The Spanish fashion brand Zara has, over the past decade, experienced unprecedented growth. Its stores are a common sight on high streets and shopping areas in some of the world’s biggest cities. But how did a small Spanish textile company grow into one of the world’s biggest and most lucrative retail brands? We take a look at the rise and rise of Zara.
While the likes of Bill Gates, Mark Zuckerberg and Jeff Bezos are well-known names around the world, many would not recognise Amancio Ortega in name or looks.
One of the world’s richest men, who briefly became the world’s richest in 2017, is the founder of Spanish retail giant Inditex. He left school at 14 and began working for a shirt maker in A Coruña, Galicia, the same city where, with his then-wife Rosalía Mera, he opened his first Zara store in 1975.
Ortega went on to found Inditex, the world’s biggest clothing retailer. Zara is one of the group’s eight brands that also include Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe.
Today, Zara has 2,242 stores in 96 markets around the world, while the entire Inditex brand has over 7,000 stores.
Ortega, now 82, has always been media-shy, granting only a handful of interviews during his illustrious career. It is said he never had an office, preferring to sit at a desk in the Inditex headquarters, surrounded by his staff. Perhaps his low-key personality and strong work ethic have helped to propel Zara to world domination.
During the first quarter of 2017, Inditex’s sales soared by 18% as the public’s appetite for fast fashion showed no sign of slowing down. The company’s total sales rose by nine percent in 2017 totalling €25.34 billion, with a profit of €3.37 billion.
Zara sells clothing for women, men and children as well as homewares through the separate store, Zara Home. There are several keys to the company’s success, but perhaps none more important than the speed with which it can turn around clothing.
The company’s fast supply chain means that new ranges are shipped to shops twice a week, producing a near constant turnover of new fashion. Much of Zara’s stratospheric success can be put down to the company’s ability to quickly tap into consumer trends. New catwalk looks are reproduced and on store shelves around the world within a couple of weeks – significantly faster than its competitors.
Zara has been quick to embrace emerging technologies to enhance its customer experience and make getting clothes from the design stage to store as smooth and fast as possible – another key to its growing global success.
One example is the brand’s use of Radio Frequency Identification Technology (RFID), which tracks items, letting the stockroom know immediately when an item of clothing has been sold so that it can be replenished on the shelves. This means the most in-demand items are quickly replaced.
According to a piece on the company by Madrid’s IE Business School, Inditex rather than being a fashion company, “is actually a large tech firm”.
Ortega has invested heavily in technology to make the business as high-tech, streamlined and fast as possible.
Zara, says the IE Business School article, uses big data to learn everything from the temperature in each of its stores to the average weight of residents in each store’s neighbourhood, enabling it to know which sizes of each piece of clothing to ship to each store. This results in less wasted stock and a more personalised customer experience.
Like many clothing brands, Zara has not been immune to controversy, with everything from sweatshop conditions to body positivity coming under the microscope.
The conditions of its workers were sharply highlighted in 2017 when employees in Turkey sewed notes into clothing, which were found by shoppers in Istanbul. The notes, which read “I made this item you are going to buy and I did not get paid for it” highlighted the plight of workers at a factory that had closed down, its manager fleeing and refusing to pay workers their last three months’ wages.
Workers urged Zara to compensate them and, eventually, the company set up a hardship fund for affected workers.
Zara’s fast fashion ethos, in which the company produces up to 20 clothing collections a year, has been criticised for its environmental impact. The company is attempting to become more environmentally friendly with the launch of its eco stores. It now has 5,068 such stores, which are 20% more energy efficient, with an aim to have 100% eco stores by 2020.
Other controversies have focused more on the clothing than the company’s practices. In 2014 the company pulled a children’s striped shirt featuring a gold star after many pointed out its resemblance to clothes worn in concentration camps during World War II.
The company was also slammed for an advert encouraging customers to “love your curves” featuring two extremely slim models.