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New Company Profile

Zara is the best-known brand in the portfolio of Inditex, the Spanish fashion group which is now Europe's biggest fashion retailer by revenues, having overtaken rival H&M at the beginning of 2006. The group has embarked on dramatic expansion since 2001, opening almost 450 stores in 2005 alone, creating an estate which housed over 2,700 outlets by the beginning of 2006, spread across 64 countries. Click here for an Adbrands Snapshot of Inditex (subscribers only). 

Competitors: See Fashion & Accessories Sector index for other companies

Recently Revised Profiles and Snapshots

In the news this fortnight: Advertisers

No wonder Richard Branson always has a smile on his face. As expected, cable television giant NTL agreed a £962m deal to acquire Virgin Mobile in the UK, creating the first quadruple play group offering fixed and mobile telecoms, broadband and pay-TV. The deal nets Richard Branson a handsome cash down-payment, a large stake in the resulting business - which is expected to adopt the name Virgin Television - and also guaranteed future cash income of £8.5m in royalties for use of the name, every year until 2036!

There could be a new threat to traditional PC manufacturers. Following the introduction of Intel chips in its computers, Apple is also to allow its users to run the standard Windows XP operating system. This marks the effective end of the decades-old battle between the rival formats. It also raises the possibility of PC users trading up to more stylishly designed Apple machines instead of the boxy desktops still produced by Dell and HP. Apple has already made significant inroads into the PC sector with the widespread adoption of iPod and iTunes.

As expected General Motors agreed the sale of a 51% stake in its consumer finance arm GMAC to a private investor group led by Cerberus Capital Management. The group was also reported to be negotiating the sale of its minority shareholding in Japanese car manufacturer Isuzu. The group is selling off assets in order to raise cash to fund a turnaround of its deeply troubled US manufacturing business. There's no sign of improvement just yet - GM's vehicle sales for the month of March fell sharply (by 14%), as did those of rival Ford though by a smaller percentage. Toyota on the other hand reported its best-ever monthly sales figure in the US. The Japanese firm is widely expected to overtake GM as the world #1 by the end of 2006.

Colgate-Palmolive, Reckitt Benckiser, GlaxoSmithKline and Novartis are all said to have registered initial bids for Pfizer's mammoth OTC healthcare portfolio, which includes brands such as Listerine and Rolaids. Alternatively, the business could be spun out as an independent unit.

The spin off of the US branded apparel division of Sara Lee Corporation is now expected to take place during the 3rd Quarter of 2006. The business will be renamed Hanesbrands Inc, after its best-selling underwear business. Other brands include Champion, Playtex and Wonderbra. Other forthcoming spin-offs include the real estate and hospitality divisions of Cendant, to be named Realogy and Wyndham Worldwide respectively.

UK electrical retailing brand Dixons is to be consigned to the scrap heap, following the announcement that all its remaining branches are to be rebranded to sister brand Currys, as Currys.digital. The Dixons name will be retained for the time being for the group's e-commerce operations.

Brand consultancy Brand Finance released its report on Europe's 20 most valuable football clubs. Real Madrid overtook last year's champion Manchester United to take the #1 sport with an estimated value of £218m. Juventus of Italy climbed 3 places to #3, followed by Barcelona (up from #5 last year) and AC Milan (down from #3). The full report is available here. Separately, sportswear manufacturer Reebok, now a division of Adidas, received a substantial boost with the news that Thierry Henry, the Arsenal and French national team footballer, has quit Nike and signed a five year contract to endorse Reebok products, although the switch won't take place until August 2006, after the end of the World Cup. 

Meanwhile WPP's Millward Brown research consultancy published highlights of its Brandz Top 100 survey. The top 10 places went to Microsoft (estimated value of $62bn), General Electric, Coca-Cola, China Mobile, Marlboro, Wal-Mart, Google, IBM, Citibank and Toyota.

In the news this week: Agencies

There's no question of which creative network Adbrands users most admire. In our first poll (results here), BBDO had a clear lead with more than a quarter of all votes cast, and three times more than its nearest rival. This was Leo Burnett which took second place with 9%. TBWA and Publicis shared joint 3rd with 7%. Poor old Lowe languished at the bottom of the table with just 1% of the vote. Vote now in our new poll for your most admired creative specialist.

Omnicom effectively wrested the Motorola global creative account off WPP, following a series of regional wins. BBDO New York becomes the lead agency on the global account, supported by Goodby Silverstein and Siegel & Gale in the US and AMV BBDO in Europe. However Motorola has not ruled out further use of WPP's O&M and independent 180 Amsterdam for selected projects.

French advertising stars Eric Tong (ex-BETC and Y&R France) and Pascal Gregoire (ex CLM/BBDO) confirmed the name for their hotly awaited new independent agency: La Chose.

Chuck Brymer, former head of Interbrand, was named as the new president & CEO of DDB Worldwide, replacing Ken Kaess, who died suddenly two weeks ago. Bob Scarpelli assumes the role of worldwide chairman, succeeding Keith Reinhard (who becomes chairman emeritus). Brymer was replaced at Interbrand by Jez Frampton.

Regards


Simon Tesler
Publisher, Adbrands

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Recommended Reading

US users

Like Freakonomics (reviewed here recently), the new work from the author of bestseller The Tipping Point inhabits a far broader territory than most traditional business books. Having already established the term "tipping point" as standard business parlance, Gladwell now turns his attention to those moments when we "know" something without knowing why. The actual term is rapid cognition, when our subconscious makes an instant decision based on experience long before our conscious brain comes to its own conclusion. Although comparatively few of the author's illustrative examples come directly from the business world, it's a process which has huge implications for the way marketing is conducted, as well as other areas of daily life and work. Anyone who's ever had to interview a job applicant is familiar with that flash of instinct which tells us within a minute or two whether or not this person is right. There is also a powerful body of opinion which mourns the sad decline lack of gut instinct when it comes to modern corporate decision-making.

Gladwell's book examines the cons as well as the pros of the snap judgement in detail, offering a wealth of illustration from all walks of life. On the pro side, his opening example is the true tale of a seemingly genuine antique statue which appeared to pass all scientific tests, but which numerous experts knew instinctively was a fake without even knowing why. The balance is provided by former US President Warren Harding who looked every inch the perfect leader, but who turned out to be one of the worst Presidents the country had ever known. The same presidential bearing appears to be a given for corporate leaders, though not necessarily with the same results. Fewer than 4% of American men are 6 feet tall 2 inches tall, but Gladwell found that an astonishing one-third of Fortune 500 CEOs look down from those lofty heights. Specifically in the field of marketing, Gladwell turns his attention to the celebrated example of New Coke and the Pepsi Challenge, a perfect example of how hard it is to work out how and what people really think. He also covers other areas in which packaging and design can be shown to have huge implications for the success or failure of a product, from brand mascots to the colour of margarine, because of the secret messages they impart to consumers. 

However the underlying message of the book is that the snap judgement is intrinsically flawed, a part of our psychological make-up that we must respect for its powers of instinctive deduction, but which we must also be wary of abusing. For every example in which rapid cognition gets it right, there is another where gut instinct can lead to a poor or even - in the case of police officers under fire - a tragic decision. This is a fascinating book, and one which offers significant insights into the way we humans behave.

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