FFE Magazine

How Zara Grew Into the World’s Largest Fashion Retailer

The company’s outward modesty reflects its surroundings. La Coruna is a quiet place, typically European in its humdrum perfection: tidy highways and compact cars, clean taxis, no need to worry about tipping. The week I visited in late July, the conservative national government was threatening to implement a new austerity plan, and unemployment among people under 30 in Spain hit 50 percent, but the city seemed calm. Restaurants were busy, beaches packed. People dozed on La Coruna’s seaside boulders, while their dogs leapt in the water. The city is a little more than 300 miles from Madrid and 555 miles from Barcelona. It’s an odd location for an aggressive, global company like Inditex.

 

In an Inditex conference room, Echevarria gave me a multimedia presentation about the company. The number of stores in different countries popped up on the screen including 289 in China and 45 in the United States. Since the time of our meeting, in late July, Inditex has reached 350 stores in China and opened another in the United States. The company’s march appears to be as inexorable as the passage of the seasons. But can Inditex survive its own expansion?

 

The roots of Inditex go back to 1963, when Ortega, the son of a railway worker, started a business making housecoats and robes in La Coruña. In 1975, he opened his own store in town. He called it Zorba, after the 1964 film “Zorba the Greek.”

 

Ortega wanted to maintain his own manufacturing business in La Coruña, so from the beginning his business model differed from the norm. A traditional ready-to-wear fashion company in the West sends the designs for its clothes to independent factories in countries like China and India, where the labor to make them is cheap. These clothes are then shipped back and stocked in stores in spring and fall, with smaller shipments throughout the year.

 

More than half of Inditex’s manufacturing takes place either in the factories it owns or within proximity to company headquarters, which is to say in Europe or Northern Africa. Inditex owns factories in Spain and outsources production to factories in Portugal, Morocco and Turkey — considered costly labor markets, typically. The rest of its clothes are produced in China, Bangladesh, Vietnam and Brazil, among other countries. The trendiest items are made closest to home, however, so that the production process, from start to finish, takes only two to three weeks. Inditex’s higher labor costs are offset by greater flexibility — no extra inventory lying around — and on faster turnaround speed.

 

In this way, says Masoud Golsorkhi, the editor of Tank, a London magazine about culture and fashion, Inditex has completely changed consumer behavior.

 

Inditex owes none of its success to advertising. That’s because Inditex doesn’t advertise. It hardly even has a marketing department, and it doesn’t engage in flashy campaigns, as its competitors do, teaming up with fashion designers like Stella McCartney, Karl Lagerfeld, Martin Margiela and Marni. Zara’s designers are completely anonymous; some would say this is because they are copiers rather than designers.

 

“The high street is really divided according to brand value,” says Golsorkhi, who is also a consultant for fashion brands. “Prada wants to be next to Gucci, Gucci wants to be next to Prada. The retail strategy for luxury brands is to try to keep as far away from the likes of Zara. Zara’s strategy is to get as close to them as possible.”

 

“In New York, they did one page saying they were opening — in The New York Times,” Echevarría said. “But it’s not a campaign; it’s an announcement; it’s information. The company does not talk about itself. The idea was that the client was to talk about the company. It was not to say how good it could be. The customer would say that if it was deserved.”

 

Fast fashion has also become more hip in recent years; even celebrities like Kate Middleton have been photographed wearing Zara. “It’s generally the way the retail market is going — it’s not just Zara,” says Isabel Cavill, a senior analyst with Planet Retail, a consulting firm based in London. “There’s a bit of cachet in picking up something that looks like £500 for £50.” If people compliment your nice dress, you can proudly boast that you got it for a steal.

 

“They broke up a century-old biannual cycle of fashion,” Golsorkhi says. “Now, pretty much half of the high-end fashion companies” — Prada and Louis Vuitton, for example — “make four to six collections instead of two each year. That’s absolutely because of Zara.”

 

The Zara headquarters is a huge airplane-hangar-size open space, with regional sales managers sitting at a line of desks running down the middle, designers on either side of them. The managers field calls from China or Chile to learn what’s selling, then they meet with the designers and decide whether there’s a trend. In this way, Inditex takes the fashion pulse of the world. “The manager will say, ‘My customers are asking for red trousers,’ and if it’s the same demand in Istanbul, New York and Tokyo, that means it’s a global trend, so they know to produce more red pants,” the P.R. person said.

 

“Actually, the customer is more or less the same in New York and Istanbul,” she said. “There are differences, like Brazilian girls like more brilliant colors, whereas in Paris they use more black. But in general when you find a fashion trend, it’s global.”

 

I recalled how I returned to my hipsterish Istanbul neighborhood after a trip to Brooklyn not long ago and discovered that the Turks were all also wearing those huge scarves wrapped around their necks eight times. I was surprised by how fast a style traveled across the globe, because I don’t see many Turks reading fashion magazines. But it isn’t just magazines that tell us what to wear. People like Ortega do. Or, more accurate, we tell each other, through the conduit of his Inditex stores and others like them.

 

There were lots of studs in brassy gold, military colors, skulls, white lace shirts and animal prints that, the spokeswoman said, “have been trendy since last season and will continue a little bit, but just until Christmas.” A trend can last a half a year, but some are finished in a month. “They thought that animal prints would finish by summer, but it kept going,” she said. “In the beginning of this season we had fluorescent colors. It was a trend in April and May, and it was very successful and then that was it.”

 

“The trends for kids are the same for adults,” the spokeswoman said.

 

She nodded.

 

Inditex denies that it copies other designers. Yet in The New York Times last March, Alexandra Jacobs described a visit to the new Zara store on Fifth Avenue in New York, where she was reminded of Prada, Alexander Wang, Balmain and many other high-end brands. Christian Louboutin took Inditex to court for selling the company’s signature red-soled shoes but lost, mainly because Inditex takes care to change its designs just enough to evade copyright laws.

 

H&M also delivers frequent shipments of new items and imitates the latest trends. But even H&M offers original collections by famous fashion designers. Inditex has discovered it doesn’t need to.

 

Expansion, however, poses a threat to Zara’s process by putting stores far from the factories and logistics center in Europe. Echevarría said the company very carefully selects the cities where it opens new stores. Remember the slide presentation showing only 45 stores in the United States compared with hundreds in other countries? There are reasons for that. Foreign brands have a long history of failing miserably here.

 

There’s also the delicate matter of sizing.

 

Expanding in China, however, will make production more complex and also require heavy investment. The company plans to open more than 400 stores there this year. “Even opening three stores a week is very aggressive,” Fraiman says. “Their factories in La Coruña have a finite capacity to respond quickly. You open more and more stores, and you don’t have flexibility of the last-minute response. Once they have a big thrust in China, then what happens is that they will have to take the whole model” — the processing of customer reactions, the quick-turnaround design teams, the logistics platform — “and replicate it in China.” But the bigger Inditex gets, he says, the more it will lose control over quality and efficiency.

 

“The reality is: a T-shirt is a T-shirt is a T-shirt,” Golsorkhi says. “It costs the planet the same thing whether you have paid £200 for it or £1 for it. It does the same amount of damage. A T-shirt is equivalent to 700 gallons of water, gallons of chemical waste, so much human labor. But it used to be that we could do with three T-shirts a year. Now we need 30. Sometimes it’s actually cheaper to throw away clothes than to wash them. That has got to be wrong.”

 

“Eventually, there aren’t going to be resources to sustain fast fashion, so to me it seems to be a very vulnerable business model,” says Alex McIntosh, the business and research manager at the London College of Fashion’s Center for Sustainable Fashion. “Production costs will also get more expensive, and they won’t be able to keep this up. Value-based companies don’t have margins to absorb that additional cost. And then they will need to convince customers to spend more for clothes again.”

 

At the end of my tour, I went to one of the Inditex factories. There were about 100 workers, I was told; huge machines do much of the work. Hundreds of bright red three-quarter-length coats were hanging throughout the building, almost ready to be shipped. A line of women stood at ironing boards, smoothing out the wool-blend, looking for defects and, the spokeswoman told me with emphasis, attaching security tags. Inditex had discovered that if that task was left to the employees in the stores, it would take an extra few intolerable hours to get that trendy red coat from Galicia into your closet.

 

SHARE YOUR IDEAS

COMMENTS

Leave a Reply

 

Important Advisory

Happy Regalo Information

Heavenly Matters1

Beauty and Fashion

21mar sidebar2

 

 materialism

 


100-yrs-beauty-4-12-14 - Copy

important advisory

 

 how they do it

BDO

bdo

 

Weather Forecast

Philippine Peso Converter
Philippine and European Times