The first Zara store was opened in 1975, in A Coruña in Galicia. Rapid expansion followed across Spain during the 1980s, followed by the opening of the first Zara store outside Spain, in Porto, Portugal in 1988. Other shops followed swiftly in New York in 1989, Paris in 1990. Now the group has nearly 3,900 stores in 70 countries around the world. Inditex has managed to get so far, so fast largely through the use of innovative management and logistics techniques, which have now become the subject of studies in business schools around the world. For a company which spends very little on advertising, its shops have always been its principal marketing tool, so many are purpose-built to look like fashion boutiques.
The key to Inditex’s brand diversification lies in the group’s vertical integration. Almost all the phases of developing and selling a new product are carried out in-house – from design and production to logistics and sales. Shop staff are encouraged – even expected – to keep Inditex designers in touch with any fashion trends as soon as they spot them, so the group can turn them round as soon as possible. A small team of in-house designers then works to keep up – if not ahead – of trends such as its 2008 autumn winter collection and get them on to the high street as soon as possible.
The success of the model lies in being able to adapt what you’re offering in the shortest time possible to what clients want. The firm tripled in size between 1996 and 2000, then skyrocketed from $2.43 billion in 2001 to $13.6 billion in 2007. By August 2008, sales edged ahead of Gap, making Inditex the world’s largest fashion retailer. While the firm supports eight brands, Zara is unquestionably the firm’s crown jewel and growth engine, accounting for roughly two-thirds of sales. While competitors falter, Zara is undergoing one of the fastest global expansions the fashion world has ever seen, opening a store a day and entering new markets worldwide – 68 countries so far. The chain’s profitability is among the highest in the industry. The fashion director for luxury goods maker LVMH calls Zara ‘the most innovative and devastating retailer in the world’.
Dr. Rajlakshmi Pujar
Faculty Member, Indira School of Business Studies, Pune.