And now he's taken Warren
Buffett's No. 3 spot on Forbes'
billionaires list.
Ortega's rags-to-riches tale
mirrors the fast growth of southern Europe in the past 30 years. But the
difference in this story is that Zara shows no sign of crashing.
His
Beginnings
Ortega built the world's
biggest fashion company in a rainy, impoverished corner of northwest Spain —
Galicia — where the 76-year-old has lived since he was a kid.
The son of a railway worker,
Ortega went to work in a local shirt maker's shop at age 14 to help feed his
family. Jose Martinez was Ortega's first colleague. He's 77 now and still works
at that same shop called Gala.
Business
In Trendy World Of Fast
Fashion, Styles Aren't Made To Last
"He may be the third-richest
man in the world, but for me, he's just a good guy," Martinez says.
"He came to work in my father's shop in 1951, so we became friends,
Amancio and me."
More than 60 years later, Gala
employees still sew shirts upstairs from where they're sold. That's a model
Ortega took with him when he opened his first Zara store two blocks from Gala
in 1975.
As the company grew, he kept
production close to home — in Spain and Portugal — at a time when other chains
were moving factories to Asia for cheap labor.
A Look Inside Ortega's Empire
The New York City Zara store on Fifth Avenue.
Evan
Joseph Uhlfelder/Courtesy of Inditex
Sooty smokestacks dot the green
Galician hills around Zara's headquarters. Inside, machines sort garments to
dispatch to stores.
Every single garment passes
through Spain. And more than half of production is done locally. That allows Zara
to be quick: 15 days from design to retail rack — compared with the old
industry standard of six months.
"They look at whatever is
new," fashion expert Jose Luis Nueno says. "They see what the
celebrities and so on are wearing, and put it in their windows very fast."
Nueno studied the clothing
company at Harvard Business School and now teaches at Spain's IESE Business
School. He says the key to fast fashion — and to Zara's success — is owning the
whole supply chain from factory to retail and dealing in small batches that
sell quickly.
"If I change the merchandise
very frequently, then I give you an excuse to come to the store more
frequently," Nueno says.
He has asked his students how
many times they frequent the clothing store, and he says the responses have
been "absolutely pathological." Sometimes they shop there once or
twice a week, he says.
And Zara entices shoppers just
like that, with zero advertising. Instead it has invested in flagship stores in
historic buildings — a converted convent, an art deco cinema — and a $324
million store on New York's Fifth Avenue. This year, it will open 500 new
stores.
Like Ortega, his company,
Inditex, which manages Zara and seven other brands, is notoriously secretive.
It took nearly two months to get clearance to visit its office, and Ortega
declined our request for an interview.
"Well, our philosophy is
that the customer is the one to describe if we do good or bad things,"
says Jesus Echevarria, Inditex's spokesman. "It is not ourselves, to
explain how good or how bad we are."
At Zara's flagship store in
Madrid, customers are doing just that.
"I like it because it's not
so expensive," a shopper says.
Another customer says she likes
the quality of the clothes, but the only problem is the lack of bigger sizes.
Yet Zara is famous for adapting.
Sales clerks report back to headquarters daily on what customers are saying.
For example, if they're asking
for a particular blue jacket in green, that green jacket might just land on a
rack. If enough shoppers request that green color, "I'm positive that
[jacket] would turn into green," Echevarria says.
Back in Ortega's hometown, the
shirt maker, Jose Martinez, says he has no regrets about staying put and not
joining his friend at Zara when the company took off.
"It never appealed to me, to
leave and start a bigger business. This is my shop, and everything I love is
right here. I've made it!" Martinez says.
He says Ortega drops by with a
bottle of wine each Christmas. Ortega is now worth more than $56 billion. And
Inditex has about 6,000 stores in 85 countries — and counting. Another one is
likely to open today.
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