too costly and impractical if
rolled out across the vast U.S.
market.   Regarding the Asian market, Zara has
set up stores in Singapore, Japan, Taiwan and
Hong-Kong, among others. Its strategy there
encompasses buying and intelligence gathering on
fashions and contemporary thinking, particularly
among younger shoppers. From Hong-Kong, the group
centralize the purchasing of fabrics and garments
form the entire region.   In fact, Zara plans to
make Asia a far more important strategic base,
for both investment and supply. But currently
manufacturing 80 of their garments in Spain,
only the strain from an aggressive retail
expansion will give Asia the leverage for
capacity.