Zara

Mame Zara

The Origin

Zara is a Spanish fast fashion (clothing and accessories) retailer based in Arteixo (A Coruña) in Galicia. The company was founded in 1975 by Amancio Ortega and Rosalía Mera. It is the main brand of the Inditex group, the world’s largest apparel retailer. The fashion group also owns brands such as Massimo Dutti, Pull&Bear, Bershka, Stradivarius, Oysho, Zara Home, and Uterqüe. Zara as of 2017 manages up to 20 clothing collections a year.

Amancio Ortega opened the first Zara store in 1975 in downtown A Coruña, Galicia, Spain. Ortega initially named the store Zorba after the classic film Zorba the Greek, but after learning there was a bar with the same name two blocks away, they rearranged the letters molded for the sign to “Zara”. It is believed the extra “a” came from an additional set of letters that had been made for the company. The first store featured low-priced lookalike products of popular, higher-end clothing fashions. Ortega opened additional stores throughout Spain. During the 1980s, Ortega changed the design, manufacturing, and distribution process to reduce lead times and react to new trends in a quicker way, which he called “instant fashions”. The improvements included the use of information technologies and using groups of designers instead of individuals.

Mame Zara
Zara’s A Coruna store in Spain.

Development

The first official mark of the brand was in 1963, when it started as a Confecciones GOA, a modest workshop making dresses and gowns for distribution in A Coruña, Spain. The first Zara store opened in 1975 in A Coruña. Zara’s new business model is termed a success the following year. In 1977, the company headquarter is established in Arteixo, Spain and Zara’s first garment factories are constructed on the outskirts. The year 1983 saw Zara expand across Spain. The following year, the first logistic centre opens spanning 10,000 square metres in Arteixo.

In 1988, the company started its international expansion through Porto, Portugal. In 1989, it entered the United States, and then France in 1990. During the 1990s, Zara expanded to Mexico (1992), Greece, Belgium and Sweden (1993). In the early 2000s, Zara opened its first stores in Japan and Singapore (2002), Russia and Malaysia (2003), China, Morocco, Estonia, Hungary and Romania (2004), the Philippines, Costa Rica and Indonesia (2005), South Korea (2008), India (2010), and South Africa and Australia (2011).

On September 2010, Zara launched its online boutique. The website began in Spain, the UK, Portugal, Italy, Germany and France. In November that same year, Zara Online extended the service to five more countries: Austria, Ireland, the Netherlands, Belgium and Luxembourg. Online stores began operating in the United States in 2011, Russia and Canada in 2013, and Mexico, Romania and South Korea in 2014. India in 4 October 2017. Zara introduced the use of RFID (Radio-frequency identification) technology in its stores in 2014. The RFID chips are located in the security tags which are removed from clothing when it is purchased and can be reused. The chip allows the company to quickly take inventory by detecting radio signals from the RFID tags. When an item is sold, the stockroom is immediately notified so that the item can be replaced. An item that is not on the shelf can easily be found with the RFID tag. In 2015, Zara was ranked 30 on Interbrand’s list of best global brands.

Zara stores have men’s and women’s clothing, as well as children’s clothing (Zara Kids). Zara’s products are supplied based on consumer trends. Its highly responsive supply chain ships new products to stores twice a week. After products are designed, they take ten to fifteen days to reach the stores. All of the clothing is processed through the distribution centre in Spain. New items are inspected, sorted, tagged, and loaded into trucks. In most cases, the clothing is delivered within 48 hours. Zara produces over 450 million items per year.

Mame Zara
First store of Zara Home in Ukraine.

Zara Home & Eco-store

 Zara Home was created in 2003. Since its launch, the brand has enjoyed huge success, opening its 500th store in 2015. When Zara Home went online in 2007, it became Inditex’s first brand to have an e-commerce platform. It was also Inditex’s first format to sell online in the southern hemisphere, beginning in Australia in 2015.

The parent company Inditex, develops environmentally strategic plan for its brands. Zara’s first highly eco-efficient store is opened in a landmark building in the commercial heart of Athens in 2008.

Finance

Among the major fashion groups, Inditex is unique, especially when it comes to online clothing sales: over the past year, it achieved a 41 % online growth spike and these now contribute 10 % of Inditex’ net sales. The Spanish company opened quite a few Asian web shops last year: customers in India, Malaysia, Singapore, Thailand and Vietnam were able to shop at Zara & Co’s web shops for the first-time last year. Its annual turnover reached 25.34 billion-euro (+ 9 %) and resulted in a 3.37-billion-euro net profit (+ 7 %).

The company has started 2018 in similar fashion: excluding exchange rate fluctuations, Inditex achieved a 9 % sales increase in the first five weeks, with subsidiary Zara’s spring and summer collections performing very well.

The results are a boost to the company, because exchange rates and the strong euro have made it vulnerable. The company’s shares plummeted drastically last month because of the strong euro’s position compared to other currencies.

Mame Zara
The Chairman and CEO of Inditex Pablo Isla, the company that owns Zara among others.

Current Situation

 Launching of Zara online in countries like India, Malaysia, Singapore, Thailand and Vietnam has helped the brand boost its turnover in the past one year and looks like the brand will keep expanding its online accessibility to wider reach in the coming years.

Recently, Zara found itself in the limelight when, Melania Trump, US First Lady was photographed boarding a flight to an immigration detention centre in Texas, US, for which the President and his policies have been strongly condemned in the media and by popular faces. The twist was that, the First Lady was wearing a Zara SS 2016 olive jacket with the words, “I Really Don’t Care, Do You?” on the back, which the world thought was highly inappropriate especially when going for a visit to such a centre. Though, it wasn’t the clothing itself that was condemned but the juxtaposition of the wearer that brought it so much attention.