Management

Much of the success is due to Zara's unusual structure. Unlike competitors such as Gap Inc. and Sweden's Hennes & Mauritz AB, which operates the H&M clothing chain, Zara produces more than half of its own clothes, most of it at its ultramodern complex here in northwestern Spain. Zara makes 40% of its own fabric -- far more than most of its rivals -- and the pieces are sewn together at 400 cooperatives run by local seamstresses.

At its base here in Spain, Zara also operates its own world-wide distribution network. Controlling the whole chain of production gives the company flexibility that competitors like Benetton SpA of Italy don't have. It also enables Zara to operate with almost no costly inventories; stores get deliveries twice a week and items rarely remain on the shelves for more than a week. "Zara is a strong competitor which we greatly admire," Benetton spokeswoman Emma Cole says. "We are two apparently similar groups, though in reality we have greatly differing projects and characteristics."

Certainly, being so quick also has drawbacks. If consumers have any complaint, it's that Zara's clothes often don't last as long as many would like. "Zara makes really trendy stuff at very accessible prices, but the quality isn't always that great," says Colleen van Cleave, a Canadian translator who shops at Zara in Spain. Zarasays improving quality has been one of its main goals and that the results can be seen in some of its lines, particularly in its professional clothing for women.

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A CORUNA, SPAIN -- Beatriz Padin knows Zara is on to something: The clothing retailer's new khaki skirt has already sold out and it's been on store shelves here for just a few hours.

Ms. Padin -- whose job as a comercial is part designing, part fashion reconnaissance -- telephones Barcelona. Sales there are also brisk. About 2,800 skirts were sent out during the night to some of Zara's 449 stores world-wide --...