Why Zara Is The Most Exciting Retailer Today
Zara is owned by Spain-based Inditex and the brand is one of the most exciting in retail today. It may even be in a class by itself.
Just this morning Zara came up in conversation about how boring stores have become with an industry contact, fellow Forbes contributor Paula Rosenblum of RSR Research. Product has become so commoditized–a sea of sameness regardless of outlet–that it’s no wonder Amazon and Walmart are among the only retailers with positive financial performance.
I used to love shopping. Just browsing stores for a couple hours was fun and offered up creative inspiration in the form of fashion or accessories I hadn’t seen before. Not anymore. Just last week I found myself in downtown Chicago with a couple hours free to wander. What had once been fun was now a chore, as I trudged through storefronts looking for something to pique my interest.
Until I came to Zara, this has consistently been the only brand to offer up interesting apparel on a consistent basis. My only complaint is I wish the store experience was better. Too often there’s a long wait for a fitting room or a long line to pay. It’s not unusual to see women stripping in the aisles to try things on, and on more than one occasion I left a pile of items behind, unwilling or unable to wait.
So it should come as no surprise that Zara is the largest fashion retailer in the world by sales posting impressive annual results.
Same-store sales for all of Inditex–considered a real measure of growth–jumped 10% and net sales rose 12% for the year. Zara was responsible for 66% of the company’s total sales and is the focus of its expansion, a focus that remains squarely on brick-and-mortar stores. Zara has been expanding in major markets, replacing smaller stores with enormous flagships.
The index doesn’t specify e-commerce sales but this is a work in progress and one estimate puts online sales at just 6% of the company’s total. This number is likely to rise as the platform steps in to capture sales where the larger stores cannot, appealing to shoppers not interested in navigating crowded stores, like myself (I’m tracking a package from Zara right now).
Zara’s success is startling in comparison to the status of Gap, Macy’s and most teen retailers, a list that is dwindling fast, thanks to bankruptcies. Inditex’s prosperity is rooted in a multi-pronged approach that creates a closed-loop. From proprietary design to owned manufacturing facilities, the company is able to quickly get fashions to stores. It also utilizes shipping containers on the return to send back unsold merchandise for recycling. It’s just slightly more economically efficient but the move has earned Zara and Inditex kudos from customers, especially millennials, for whom this eco-consciousness matters.
Inditex has a lot of room to grow with plans for more flagships and online expansion. It’s a bright spot in retail today, if not the brightest.