Spain’s mega clothing retailer continues to expand

Fast fashion shops are to be found everywhere but the world’s most successful clothing business, Inditex, is Spanish and it recently posted an almost 3 billion euro net profit. Zara is the company’s flagship store.

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Even if you have never been to Spain, you will probably have bought clothes from a Spanish owned shop - Zara, Massimo Dutti, Bershka and Pull & Bear are all brands owned by the world’s largest clothing company, Inditex - owned by the world’s 2nd richest man, Armancio Ortega.
 
The phenomenal success of the Inditex clothing group lies more out of Spain than within, where just 17% of sales are made; however the company created over 4,000 jobs in Spain last year, and Spain boasts the largest number of shops of any country. 
 

Posting a rise in profits

In 2015 the company increased its worldwide sales by over 15% and announced a net profit of 2.88 billion euro. Of all the brands, Zara Home, saw the largest growth in sales, with new stores opening during the year. Zara fashion shops also brought in more sales.
 
In 2015 the company increased its worldwide sales by over 15% and announced a net profit of 2.88 billion euro.
 
It is interesting to consider why these brands are doing so well globally and in Spain, as there is plenty of competition providing up-to-date fashion at a reasonable cost. Perhaps it is because Inditex opens one new store every day, or because of the expectation of teamwork amongst its staff or even because much of the clothing is made in Spain (or nearby in Portugal, Morocco and Turkey)?
 

Fast fashion

"Clients today want what they saw yesterday. They want to wear what's in, at a good price. There is very little risk associated with the purchase, because the cost is not very high”, says José Luis Nueno of Harvard University and author of a study on the Zara business model. In fact,
Zara is studied in business schools around the world. 
 
Turnaround time for new styles is around three weeks, so if a celebrity was photographed wearing an outfit, you will find it in one of the stores just 21 days’ later. 
 

Young and fun

Zara and the other brands sell fashion for the young at heart, constantly updating their stock with current trends. Each brand has its own style of store; Zara is quite minimalist, Bershka busier and noisy and Massimo Dutti reaches out to a more mature customer, offering a feel of luxury and tranquillity. Zara Home concentrates on attractive settings for displaying its linens, tableware and other decorative home items.
 
Have you ever seen an advertisement for Zara? Probably not as it is company policy not to advertise.
 
All of this began in 1963 when Ortega started making housecoats in his hometown of La Coruña in Galicia. Eventually he opened a shop there in 1975 (originally to be called Zorba, but that name clashed with a bar, so the name Zara was born) and continued to manufacture his products in the town. To this day, the company controls its supply chain and manufacturing, and keeps its finger very much on its business pulse. 
 

No ads

Have you ever seen an advertisement for Zara? Probably not as it is company policy not to advertise. They say that their promotions are based on their locations, which are often in attractive buildings close to the hub of any town or city. They also invest in real estate. You may be surprised to know that Primark’s flagship store in Madrid is housed in a beautiful building rented from Ortega’s company - well that’s one way to keep an eye on the competition.
 
Ortega himself has never been interviewed, nor has the current chairman, Pablo Isla. They let the fashion speak for them - and it does so extremely successfully.

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