Zara Background History

Today Indetex is the Europe’s largest apparel retailer by sales volume (Diderich, 2010): but this highly successful company comes from humble beginnings. Amancio Ortega, born 1936, began working as an errand boy for a shirt maker in 1949: as he rose through the ranks his awareness of acuminating costs in the industry grew and in 1963 he started a company manufacturing (Ghemawat and Nueo, 2003) lingerie, pajamas and nighties on a budget of just 5,000 pesetas (Heller, 2001) with his then wife Rosalia Mera: still a 7% shareholder in Inditex (www.forbes.com /1). Ortega then integrated forward into retailing (Ghemawat and Nueo, 2003).

Indetex today comprises of eight brands. Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe: operating 5.221 retail outlets in 78 countries (www.intetex.com /1). Zara, Indetex’s flagship brand opened its first store opened in 1975 and the company gradually expanded its retail operation across Spain throughout the 1980s with the help of Jose Maria Castellano who joined Inditex in 1985 as Deputy Chairman (Ghemawat and Nueo, 2003). International expansion however did not begin until 1989 when Zara opened in Portugal (Arnarsson, 2009).

Inditex became famous for its fast fashion business model during the 1990s (Bjork, 2010): it is the vision of Inditex’s founder Amancio Ortega that has pioneered Intetex to its success. His observation of accumulating costs in his first job (Ghemawat and Nueo 2003) led Indetex to develop a business model that is reactive to market trends, cutting down on inventory by manufacturing over half of its stock close to its base in Spain: reducing the need from mark downs (Bjork, 2010).

Zara was positioned as “medium quality fashion at affordable prices” (Ghemawat and Nueo, 2003, p. 7): a tenet that it still exists today. Therefore to cut down on costs and to follow trends within its chosen market quickly, a rapid decision making structure (Daft et al, 2010) is adopted....