What Makes Zara So Special? (2024)

While luxury fashion is about setting the latest trends on runways, fast fashion is about playing catch-up.

The fastest to bring fresh-off-the-runway trends to the mass market wins. And Zara’s business model has proven to be the best at it.

So, how does a modest shirtmaker in Spain create a brand head and shoulders above giants like Gap, Uniqlo, or H&M? What keeps them ahead of the curve? And perhaps most importantly, what are the secrets of Zara’s success?

Amancio Ortega — Zara’s founder — began working for local shirtmaker Goa in Galicia, Spain, while still a teenager in 1963.

After spending 12 years there learning the dynamics of the textile industry, he began his entrepreneurial journey founding Zara in 1975 with his wife Rosalia (divorced in 1986).

The initial brand name was actually Zorba — derived from the movie Zorba the Greek — but was later changed to Zara as a restaurant nearby had the same name.

Ortega’s vision was to bring the latest fashion trends to the mass market. At the time, fashionable clothes were only within reach of the rich. That’s where he identified a gap in the market for trendy, yet affordable clothes.

Zara has since grown into an industry powerhouse, with over $10 billion in sales, 2,000 stores, and a presence in almost 100 countries — making Ortega the sixth richest man in the world.

The brand is now part of Inditex, a holding company created to integrate production with other successful brands such as Pull&Bear, Massimo Dutti, and Bershka. Though Zara remains the flagship for the group with 66% of revenues, Inditex now owns eight different brands.

The brand’s success stems from numerous factors — both controllable and uncontrollable. Either way, they certainly got something right.

Here are four key differentiating factors that give the brand an edge over competitors.

In the fashion industry, creating a sense of urgency gets people talking. Think of the Yeezys, the Supremes, and the Off-Whites. Through making limited editions (the sense of urgency), consumers are left thinking: “if I don’t buy this now, I might never see it again.”

Though the three brands I mentioned are relatively new, Zara’s been in the spotlight for creating a sense of urgency for decades.

The brand changes its products on display every three to four weeks. This rapid turnover gives them a competitive advantage in two ways: avoiding discounts and generating more traffic.

Avoiding discounts

According to an HBS case study, the brand “estimated to generate 15%–20% of its sales at marked-down prices, compared with 30%–40% for most of its European peers.” Avoiding discounts through rapid product turnover has given Zara stable cash flows, higher revenues, and greater margins.

Generating more traffic

While most customers visit a fashion store four times a year (once per season), Zara’s rapid turnover means customers eager to see new designs visit about 15 times a year — generating almost four times more traffic than the average store.

As strange as it might sound, Zara doesn’t really advertise. Yet it’s probably among the best-known fashion brands in the world.

“Zara spent only 0.3% of its revenue on media advertising, compared with 3%–4% for most speciality retailers.”―Harvard Business School

While they don’t invest in TV ads, press, or radio, they do have a strong presence on social media. Unlike traditional advertising routes, social media provides Zara with valuable analytics through clicks, likes, and comments, all of which the brand considers when designing new products.

Zara’s lack of advertising is offset by investing in prime store locations. They believe that if your store is located on the main street of a metropolitan city, the daily views it gets advertises on its own. Unlike a digital ad that has a limited lifespan, a physical store in a prized location is a permanent source of guaranteed traffic.

“We invest in prime locations. We place great care in the presentation of our storefronts. That’s how we project our image.” — Luis Blanc, former Inditex director

Zara currently has stores in prime shopping streets across the globe: Fifth Avenue in New York, Champs Elysées in Paris, and Regent Street in London.

The brand deliberately places stores next to luxury brands such as Gucci, Prada, or Louis Vuitton in an effort to glamorize the image of the Zara brand.

While the likes of H&M, Gap, and Uniqlo outsource their production to third parties, Zara keeps the production process in-house.

Rivals outsource to Asian countries for lower labor costs, however, Zara keeps factories near its Spanish headquarters (mainly Spain, Portugal, and Morocco.)

Zara isn’t minimizing costs. But having an in-house production system means they have trending products in stores in a matter of weeks. In comparison, rivals have customers waiting several months before they can buy the latest trends — often past peak demand.

So when a new trend emerges, Zara’s already giving competitors a run for their money while they’re merely coordinating with Asian suppliers.

Going against the tide by creating a vertically integrated system is a winning card for the company.

• Understand where your competitive advantage is before starting a business.
• When it comes to marketing, the best investment you can make is a store in a prime location.
• Create a sense of urgency to buy your products. You benefit from more traffic and fewer discounts.

While it’s no secret that the proliferation of fast fashion brands like Zara, H&M, and Uniqlo have exacerbated the negative impact of consumerism on the environment, how they react moving forward may dictate whether Zara gets to keep the fast fashion throne.