Blog: What drives the world's largest retailer's success?
Petah Marian | 1 August 2012
Zara, which opened its first store in 1975, has taken its pioneering fast fashion approach global, becoming the world's largest retailer in the process.
While Zara has become ubiquitious on high streets around the world, its founder, Armancio Ortega, has remained fiercely private. In the recently released book 'The Man From Zara', Covadonga O'Shea looks to understand the man behind the brand. Here are five strategies that have driven the retailer's success:
- Zara constantly renews its stock - 40% of stock is changed each week -while stock in the stores is replenished every three days. Each year it offers 20,000 SKUs and and aims for a complete turnover of stock in its stores every 28 days.
- The company's strategy is to create a climate of scarcity and opportunity in its stores, which means that customers must purchase items they like when they first see them, as the same product is unlikely to be in stock a week later.
- Vertical integration means Inditex has much more control over the production of its products. Inditex owns some 99 companies covering not just textiles and fabrication, but also logistics, marketing, construction, real estate, finance and power generation. It produces over 50% of its collections in its own factories and in Spanish and Portuguese co-operatives.
- Ortega goes out of his way not to see other retailers' collections to avoid claims of copying. "They can accuse us of plagiarists if they like, but the truth is that among all the great brands, and the not so great ones, there are always areas where they coincide. It might be better to refer to that process of mutual influence as 'inspiration," Ortega reportedly said.
- Stores are largely autonomous: managers decide which stock to carry and are responsible for their smooth running. There are six fundamental things that Ortega expects from his stores at a minimum: always wear a pleasant expression, smile at the cash desk, have a pen in the hand, the manager should attend to customers most, the changing rooms are treated as an important point of sale, and in-store staff must be patient.
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