We all know about Zara: It’s the trendy, Spanish brand that’s cheaper than Hobbs or Karen Millen but more upmarket than Primark. It used to be that we could walk into a shop in October and expect to see the same range again in February. But with Zara, you don’t have that luxury. You know that if you don’t buy the trousers immediately, they will be gone by the time you come back. And because they are relatively inexpensive, you buy the trousers there and then. This is called “fast-fashion” and it is what has been powering the retail industry for the past five or six years.
Zara has become one of the leading high street brands in Europe and in the UK. What model is this “Spanish success story” built on? How sustainable is its growth and what can we expect next?
Behind the retail giant is its founder, Amancio Ortega. Of humble beginnings, he is now the world’s fifth richest man. He started his career as for gofer for various shirt stores in La Coruña, Galicia. It was only at the age of 36 that Ortega started a bathrobe manufacturing company called Confecciones Goa (his initials in reverse). By 1975 he had opened his first shop. He decided to call it Zorba, after the 1964 film “Zorba the Greek”. But changed it to Zara after a bar nearby was named the same. And so Zara was founded.
From the beginning, Amancio Ortega’s company was different because he wanted to maintain manufacturing in his hometown of La Coruna. Traditionally, a European firm would send their designs to be manufactured in independent factories in countries like China and India, where the cost of labour is cheap. But Zara keeps their factories relatively close-by in places like Portugal and North Africa especially for the ‘hot pieces’. This reduces the time spent in transit so the clothes are on the shop floor as quickly as possible.
Inditex (the group which Zara belongs to) really is a pioneer amongst “fast fashion” firms: Their floor staff are trained to find out what works and what doesn’t from the customers. Say there is a sale increase of knitted jumpers but customers would like to see more colours, this information is sent to the production team who will carry out this demand. Every piece of clothing the company makes has, in a way, been requested.
Jesus Echevarría, Communications Director for Zara, says, “because the customer is always determining production, not the other way around, the business model doesn’t feel the pinch of financial crises. I say business model because Inditex doesn’t just mean Zara. No, Inditex encompases Zara, Zara Home, Bershka, Massimo Dutti, Oysho, Stradivarius and Pull & Bear, who all follow the same template. They sell trendy and decently made but inexpensive products in stores that look and feel high-end, particularly for Zara and Massimo Dutti.”
Inditex believe that the high street is strongly divided according to brand value, so Zara will invest heavily into real estate so they can be close to stores like Prada and Miu miu. For example it recently paid 324million USD to buy space at 666 Fifth Avenue in New York- known as the most expensive space in Manhattan.
In fact, even their designs are relatively similar to those of Balmain, Louboutin and Chanel (to name a few), but Inditex take great care to alter them enough so as to avoid copyright infringement. So by walking into a Zara store you get the sleek, fancy feel and the ‘bang-on- trend’ pieces, at a fraction on the price. Bargain.
The Zara template is obviously working and the company is constantly expanding but this could be a very important issue: more and more stores mean more customer data and ultimately, less ‘last-minute response’- which is what they are good at. They need to be in 100% control of the logistics, quality and efficiency of their manufacturing teams for their model to thrive. So it seems that a momentous, make or break decision will have to be made in the near future, but right now it’s time to grab a steal while we still can.
Check out the latest fashion at Zara Nottingham, or online by clicking here.