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Zara, one of the most famous and profitable fashion retailers in the world, has in the last few decades reached a peak of expansion throughout the world, backed by the founder Amancio Ortega’s finances and some key factors that have revolutionised the current landscape of fashion retailing.
Based in Arteixo, Galicia, Zara is a 43-year-old company that currently has 2266 stores worldwide in around 100 different countries with huge $15 billion in revenues, and is the world’s leader and probably one of the founders of fast fashion.
Accessibility, scarcity and supply are the factors that have made Zara the world’s most relevant fast fashion retailer. It is at the intersection of these three variables that, explains Business Insider, Zara has built a clothing empire. The Spanish Inditex Group, to which the brand belongs, has not only changed many rules of fashion by speeding up the times of production and distribution, but has given a hard time to historical clothing brands such as Gap, Ann Taylor and Abercrombie & Fitch.
Their products are supplied based on customer trends, to which the company is extremely sensitive and responsive with new designs being developed continuously for a range of clothing items. From the notebooks and drawings, it takes about a week or two for designer's team to get their new product to the shops. They are often characterized by an exclusive and elegant look, sparked from ideas seen on the catwalks of the great designers, but offered at an affordable price. In the same way, designers are constantly working to update clothing items following the suggestions of store managers, who are responsible for sending comments collected among customers. The multinational is also vertically integrated and, therefore, manages every step from design to distribution.
Regarding the concept of scarcity, distributing a limited number of items to each store proved to be a rewarding strategy from different points of view. First of all, it obliges customers to immediately make a purchase decision, as it is known that in a short time the model will disappear from the store, unlike what happens with other brands, where the collection is available for a longer time. Furthermore, aiming at product scarcity allows a quick turnover of goods and invites customers to frequently visit the store to find out the latest news. Finally, it reduces the need to allocate a lot of space to the warehouse.
The combination of supply, scarcity and accessibility allows Zara to produce new products while new trends are at their peak, offering customers more affordable versions of the same styles that luxurious brand present with much higher prices.
Forty years after the opening of the first store in the city of Coruña, 50% of Inditex's products - which also include Zara Home, Bershka, Massimo Dutti, Pull & Bear, Stradivaius and Oysho that follow the same philosophy of production and sales -, continues to be built in Spain, where the warehouse area covers an area of 464 thousand square meters. Amancio Ortega, the founder of the multinational, is now the second richest man in the world, according to Forbes, who attributes a patrimony of 72.3 billion dollars, but has never made statements to the press or publicity. Rather, the company prefers to acquire points of sale in strategic areas of the city center, near high fashion brands such as the $324 million he has paid to acquire space for his shop on Fifth Avenue, in New York.