Spanish Fashion Retailer Zara Leads Global Fashion Stakes

Spanish Fashion Retailer Zara Leads Global Fashion Stakes

The Spanish high street fashion retailer Zara has had one incredible year so far. Profits are up by over 8% compared to last year, fuelled in part by the company in Spain adopting a new business model.

Zara is led by one of the world’s richest men and Spanish entrepreneur Amancio Ortega, founder of the Inditex Group. In the six months following February 1^st the company reported €10.5 billion global sales for profits of €1.3 billion.

What is the secret to their success? Ortega believes that the success comes from their ability to get the latest fashion trends in their stores before any of their rivals can and offering them at competitive prices.

This is the business model that gave Zara the leeway to expand their global reach as they opened up 80 new stores around the world in the first half of the year. Zara also make their clothes closer to the markets that they serve as Zara clothes are typically made in Spain as the cost of living and manufacturing has been low including Portugal and North Africa, rather than the cheaper but more remote areas of China and India. As such they are just able to get their clothe sin the stores faster and easier than competing brands.

The company say that they can have a new design in store within just two weeks of it being drawn up, which shows how much Ortega cares about always being first and keeping up with the fickle world of fashion.

Zara represent a true Spanish success story and they have been enjoying these highs for a while now, but things can always change and experts agree that Zara can’t afford to rest on their laurels.

Making a big profit is actually a risk, according to Business Strategy Professor at the Madrid branch of Boston’s Suffolk University Noel Byrne. He warns that having a lot of profit means that your competition want a piece of the pie.

Byrne suggests that Zara should try to expand into the Asian markets, in particular South Korea and China. These two countries have seen the highest increases in individual spending on clothes since 2004.