ambitious expansion effort there because of higher-than-expected operating costs and weak demand- despite the fact that its prices there were pegged at levels comparable to those that it posted in its large markets in North Europe. Asia appeared to be even more competitive and difficult to penetrate than North America.
While the issues surrounding Zara's future geographic focus were important, top management had to consider some questions that reached even farther. One immediate set concerned the non-Zara chains that had recently proliferated, but at least some of which were of subcritical scale. Could Inditex cope with the complexity of managing multiple chains without compromising the excellence of individual chains, especially since its geographic scope was also relatively broad? Looking farther out, should it start up or acquire additional chains? questions were sharpened by Inditex's revenue growth rate requirements, which top management pegged at 20%+ per annum While like- for like sales growth had averaged 9% per year recently, it might fall to 7% or even 5%, so a 15% annual increase in selling space seemed to be a minimal requirement And, of course, margins had to be preserved as well-potentially a challenge given some of the threats to sustainability of Inditex's competitive advantages. A roundtable video of Inditex's top management sheds additional light on some of these issues as well as others discussed in this case.