As Spain’s politicians spar over how to escape a painful economic crisis, major exporters like fashion titan Inditex and its smash Zara brand are finding riches elsewhere.
Welfare cuts and a staggering 21.52 percent unemployment rate have angered Spanish voters, who are expected to topple the Socialist government in Nov. 20 elections.
However, the grim economic landscape has also prompted a sharp focus on exports, reaping rewards for some of the leading corporations.
Photo: AFP
Inditex’s Zara brand is a prime example.
In the heart of Galicia, 300 young designers at Zara are at work: It rarely takes more than three weeks from the first mark of their pencils to the moment the clothes are on the rack in shops on the other side of the world.
In this green, hilly northwestern region of Spain, the small town of Arteixo, with a population 30,000, is home to the headquarters and 11 factories at the heart of world-leading textile group Inditex.
Photo: AFP
The empire was created 40 years ago by Amancio Ortega, son of a railwayman, who became the richest man in Spain with a private fortune estimated to be the seventh-biggest in the world.
On the first floor of the glass building, salespeople and designers of about 30 different nationalities work together in a huge, mostly white, open office space.
The calm is deceptive: Sales staff have phones glued to their ears, in constant contact with Zara’s 1,800 outlets, a major slice of the Inditex network of 5,000 stores.
Photo: AFP
As the crisis batters Spain, the low-price brand, which brings in two-thirds of group sales, has its eyes fixed abroad.
A total 96 percent to 97 percent of new store openings are abroad, Inditex communications director Jesus Echevarria said. Only one-quarter of group sales now come from Spain.
It is a sign of a bigger trend: Spanish firms are looking for their salvation beyond the country’s borders and, according to analysts, exports are staving off a Spanish recession.
The latest example was a Spanish consortium winning a major high-speed railway contract to take pilgrims to Mecca in Saudi Arabia.
On Nov. 5, the Spanish company opened its first Zara store in Taiwan at the Taipei 101 shopping mall. A second store will be opened in Taipei’s bustling eastern shopping district along Zhongxiao E Road by the end of this month.
On Thursday, Zara also entered the market in South Africa, the 80th country in a network that is in constant touch with the Galicia headquarters.
“Every day, the stores send information, firstly with a sales analysis, what the customer bought and what he decided not to buy, what color, what material he did not like,” Echevarria said.
That information can lead to an increase or immediate halt to a production line.
“But there is also a qualitative input, because the shop managers have a very important relationship with the customer and they know why he did not like this jacket or that dress,” he added.
“With that information, the design teams get to work and make constant changes” to the designs they are working on.
Amancio Ortega, 75, often sits at a table in the center.
A few steps away, the first patterns are tested on models, then approval is given to one of the factories which cut the pieces of cloth before sending them to a multitude of clothing workshops in Galicia and Portugal.
To stay flexible, the group produces 50 percent of its clothes in Spain, Portugal and Morocco. Even the 34 percent made in Asia must pass through Arteixo for a final ironing and quality control.
From the design of a piece of clothing to its being placed on the rack, it takes two weeks for shops in Europe and three weeks for the shops at the farthest end of the network.
Each store is re-supplied every three days.
“It’s high-speed fashion,” said Ricardo Perez, economist at Spain’s IE Business School and a specialist in Inditex.
The group headquarters, where “apparent chaos masks order and very strict discipline,” defines a business focused on the efficient execution of a rapid, worldwide distribution model, he said.
Last year, Inditex made 800 million items of clothing and its net profit leapt 32 percent to 1.73 billion euros (US$2.4 billion).
All that, without spending any money on publicity.
Chairman and chief executive Pablo Isla took over in July from Ortega, who remains the main shareholder, and he is following his mentor’s custom of never granting interviews.
Additional reporting by staff writer
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