Inditex SWOT & PESTLE Analysis

Strength

1. Global footprint of Inditex in the fashion industry: Inditex is the parent for eight well-known brands including Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe. It has been the biggest fashion retailer of the world in terms of revenue. With around 7,469 stores in 96 markets, 1,985 suppliers and 8,155 factories worldwide in 2019, Inditex is one of the world’s largest retailers in the fashion industry. The company has a strong workforce of 176,000 employees from 172 different nationalities and highly diverse cultures, religions, ethnicities and tastes. Amancio Ortega, the owner of Inditex, was the third richest man in the world in 2017 but has now slipped to number eleven in 2020 because of heavy losses suffered due to the COVID-19 pandemic.

2. Diverse range of product portfolio: Each one of Inditex’s brands targets different age groups and offers products starting from apparel, footwear, sportswear, small appliances and kitchenware, to high-quality accessories and leatherwear. While Pull&Bear is primarily intended for casualwear of young customers, Oysho specialises in lingerie, beachwear, home wear and Sportswear. The company Zara Gap, that sells Inditex’s footwear through the eight brands has become an example of how to replenish stores almost instantly and beat competitors to trends. Zara, the most famous and profitable brand of Inditex offers fashionable clothing for kids, teenagers and adults along with footwear and handbags. Inditex’s another brand, Zara Home is a bit different from others since its offerings focus more on home décor products such as bedding, tableware, bed and bath linen, along with dishware, glassware, cutlery etc. Apart from these, Zara Home also sells apparel and accessories associated with the comfort and intimacy of home life, although its prime offerings are home décor products.

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Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Implementation of sustainable business policies: Inditex acknowledges its responsibility as a sustainable organization and hence acts accordingly to reduce its environmental impact. In 2020, Inditex showed its support to the Task Force on Climate-Related Financial Disclosures (TCFD) by making a commitment to implement their recommendations in order to promote transparency about risks and opportunities associated with climate change. The executive chairman announced that the company aims to manufacture or procure its entire range of cotton, linen and polyester for all of its eight brands from organic, sustainable or recycled resources by 2025. Inditex has pledged to completely eliminate the use of plastic bags by the end of 2020, which has already been implemented by some of its brands like Zara, Zara Home, Massimo Dutti and Uterqüe. And by 2023, the company aims to debar all single-use plastics for customer’s sales. The company is even trying to use 80% of renewable energy consumption in all facilities including main offices, logistics centers and its own stores.

2. Environmental footprint of fast fashion industry: The entire lifecycle of fast fashion clothing has an extensive environmental impact, starting from its production to disposal. Production of clothes requires a considerable amount of energy and resources, and many of the fabric dyes and chemicals used in the process are toxic and are responsible for contaminating fresh water. Fast fashion moreover not only has a negative environmental impact but also promotes poor working conditions and unfair wages for laborers. This mainly includes countries like Bangladesh, Brazil, China, India, Indonesia, Philippines, Turkey, Vietnam, etc. Leaders in the fast fashion industry such as Zara, H&M, UNIQLO, Gap, and Forever 21, competes with traditional fashion houses that continue to introduce new fashion lines on a seasonal basis. Fast fashion contributes to pollution, poor workmanship, and poor working conditions in developing countries, where many of the clothing is manufactured. As per the information revealed by the United Nations Environment Program, 10% of the total global greenhouse gas emissions come from the clothing industry. Around 20% of the total clothes produced globally are never purchased, which means resources used to produce them are completely wasted. A significant portion of these garments are made with synthetic fabrics that are non-biodegradable, which further contributes to the waste disposal problem.