Zara Fashions an Expanded Online Growth Strategy

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Zara

Four decades after Zara opened its first store in La Coruna, Spain, the retailer opened stores in 56 markets last year, with a shop in Hawaii becoming its 7,000th store worldwide. The Spanish clothing and accessories retailer also expanded online sales to Hong Kong, Taiwan, Macao, and Australia this year. And with high expectations for organic growth and online sales, Zara expects to open at least 400 new stores in five new markets: Vietnam, New Zealand, Paraguay, Aruba, and Nicaragua.  

The flagship brand of parent company Inditex—founded by retail magnate Amancio Ortega—Zara’s success in creating great value for customers and shareholders alike is a magnet for younger, fashion-forward women demanding on-trend style. In addition, its internal data center tracks customer preferences, fueling the brand’s nimble, low-inventory strategy.

Zara disrupted the industry’s century-old biannual cycle of fashion, replacing it with a new standard of four to six collections annually—and making it a good fit for social platforms like Snapchat and Instagram for its customers to keep up with fast-changing fashion trends.

With shares up more than 12 percent to nearly EUR €32 from the same period last year, Spain’s Inditex is the world’s largest fashion retailer and also parent company of Bershka, Pull&Bear and Massimo Dutti. Inditex is now steaming ahead in a landscape marked by competition, sustainability and supply-chain issues, and a fickle market tied to fast-fashion.

“We believe that Inditex has the best business model in apparel and expect Inditex to deliver double-digit earnings growth per year over the next five years,” noted Bernstein analysts, in The Wall Street Journal.

The Dow Jones Sustainability Index named Inditex as an industry leader for its economic, environmental, and social policies highlighting the company’s “leadership” and “pioneering stance on human rights” in the supply chain, as well as its special “commitment to operational eco-efficiency.”

Inditex sources the majority of its products from Spain, Portugal, and Morocco, with designs cut from materials in Ortega’s mills and sewn by local shops. Ortega’s success comes in streamlining the process from Fashion Week catwalk to store shelves in weeks—and continues to distinguish the Zara brand.

“Success is never guaranteed,” said Ortega. “Complacency is the worst. I never allow myself to be content with what I have done, and I have always tried to instill this in everyone around me. Grow or die. If you want to innovate, don’t focus on the results.”

Ortega’s top five lessons for success with Inditex and Zara:

  1. Speed is everything.
  2. Obsess over what your customers want.
  3. Control the supply chain.
  4. Stay true to your roots.
  5. Never stop innovating.
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