Background: Inditex is the parent company of fast-but-premium-fashion-retailer Zara and its classier-cousin Massimo Dutti. It also owns Bershka, Pull&Bear and Zara Home. The company was founded in Spain in 1985 and has grown to become the world’s largest fast-fashion retailer with over 5,800 stores across 50+ markets.

‍What happened: Inditex has seen its quarterly revenue jump to $12.2 billion USD — up nearly $1 billion USD from the same period last year. But, despite the positive quarterly update, there were a couple of red flags for investors. In 2023, the Americas accounted for around 20% of all sales, but in 2024, it dropped to 18.6% of its total revenue.

‍What else: Interestingly, despite a fall in its Americas sales, it’s actually jacked up its pricing. Zara has raised prices by an average of 22% on its dresses and 8% on its tops in the US over the past year.

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‍What's the key learning?

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‍💡Pricing strategy can be a very delicate balancing act. While luxury brands can generally raise prices with minimal impact, fast-fashion thrives on affordability.

💡By jacking up its prices, Zara risks falling into an awkward middle ground: too expensive for budget shoppers, yet not premium enough for luxury buyers. We know that the likes of Shein, H&M and even Temu are taking the world, and the US by storm. In fact, Shein’s sales in the US reached around $25 billion USD in 2024.

💡If Inditex wants to grow its Americas revenue once again, it needs to differentiate Zara from budget fast-fashion brands, but also ensure it doesn’t alienate its core customer base.