ZARA: Not Afraid Of The Global Economic Downturn, The European Debt Crisis's Hinterland Is Going Against The Trend.

At the age of 37, Ortega opened its first fishing port in La Coruna with a deposit of 5000 Spanish silver coins. Zara 。 By the beginning of June this year, the Inditex value of its parent company had reached 40 billion 500 million euros, which was 300 million higher than the Spanish National Bank's market value, which is 190 million euros higher than that of Spain Telecom, one of the largest telecommunications groups in the world. Ortega also beat the LVMH group president Bernard Arnault with $9 billion 200 million in personal assets to become the richest in Europe.

The background of this series is global cotton prices and Asian wage rises, consumer slump, and general profits decline in the same industry - H&M's net profit fell 15% last year, while Spain's overall retail sales fell 9.8% in the first quarter of this year. This is why analysts will be surprised when Inditex gains a net profit of 30% in the first quarter of 2012.

The principle of Zara's success has been thought for a long time by the same industry. But now, why this company can rise in the hinterland of the European debt crisis has become one of the newest topics. "On the one hand, the supply chain of the group is relatively short, which means that the input cost is low; secondly, the supply chain is low. Spain There is a continuous trend of mixed change in the first quarter. " Bernstein research analyst told reporters.

Pablo Isla, the current president of Inditex, obviously disagrees. "We have always believed that the quality of business depends more on ourselves than on the whole. Economics Environment. " What kind of ecosystem is there in Spain's costume Empire, which can be placed outside the universal crisis?

　　 Amulet

In Arteixo, a grassy mountain town in northwestern Spain, Inditex's headquarters building and 11 factories, which form half of the clothing kingdom.

In the glass appearance headquarters building, 300 young Zara designers are doing daily work. The first floor of the building is a white open room with sales staff and designers sitting shoulder to shoulder. They come from more than 30 different countries and regions. The salesperson wears headphones at any time, receives messages from more than 1800 sales points, and then gives feedback to designers. From sketching the first sketches to clothing stores that store around the world, there will be no more than three weeks.

For salesmen, their recent work is fresh and hectic. Since Zara entered the South African market a few months ago, the number of new stores has not been cut off in eightieth countries on their communication list. "The first thing is sales analysis, what customers buy, what colors and materials they like, and what new areas need to know more." Headquarters staff said. After obtaining information, the group team needs to modify the existing design immediately. The founder of the group, Amancio Ortega, 75, usually sits in the middle of the design team desk. Ortega started his apprenticeship in a sewing shop in La Coruna at the age of 13, and he still leads the design soul of Zara.

South Africa is just a corner of the new version of Inditex. When the economic crisis swept Spain and shouldered 2/3 of the group's sales volume of Zara, it naturally turned its attention outside the port. In recent years, the pace of global expansion of Inditex has accelerated, adding more than one store every day on average. In fact, overseas stores account for about 97% of the new stores opened by Zara. Today, only about 1/4 of the group's sales come from Spain.

Among them, emerging markets such as Asia and Latin America have become the focus. In March, the company revealed that it plans to open 425 stores in China. And in September, Zara's online sales in China are about to open.

Of course, behind the expanding overseas map, supporting the company has always been the core mode of Ortega creation. "Fashion business is like selling fish. A fashionable jacket with a trendy color is like a fresh fish. It sells quickly and costs a lot. The fish on the first day can only be sold at a discount, and no one is interested in it. Ortega is often such a metaphor.

This simple reason makes Inditex one of the largest two garment manufacturers in the world (the other is Sweden's H&M). Zara only chooses the fashion trend of each season, and never touches the outdated fashion. It also never advertises. The biggest brand display is in the shopping mall's huge store logo, and the display window in the shop. Opponents believe that Zara actually adheres to the idea that we are in a one-off fashion gilded age. Women face the desire to buy clothes that are worn out two times.

And the huge logistics system and the use of information technology to track consumer preferences are the two main wheels to ensure "selling the freshest fish". Inditex's brands, including Zara, Bershka, Pull & Bear, and half of its products are still in the vicinity of headquarters, such as Portugal and Morocco. The new clothes will be divided into small portions, two times a week and sent to all parts of the world. In France, Germany, Italy, Spain and other European Union countries, trucks are mainly transported, and they can reach chain stores in an average of 48 hours. Sales in these areas account for 70% of total sales. The remaining 30% of sales are transported to distant countries and regions such as Japan, the United States and Eastern Europe by air transportation.

At the 200 mile production base in Spain, there are 20 cloth cutting and dyeing centers and 500 foundry terminal factories. ZARA hollowed out the 200 mile underground and set up the underground conveyor belt network. Every day, according to the new order, the most fashionable fabric is delivered to the terminal plant on time, ensuring the overall leading time requirement.

Such a practice has greatly increased the cost of production -- the construction of such a production base will require billions of euros in investment, but it will enable the company to respond more quickly to supply and demand, and it has proved to be more successful in the economic crisis.

"I don't want to compete with LV, Gucci and Prada," Ortega once told her employees. "We prefer to be TOYOTA and Lexus in the clothing industry, not Rolls-Royce and Mercedes Benz."

When the economy is in recession, cheap and natural Japanese cars naturally appeal to consumers. "The current economic environment will only help large chain stores like Zara." HSBC retail analyst Paul Rossington said. Inditex's performance in the European economic downturn is much better than that of its rivals, including H&M, including many of the fast fashion brands, because capturing the fashion trend to the shorter sales interval of the new shelves, while controlling the output, making Zara more popular with consumers, and avoiding the high inventory risk.

Inditex's biggest competitor, H&M, also won the price. But compared with Zara, H&M is very strict about cost control. This is probably the reason why Inditex growth has exceeded H&M in the past 10 years. "Consumer buying habits are changing. Consumers nowadays prefer to buy things that are better quality and longer use. " Zara is better suited to the changing buying habits than H&M.

　　 Pan "Zara" era

However, Inditex is facing new challenges: first, can the company be further globalized? Secondly, will its fast fashion model be imitated or even surpassed?

At present, Inditex relies heavily on the European market. In 2011, 70% of Inditex's turnover came from Europe. Sales in the Spanish market account for 25% of the total sales and have not been able to grow. The European market is experiencing recession and aging, and whether the new market can take up the responsibility of selling quickly is unknown.

In March, a large flagship store in Inditex opened in Fifth Avenue, New York, which spent $324 million to endorse the forefront of Zara in this fashion sanctuary.

But Zara has embraced the imagination in the US market. Zara's clothes are fashionable and self-cultivation, but Americans in small and medium-sized cities prefer loose classic styles. Another secret reason is that Zara did not follow the US's "vanity size" - considering that 30% to 40% of American adults are considered obese, and clothing brands usually indicate smaller sizes for larger clothing. Zara size 44 is the size 44. According to BBC's chart, obesity is almost absent in Europe and Asia, and Zara may need to redesign its clothing if it wants to gain popularity in the US.

The Chinese market is another test. Last summer, Pablo Isla, who succeeded Ortega as president of the company, was full of confidence in the Chinese market. "For us, entering the Chinese market is the same as entering the European market for the first time." In 2011, Inditex opened 179 new stores in Asia, 156 of which are located in China.

Zara's self-cultivation is favored by Chinese women in the workplace, but there are differences in color: Chinese women tend to choose lighter colors for brightening their skin, while Europeans prefer dark colors. Besides, the fashion tastes of Chinese and European women are strikingly similar.

The biggest problem is price. Zara is a cheap brand in Europe, but it is not cheap in China. Because the Chinese market is far away from La Coruna, Zara has to set the absolute price higher: the price of an ordinary T-shirt needs more than 200 yuan, and the shirt is more than 300 yuan. The price of a woman's long skirt may sometimes reach 1000 yuan. And Zar's old rival H&M, a T-shirt price is around 100, while a woman's long skirt up to 200 yuan.

This low price, like Sweden's IKEA, is only for Europe, and its relative price is relatively high in China. Although Zara stores in China are surging, Luca Solca, an analyst at Sheng Fu securities, can't help worrying. "China's success is much more fragile than Europe's."

Today, Inditex has put some of its design in China and has local designers in Shanghai. Although the number is not large, more and more attention is being put on this hot spot. There are signs that China will become the next talisman of Zara.

However, even in the Chinese market, there are more and more "Zara" brands in the market, which may indicate that the distance between Inditex and its competitors is shrinking. Although imitating Inditex has a huge barrier: the cost of such a nearby production mode is too high, which means that the imitator must completely break the existing structure of the company and start again. But companies that are driven by fast fashion to a desperate situation do not rule out the possibility of a war against water.

In order to reform its business mode, the Benetton family suspended its rectification of its listed fashion group in February. According to insiders, Benetton will adopt certain factors in the Inditex mode, such as speeding up the upgrading of products. Clothing retailers such as Gap and George are trying to move their production lines out of Asia and move closer to headquarters. In order to learn the secret of success in creating the fast fashion storied company, many competitors are digging into the corner. A C&A department store employee who was dug from Inditex said, "my main task in C&A is to copy Inditex products and store display." The era of "pan Zara" has arrived.

The Ortega of the Inditex Kingdom has been 75 years old, and he has always taken care of the company's design, production and sales business as a brand Mousika. The successor Isla is responsible for others, such as finance and information technology. Isla has a completely different background from Ortega. He was a lawyer and before he entered Inditex in 2005, he was the chairman of tobacco companies's Altadis. Although he is now the owner of Inditex, according to insiders, he has nothing to do with Inditex's product business. "The production departments and financial departments in the company have split up." Enrique Bad a a said in its latest book, Zara and its sister brands.

This dangerous relationship is undoubtedly a hidden worry for Inditex. Although Isla has made many contributions to the operation, such as controlling the high cost, it has launched the global online trading platform. But employees are still worried about the future Inditex of Ortega after retirement. After all, when the ruler leaves, loyalty or subversion will be faced with great challenges.