An army of designers, sales representatives, programmers, pattern makers and models work at full capacity in the enormous headquarters that the textile giant Inditex maintains in Arteixo, a few minutes from A Coruña. It is there that the garments that millions of people later buy at the Zara flagship on Paseo de Gràcia, in Barcelona, ??in the heart of Milan or on Fifth Avenue in New York, are devised in a privileged enclave a few meters from the Cathedral of San Patrick’s and Rockefeller Center. Zara, the main brand of Inditex and driving force behind the company, is the most valuable brand in Spain according to the Kantar BranZ ranking. “Everyone here knows her,” a Manhattan-based diplomat told this newspaper. His business model is studied at the prestigious Parsons School of Fashion Design and at business schools.
With 2,312 stores (almost 40% of all Inditex stores between Zara and Zara Home) spread all over the world and an e-commerce fully integrated with its physical stores, the business it generates grows every year. He sells clothes worth 65 million euros a day. In the last year, even with restrictions due to the pandemic at the beginning of 2022 and the commercial closure of Russia, one of its main markets before the war, Zara had a turnover of 23,761 million, 21% more than the previous year, leading growth within the multinational.
The increase in sales since 2019 has been 21.45%, the greatest advance among its six brands. If four years ago Zara reported 19,564 million euros to the income of the company chaired by Marta Ortega, last year the figure rose to 23,761 million, 72.95%, as indicated by the data published in its last annual report. In 2017, Zara’s contribution to Inditex sales remained four points below, with a share of 68.87%, although the last three years have been atypical due to the covid crisis and billing also reports of Lefties, which has been expanding in Spain.
Zara also stands out as the banner that has most diversified its offer within the Inditex universe. With a line for the home (Zara Home), accessories, lingerie, footwear, makeup and perfumery or sportswear, it increasingly covers a wider range of products.
Zara has “an extraordinary model,” says José Luis Nueno, a professor in IESE’s Department of Business Management and holder of the institution’s Intent HQ Chair in Changes in Consumer Behavior. “We are not talking about the Inditex model, we are talking about the Zara model; It is the brand that has the best-oiled production process of all the group’s brands, with short and constant cycles, which brings great agility to the business; dictates prices and has no competitor problems; its gross margin is always at a good level and it does little price cutting,” he says. And he has found –he adds– the balance in his supply network, with part of the production in proximity and another similar one in Asia.
Zara is also leading the expansion of Inditex throughout the world. It is not an internationalization, but the globalization undertaken by a clothing brand. The flagship firm concentrates most of the openings and commercial space in the markets in which Inditex is present. And it is the only one in which it is already its second business ecosystem behind Spain: the United States. There, with 98 Zara stores, Inditex will boost its network of establishments with 30 projects between openings, expansions or relocations until 2025. New York, Miami, Chicago, Boston, Los Angeles or Las Vegas will be some of the cities where Zara will give a new step with the aim of gaining market share and sales.
These results have further distanced the brand from its immediate competitors. h
Is there less space therefore for fast fashion operators today? Enrique Porta, Consumer partner
Zara, in any case, seems to occupy a privileged place in the textile business. As long as 10% of consumers are aware of fashion, affirms José Luis Nueno, fast fashion will continue, “and nobody touches fashion like Zara”.
