A colleague, Mario Arias Oliva, from the University Rovira I Virgili gave an interesting talk here today. As part of it he used a case study about Zara. I couldn’t place the name when he mentioned it at first, but that’s because I’m a distinct anti-fashionista. However, Zara recently became the second largest clothing retailer in the world, he claimed – and I have no reason to doubt it although he simply stated it rather than providing a reference – when it overtook GAP. Only Benetton is larger. It has done this in a very short time for such a large company and has been built up from literally nothing. The owner, Amancio Ortega, comes from a working class background and started his working life as a retail assistant. The model of most of the other fashion stores is that designers produce designs, production managers source large order in bulk from cheap manufacturing in China, India et al. and then the marketing managers at regional levels decide what goes into the stores where. Local store managers must do what they can with what they are sent. Oh, and these companies have huge marketing budgets purchasing TV, radio, billboard, newspaper and magazine adverts and expensive sporting sponsorships.

Zara has virtually no advertising budget and nothing central – it’s all based in the local stores, and then mostly about stores opening. In addition to the lack of central advertising, Zara use a completely different model of design, production and sales. Designers produce designs, principally informed by current streetwear, not the catwalk. Teams of designers and sales executives (and I use the term sales executive correctly here) then review designs, both individually and in combinations with existing and other potential new lines (I suspect, but have no evidence, that they include clothes by other labels in their ensemble considerations). New lines are approved by this team or not – designers have no final say, nor do sales execs – it’s got to be a general group approval from both sides, though probably not necessarily unanimous. Local store managers can select any of these proposed new lines for their stores and production managers make short term deals for the numbers and sizes of items requested by store managers. These are made to high quality in small runs, mostly in Europe. They keep prices down by competition for the relatively small runs and by having few disasters – even when one particular piece fails it places little burden on the store or the chain because it has only been ordered in small quantities and is therefore cheap to write off. Customers regularly visit the stores and buy things they like because they know it probably won’t be there the next time they come in.

What Ortega has learned is an old saying – give the customer what they want. What customers of fashion want is constantly renewed stock that looks like it will keep them up with current streetwear. They don’t want what catwalk models wear because it doesn’t look good on them (they aren’t catwalk models). Other “creative” industries need to look at Ortega’s success in fashion and consider what it means in their businesses. Otherwise they might find a new Ortega eating their lunch in the new marketplaces.