Sunday, 11 November 2012

How Zara Grew Into the World’s Largest Fashion Retailer

Inspiring business success story in The New York Times about Zara (Inditex) and its founder Amancio Ortega Gaona, who is now the world’s third-richest man.




I recommend to read the whole story, but here are some snippets:


Inditex is a pioneer among “fast fashion” companies, which essentially imitate the latest fashions and speed their cheaper versions into stores. Every one of Inditex’s brands — Zara, Zara Home, Bershka, Massimo Dutti, Oysho, Stradivarius, Pull & Bear and Uterqüe — follow the Zara template: trendy and decently made but inexpensive products sold in beautiful, high-end-looking stores.

Inditex now makes 840 million garments a year and has around 5,900 stores in 85 countries, though that number is always changing because Inditex has in recent years opened more than a store a day, or about 500 stores a year.

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.

Every day, store managers report this information to headquarters, where it is then transmitted to a vast team of in-house designers, who quickly develop new designs and send them to factories to be turned into clothes.

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.

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 ...

The marketing Inditex does do is all about real estate. The company invests heavily in the beauty, historical appeal and location of its shops.

“They have done process innovation very well,” says Nelson Fraiman, a professor at Columbia Business School who has studied the Inditex model. “Product innovation? No. But tell me one Chinese company that has done product innovation very well. They are brilliant at process. I think you should give a cheer for process innovation.”





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