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Attention editors: An earlier version of this article about the Spanish clothing chain Zara and its parent company Inditex misspelled the surname of Inditex's communications director. He is Jesus Echevarria, not Echeverria. The text has been corrected below.
Keywords: World, business, lifestyle, fashion, Zara, clothes, Europe, Spain, retail, Inditex, fast fashion, China, Asia, Gucci, Prada, high fashion, Galicia, Amancio Ortega Gaona, design
From The New York Times Magazine
c.2012 The New York Times
Distributed by The New York Times Syndicate
Galicia, on the Atlantic coast of northern Spain, is the homeland of Generalissimo Francisco Franco, but is otherwise famous for being a place people try to leave. For much of the 20th century, hundreds of thousands of gallegos, as they are called, emigrated to countries as far away as Argentina to escape Galicia's rural poverty. Today, however, even as Spain teeters on the edge of economic catastrophe, the Galician city La Coruna has attracted notice as the hometown of Amancio Ortega Gaona, the world's third-richest man and the founder of a wildly successful fashion company, Inditex, more commonly known by its oldest and biggest brand, Zara.
Ortega has never given an interview, according to his communications department, nor does he attend award ceremonies or parties. He rarely allows his picture to be taken. Pablo Isla, who took over the company when the 76-year-old Ortega stepped down as chairman last year, rarely gives interviews or waves to the camera, either. In fact, the public face of Inditex is its soft-spoken communications director, Jesus Echevarria, who, as I discovered during a recent visit to the Inditex complex, is perhaps the only communications director on the planet who all but apologizes whenever he must answer questions about Inditex's runaway success.
The company's outward modesty reflects its surroundings. La Coruna is a quiet place, typically European in its humdrum perfection: tidy highways and compact cars. The campus (located in the industrial area of Arteixo, next door to La Coruna) consists of corporate headquarters for the entire company, as well as headquarters for Zara and Zara Home, two of Inditex's eight brands. There are also factories and a distribution center where clothes are loaded onto trucks to be sent around the world.
Inditex is a pioneer among "fast fashion" companies, which essentially imitate the latest fashions and speed their cheaper versions into stores. Every one of Inditex's brands — Zara, Zara Home, Bershka, Massimo Dutti, Oysho, Stradivarius, Pull & Bear and Uterque — follow the Zara template: trendy and decently made but inexpensive products sold in beautiful, high-end-looking stores. Zara's prices are similar to those of the Gap: coats for $200, T-shirts for $30.
Inditex now makes 840 million garments a year and has around 5,900 stores in 85 countries, though that number is always changing because Inditex has in recent years opened more than a store a day, or about 500 stores a year. Right now there are around 4,400 stores in Europe, and almost 2,000 in Spain alone.
In an Inditex conference room, Echevarria gave me a multimedia presentation about the company. The number of stores in different countries popped up on the screen — including 289 in China and 45 in the United States. Since the time of our meeting, in late July, Inditex has reached 350 stores in China and opened another in the United States. The company's march appears to be as inexorable as the passage of the seasons. But can Inditex survive its own expansion?
''When we open a market, everyone asks, 'How many stores will you open?'" he said. "Honestly, I didn't know. It depends on the customer and how big the demand is. We must have the dialogue with the customers and learn from them. It's not us saying you must have this. It's you saying it."
The roots of"Inditex go back to 1963, when Ortega started a business making housecoats and robes in La Coruna. In 1975, he opened his own store in town. He called it Zorba, after the 1964 film "Zorba the Greek."
''I don't think they were thinking of making history, just that it was a nice name," Echevarria said. "But apparently there was a bar that was called the same, Zorba, like two blocks away, and the owner of the bar came and said, 'This is going to confuse things to have two Zorbas.' They had already made the molds for the letters in the sign, so they just rearranged them to see what they could find. They found Zara." The holding company Inditex was created in 1985.
Ortega wanted to maintain his own manufacturing business in La Coruna, so from the beginning his business model differed from the norm. A traditional ready-to-wear fashion company in the West sends the designs for its clothes to independent factories in countries like China, where the labor to make them is cheap. These clothes are then shipped back and stocked in stores in spring and fall, with smaller shipments throughout the year.
But a brand at Inditex will make a fall collection, for example, and then ship only three or four dresses or shirts in each style to a store. There's very little leftover stock; store managers can request more if there's demand. They also monitor customers' reactions, on the basis of what they buy and don't buy, and what they say to sales clerks: "I like this scooped collar" or "I hate zippers at the ankles." Every day, store managers report this information to headquarters, where it is then transmitted to a vast team of in-house designers, who quickly develop new designs and send them to factories to be turned into clothes.
More than half of Inditex's manufacturing takes place either in the factories it owns or within proximity to company headquarters, which is to say in Europe or Northern Africa. Inditex owns factories in Spain and outsources production to factories in Portugal, Morocco and Turkey — considered costly labor markets, typically. The rest of its clothes are produced in China, Bangladesh, Vietnam and Brazil, among other countries. The trendiest items are made closest to home, however, so that the production process takes only two to three weeks. Inditex's higher labor costs are offset by greater flexibility — no extra inventory lying around — and on faster turnaround speed.
That means that if Inditex stores in London, Tokyo and Sao Paulo all have customers responding enthusiastically to, let's say, sequined cranberry-colored hot pants, Inditex can deliver more of these, or a variation on hot pants, sequins or that cranberry color, to stores within three weeks. The company tries to keep the stock fresh; one promise its stores make is that you will always be buying something nearly unique.
In this way, says Masoud Golsorkhi, the editor of Tank, a London magazine about culture and fashion, Inditex has completely changed consumer behavior.
''When you went to Gucci or Chanel in October, you knew the chances were good that clothes would still be there in February," he says. "With Zara, you know that if you don't buy it, right then and there, within 11 days the entire stock will change. You buy it now or never. And because the prices are so low, you buy it now."
Inditex owes none of its success to advertising. That's because it doesn't advertise. The marketing Inditex does is all about real estate. The company invests heavily in the beauty, historical appeal and location of its shops. In 2003, Inditex built a Zara in the San Antonio el Real, an 18th-century convent in Salamanca, and in a historic cinema in Elche (also in Spain).
In the last five years, Inditex's overall sales have grown to 13.8 billion euros ($17.7 billion) a year from 9.4 billion euros. Profit has risen to almost 2 billion euros a year. While Spain has been suffering through real estate and debt crises, Inditex has prospered. Echevarria said that is because the customer is always determining production — not the other way around.
But the Inditex effect isn't confined to cheap, fast fashion. It has forced — or inspired, depending on how you look at it — people to spend their money in a different manner. In Zara, every purchase is an impulse buy; there's no longer any saving up for that gorgeous leather jacket in the window. It's a way of consumption that has conditioned buyers to expect this up-to-the-minute trendiness and variety in higher-end labels as well.
''They broke up a century-old biannual cycle of fashion," Golsorkhi says. "Now, pretty much half of the high-end fashion companies" — Prada and Louis Vuitton, for example — "make four to six collections instead of two each year. That's absolutely because of Zara."
The Inditex brands exist in a dizzying fashion time frame, where the latest trend seems to be wilting on a woman a few hours after she buys into it. The public relations person who gave me the rest of my tour of the Inditex premises — and requested not to be named, presumably in accordance with Inditex's modesty rules — wore sleek black pants with zippered ankles, a loose yellow blouse and a black blazer with an upside-down V cut out of the back. She looked sharp and shiny as a penknife. I wore a dress that was at least six years old, which basically means I showed up for my fast-fashion tour in a poodle skirt.
The Zara headquarters is a huge airplane-hangar-size open space, with regional sales managers sitting at a line of desks running down the middle, designers on either side of them. The managers field calls from China or Chile to learn what's selling, then they meet with the designers and decide whether there's a trend. In this way, Inditex takes the fashion pulse of the world. "The manager will say, 'My customers are asking for red trousers,' and if it's the same demand in Istanbul, New York and Tokyo, that means it's a global trend, so they know to produce more red pants," the PR person said.
I remarked that it must be interesting to see what is fashionable in Turkey but not in New York and vice versa. I imagined that different nationalities still had different tastes, at least in terms of fashion. But I was wrong.
''Actually, the customer is more or less the same in New York and Istanbul," she said. "There are differences, like Brazilian girls like more brilliant colors, whereas in Paris they use more black. But in general when you find a fashion trend, it's global."
Inditex denies that it copies other designers. Yet in The New York Times last March, Alexandra Jacobs described a visit to the new Zara store on Fifth Avenue in New York, where she was reminded of Prada, Alexander Wang, Balmain and many other high-end brands. Christian Louboutin took Inditex to court for selling the company's signature red-soled shoes but lost, mainly because Inditex takes care to change its designs just enough to evade copyright laws.
"They have done process innovation very well," says Nelson Fraiman, a professor at Columbia Business School who has studied the Inditex model. "Product innovation? No. But tell me one Chinese company that has done product innovation very well. They are brilliant at process."
Expansion, however, poses a threat to Zara's process by putting stores far from the factories and logistics center in Europe. Expanding in China, for example, will make production more complex and also require heavy investment. The company plans to open more than 400 stores there this year. "Even opening three stores a week is very aggressive," Fraiman says. "Their factories in La Coruna have a finite capacity to respond quickly. You open more and more stores, and you don't have flexibility of the last-minute response. Once they have a big thrust in China, then what happens is that they will have to take the whole model and replicate it in China." But the bigger Inditex gets, he says, the more it will lose control over quality and efficiency.
Still, Asia remains central to Inditex's plans, and the prospect of more than a billion Chinese consuming clothes at the fast-fashion clip worries some critics of the industry model. Golsorkhi says that fast fashion hasn't changed the amount of labor needed to make clothes or the waste created by their production. Inditex says it works with unions and other organizations "to have the most respectful supply chain" and audits all of its partners every year, but like most major fashion companies that outsource the manufacturing of their clothes, it has received its share of complaints about factory conditions.
''The reality is: A T-shirt is a T-shirt is a T-shirt," Golsorkhi says. "It costs the planet the same thing whether you have paid 200 pounds for it or 1 pound for it. It does the same amount of damage. A T-shirt is equivalent to 700 gallons of water, gallons of chemical waste, so much human labor. But it used to be that we could do with three T-shirts a year. Now we need 30. Sometimes it's actually cheaper to throw away clothes than to wash them. That has got to be wrong."
It also may not be good for business in the long run.
''Eventually, there aren't going to be resources to sustain fast fashion, so to me it seems to be a very vulnerable business model," says Alex McIntosh, the business and research manager at the London College of Fashion's Center for Sustainable Fashion. "Production costs will also get more expensive, and they won't be able to keep this up. Value-based companies don't have margins to absorb that additional cost. And then they will need to convince customers to spend more for clothes again."
At the end of my tour, I went to one of the Inditex factories. There were about 100 workers, I was told; huge machines do much of the work. Hundreds of bright red three-quarter-length coats were hanging throughout the building, almost ready to be shipped. A line of women stood at ironing boards, smoothing out the wool-blend, looking for defects and, the spokeswoman told me, attaching security tags. Inditex had discovered that if that task was left to the employees in the stores, it would take an extra few intolerable hours to get that trendy red coat from Galicia into your closet.
(Suzy Hansen is a writer based in Istanbul.)
(This article is an adaptation of a piece that originally appeared in The New York Times Magazine.)
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