Fashion sense

Spanish retailer, Zara, has crafted a sweet success story riding on its image as a low-cost, high fashion store. Nirmalya Kumar and ...


In 1975, the first Zara store was opened in La Coruña, in Northwest Spain. By 2005, Zara’s 723 stores had a selling area of 811,100 square metres in 56 countries. With sales of e3.8 billion in the financial year 2004, Zara had become Spain’s best-known fashion brand and the flagship brand of e5.7 billion holding group Inditex. Inditex’s stock market listing in 2001 turned Amancio Ortega, its founder and a self-made man, into the world’s twenty-third richest man, with a personal fortune that Forbes magazine estimated at $12.6 billion.

Among the keys to Zara’s success is its approach to the supply chain. Zara sources around half its garments from third parties in low-cost manufacturing locations like Asia. These are basic collection items or wardrobe “staples,” with minimal fashion content, such as T-shirts, lingerie and woollens, and where there is a clear cost advantage. Externally manufactured items are shipped to Zara’s distribution centre. The other half of Zara’s garments, those that are more fashion-dependent, is manufactured in-house, in nearby Zara factories.

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