Flagship label Zara a Spanish success story that goes from strength to strength
This rapid turnover of constantly changing designs is key to bringing customers such as Marta Velasco back for more.
“You know that if you see something you like and you don’t come to get it within two or three weeks, it might not still be in the shop,” she says.
“The clothes are always changing.”
Instead of spending heavily on advertising, such as competitors Mango and HM do, Inditex’s centrally located and carefully designed stores promote the brand.
The use of up-market locations for stores makes the group’s relatively low-budget products appear more attractive, says Kate Ormrod, a retail analyst at Verdict Research. And the company’s aggressive approach to expansion, she says, is paying off.
“There doesn’t seem to be any let-up in their store openings,” she says. “They have a lot of stores around Oxford Street and yet they’ve just opened another batch. You may think they wouldn’t need to, but they feel they do.”
Given that the UK is expected to see substantial growth in clothing expenditure over the coming years, Inditex’s ambitions there are understandable.
But the firm’s home market of Spain will see spending on clothing shrink by about 1 per cent between now and 2017, according to Verdict, and Inditex’s sales growth there has been virtually flat lately.
The same study shows Ireland (where Inditex has 22 stores) faring little better, with projected growth in spending on clothing of less than 1 per cent over the next five years. With the euro crisis dragging on and lower-budget rivals such as Ireland’s Primark posing an obvious threat, Inditex’s push into eastern Europe, Asia and Latin America in recent years makes perfect sense.
Online service
This year, that drive has seen new stores in Armenia and the Republic of Macedonia and, more importantly, the launch of an online service in China.
Internet sales is an area where the company has been somewhat slow off the mark, although it is now making up for lost time. But one concern voiced by analysts is whether, with online shopping increasing, Inditex’s rapidly expanding floor space will eventually outgrow demand.
Observers of Inditex agree that geographical diversification will be key to its continued success. But as Enrique Badía points out, the issue of Ortega’s succession has also been crucial. In 2011, he handed the reins of the business over to his young deputy chairman, Pablo Isla, in what appears to have been a smooth transition, although the company’s deeply private founder, now 76, still takes a close interest in the business.
“Ortega lives by certain maxims,” says Badía. “And one of those maxims is, stick to doing what you’re good at.”
As Inditex expands across the globe, more and more shoppers are finding out that it is very good at selling clothes.
