This makes the designers very responsive to customer feedback. Walker relays one famous example. At a store in New York, customers kept asking whether the stores stocked a certain jacket in cream as opposed to white. “Two weeks later that cream jacket was put into the store. It happened within a fortnight,” he says.
And, of course, Zara wouldn’t be anywhere as successful if their product wasn’t appealing. The clothes are reasonably priced, and despite being inspired by the latest fashion shows, are realistically designed. “Their designs work in everyday life,” Walker says. “They’re not way out there, everyone could wear them.”
The group also pays a lot of attention to tailoring, using tailoring methods that make its clothes fit better and appear to be of higher quality than is normally offered at their price range, Walker says.
The fashion house makes use of the scarcity principle to boost demand, he continues. “They might make 30,000 copies of an item,” he says. “But their supply is spread very thinly across their stores.”
Ritson says a traditional brand has two major seasons, and choses an iconic piece it will spend between $5-$10 million promoting globally. “They use the particular product to reel in the customer,” he says.
Zara doesn’t do this. There is no definitive Zara “style” or “piece”; their appeal is purposely broad.
Intriguingly, the group almost never advertises.
Ritson says the typical fashion retailer will spend 20%-30% of their revenues on advertising. Zara spends less than 0.5% – a big saving.
Where they do place an emphasis is on their windows. “Their research showed some years ago that windows are a much more important source of traffic than media advertising,” Ritson says.
Store managers are in charge of ordering the stock they like from Zara’s catalogue, but the windows are centrally controlled from Spain.
“Most Australian brands go wrong in spending money on print advertising that is largely a waste of time,” Ritson says. “They often ignore the windows because what you put in them is almost free. But that doesn’t mean it’s not important and influential.”
This style suits the preferences of Ortega, Inditex’s founder. He once called advertising a “pointless distraction”. He never gives interviews. The group has a useful media backgrounder to give you the bare facts, but isn’t interested in commentary or promotion. Even its press releases contain no quotes from its leaders, doing nothing more than providing investors with the relevant numbers.
Inditex lets the hype around a new Zara store opening build organically. It works – when the first Australia store opened in Sydney in April 2011, 80% of the stock was sold within three minutes. When it comes to hype, the opening of a new Zara store is a lot like the opening of a new Apple store. But Apple spent US$113 million on advertising in 2010.
Zara’s stores remain relatively popular long after the queues have subsided. Its customers visit their local store six times more than the industry average, leading local retailers to dread the day the Spanish giant reaches their city.
“You go there because there’s always something new and different,” Walker says.
Between February 2011 and February 2012, Inditex turned over 13,793 million euros for a net profit of 1,932 million euros. In January this year, it employed 109,512 people worldwide.
Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
