Fast fashion and high-street real estate keep clothing retailer Amancio Ortega ahead of the trends
Zara’s largest store, 65,000 square feet, opened in April in Madrid’s financial center, Paseo de la Castellana
Zara founder Amancio Ortega’s empire is rooted in retail, so it’d be no surprise if it were going the way of the current market: rapidly downhill. But as competitors like Bebe, BCBG Max Azria and The Limited fall like dominoes and corporate retailers shed real estate assets amid the great retail recession, Ortega appears to be headed in the opposite direction.
In April, Zara announced it would open its largest store, a 65,000-square-foot behemoth, in the heart of Madrid’s financial center, Paseo de la Castellana. The same month, the discount retailer announced its biggest location in the United Kingdom, a 41,731-square-foot storefront in London’s Westfield Shopping Centre.
Ortega is the richest man in Europe and the fourth-richest man in the world, according to Forbes, with a personal net worth of $82.3 billion as of May. Echoing the larger battle being waged between e-commerce and brick-and-morter retail, the 81-year-old Spaniard briefly took second place on the world’s richest list earlier this year, temporarily pushing Amazon’s Jeff Bezos down a rung before resuming his fourth-place position.
As the majority shareholder of Inditex — which controls Zara, as well as retailers Bershka, Massimo Dutti, Oysho, Pull and Bear, Stradivarius, Uterque and Zara Home — Ortega will be getting a $1.26 billion dividends payment after his company posted a net profit of $3.2 billion in 2016, a 10 percent bump over the previous year.
As an added bonus, over the last decade Ortega’s share of Inditex’s profits has given the fashion tycoon the capital to amass more than $10 billion in trophy properties from Miami and Beverly Hills to London — relatively debt-free.
It’s part of a global business strategy that has propelled Ortega from the poor son of a railway worker and a housemaid to the Forbes billionaires list. But it isn’t the only reason. Another factor is a shift in consumer habits toward fast fashion. And no one is getting clothes from the runway to the racks faster than Zara.
A notoriously media-averse chief executive, Ortega doesn’t do press interviews (and declined to comment for this article), but retail and commercial real estate experts say his vertical strategy gave Zara the ability to implement aggressive production schedules so that stores were stocked with fresh apparel twice a week. Materials for all Inditex brands originate in Spain, Portugal and Morocco, which are cut, finished and treated in mills and then sewn by local shops in Galicia, Spain. By controlling the supply chain, Inditex can adapt to new fashion trends quickly.
Liz Holland, chairwoman of the International Council of Shopping Centers and CEO of commercial real estate investment firm Abell Associates, said Inditex figured out the perfect model for fashion at affordable prices that can be produced in a quick turnaround.
“In terms of going from runway to sales floor, Zara is winning the race,” Holland said. “And the company has done a great job of tapping into the desires of a cash-strapped customer base.”
Arik Kislin, principal of Linx Industries (a diversified investment company), credited Zara’s ability to move quickly in response to trends as a key to its success.
“They produce on-demand product in the shortest amount of time compared to their competitors,” Kislin said. “To do that, Ortega has built a very strong infrastructure. He knows the business inside and out.”
Getting up to speed
Ortega’s fast-fashion empire was not built in a day. His early life was marked by political violence and abject poverty. He was born on March 28, 1936, four months before the three-year Spanish Civil War broke out. Xabier Blanco, a Spanish journalist who’s authored biographies about Ortega and his first wife, the late fashion icon Rosalia Mera Goyenechea, said the couple are part of the generation who lived through the iron grip of General Francisco Franco for 36 years.
Ortega told the biographer that when he 上海千花网龙凤论坛