Competitor clothing retailers are charging at Spanish brand Zara like a bull attacking a red rag as they look to topple the world’s largest fast fashion brand and steal a portion of their profit.
Having hit the Spanish streets in 2007, British value fashion retailer Primark have invaded Zara’s homeland and overtaken them to become the biggest clothing store in the country – that’s according to John Bason, finance director of Primark’s parent Associated British Foods.
But Amancio Ortega, founder and director of the Inditex Group which owns the Zara fashion chain, should not be accused of taking a siesta. Notoriously media-shy, Ortega has climbed from humble beginnings to become the richest retailer in the world due to the Zara success story.
Remarkably, Zara have managed to catapult themselves into their position without the use of advertising. Rather than investing in lavish marketing campaigns they have used their funds to open new stores in prime locations, showing just how powerful the high street can still be as a promotion tool.
Zara have wedged their stores alongside luxury brands like Prada and Gucci and offer affordable equivalents. They have certainly caught the eye of those in the high end of the business – Daniel Piette, Louis Vuitton fashion director, described them as ‘possibly the most innovative and devastating retailer in the world’.
Much to the frustration of these luxury brands, Zara also save money by not appointing the industry’s leading designers; instead they wait for the release of catwalk collections, mimic the designs and get the products in store for sale quickly.
Zara’s efficiency in the department of production has been integral to their success – they can turn an idea into a new product for sale in just two weeks, around five times quicker than their competitors.
They are working on making this even faster after it was revealed last July they are testing a new stock control system whereby a chip is embedded inside the plastic alarms which are attached to products in store. The sale of these products can thus be tracked immediately meaning another delivery of a big-seller will be en route at an unprecedented speed.
If that system was in place in 2011 a lorry-load of cornflower blue, polyester dresses would’ve been on the motorway within hours after Kate Middleton donned the Zara outfit, costing £49.99, just the day after her wedding to Prince William. With that kind of endorsement, who needs advertising?
In June the company announced its biggest fall in quarterly profits in five years – but a strengthened euro was more to blame than any sort of wrongdoing. Sales actually grew 4.3% in this period, and that was following an 8% sales rise in the year ending January 31st.
And despite a recovering Spain seemingly opting for the cheaper goods of Primark, sales in that nation did actually rise by 3% in the second half of 2013 and chief executive Pablo Isla has expressed satisfaction that he expects the home market to continue an upturn in trajectory.
At the height of the economic crisis, 1 in 4 Spaniards were unemployed. There was little to be cheery about except for sunny skies and a sensational football team. But the success of Ortega and Zara shone through the gloom and has almost become a symbol of national pride – don’t expect the people to give up on it just yet.