World of Fashion
The Inditex Phenomena (Part 1)
Retail Best in Class: Creating the Future
by Yvonne Heinen-Foudeh, Senior International Correspondent
Spanish retail fashion giant Inditex, owner of the Zara fashion brands Bershka, Massimo Dutti, Oysho, Pull & Bear, Stradivarius, Uterqüe, then Lefties (nomen est omen), is the clear winner in the fast fashion space – globally.
Acting smart and fast with a fully integrated business model from digital 2D/3D design/product development over manufacturing using state-of-the-art automation solutions and intelligent logistics to customer-centric distribution in a worldwide retail network of their own stores makes the backbone of that extraordinary success story. The real distinguishing features between Inditex and everything that falls under the heading of “Profit before People & Planet” lie elsewhere entirely.
As a major differentiator from its fast-fashion competition, Industria de Diseño Textil, S.A., better known as Inditex, at least for its core brand, Zara, drives a value-based rather than a revenue-based business model. Diminishing the risk that clothes are no longer fashionable by the time they reach the POS (Point of Sale) gets achieved through stunning 3-5 week design-to-delivery cycles and for about 50% of all products and a cycle of 10-12 weeks for an additional 15% of products for all their various brands.
Fighting markdownsHow so? From a “behind the curtains” view and subsequent analysis, the manufacturing/sourcing share from Spain – where sophisticated fashionable quick-production is still partly produced at homemade workshops – from Portugal, Morocco, and relatively fast Turkey in combination with a high (estimated 50%–60%) of its own, fully controlled production play an important role here. A strategy comes at a price: An average additional sourcing cost-of-goods of 40% – especially compared to purchasing in China – appears to be realistic here.
And yet – the math works. Inditex has a fast fashion proposition thanks to its unique and continuous trend scouting. Let’s never forget: the bottom line is all about the product, plus Inditex refrains from any third-party advertising. Its agile supply chain provides it with pricing power and an honest, sustainable competitive advantage.
The reasoning behind the organization’s worldwide leadership and exemplary performance in the fashion market is multifaceted. In a nutshell, key aspects include the creativity of the teams and the strong execution of the fully integrated stores, which count 7,200 worldwide, in conjunction with a powerful, equally globally positioned e-commerce business model. As of 2025, Zara exhibits an international footprint in 98 physical markets and 214 online markets. With that lead, the Zara brand maintains a highly efficient dialogue with customers worldwide while remaining focused on offering a seamless shopping experience, blending physical stores and an integrated online platform to meet customers wherever they are.
This is another strong asset to prevent “red pencil actions systematically.” What appears to be a bum in one marketplace may well turn out to be a hot sell in another. Apart from the fact that the fit challenges from the early years of international sales have been addressed, market-adapted pattern development accommodates different body measurements of customers across various regions.
What started 50 years ago – or more precisely, in 1963 – with a small clothing business established by the 88-year-old and still-active Amancio Ortega has today become the most valuable fashion company. Inditex is setting the course with the idea of fashion for millions.
And that, pronto. In that respect, we should recognize:What, by today, has become a €38.6 billion business, without a doubt, is preparing for a life far beyond the indeed questionable fast fashion – fast money concept. The shift at the top of the organization over the transition period from a family (only) driven business with the IPO in 2000/2001 and ongoing globalization, providing readiness for worldwide e-commerce, certainly marked a challenging period. With the leadership team in place by today, the timetable of action taken hereby outlines the direction of the journey.
Yvonne Heinen-Foudeh
Outlook 2025: massive investment in technological integration
€1.8 billion is planned to be invested in the current business year, particularly in the further technological integration of sales areas. The logistics expansion will continue with an annual investment of €900 million.
The start to 2025 was positive: “Our Spring/Summer collections are being well received, with sales rising by 4% in February and March. Sales rose by 4% in the period from February to April,” explained CEO Oscar García Maceiras at the AGM back in March. Despite economic uncertainties, Inditex anticipates stable gross profits and expects a small exchange rate effect of minus 1% on sales. [Exchange rate €/US$ at the time of The Needle’s Eye editorial deadline: €1 = US$1.142] ........to be continued
Historical: It all began with a single shop.
Today the group runs a total 7,200 stores in 93 markets worldwide.
Let’s start off back at the beginning. After having been active in the textile sector since 1963, Amancio Ortega founded the textile company Zara in May 1975 (the year actually when Franco’s dictatorship in Spain came to an end) with the opening of a first store in A Coruña. In 1985, the 40 years young entrepreneur merged his textile activities under the name Inditex.
Today the Industria de Diseno Textil S.A, thus the name of the company's registered legal entity, is one of the largest textile companies in the world. The venue for the giant’s headquarter is Arteixo, a suburb of A Coruña in Galicia province in the North of Spain.
Inditex runs more than 2000 Zara stores worldwide, all brands augment to 7.200 POS with almost 350 in the Americas. The majority of the group’s stores are corporate-owned. Franchises are mainly conceded in countries where corporate properties cannot be foreign-owned. Image shows Zara at Soho, New York.
€1.8 billion are planned to be invested in the current business year, particularly in the further technological integration of sales areas. View into Inditex’ “Centro Tecnoligico”.