How Zara Ballooned Into a Multi-Billion Dollar Brand Without Advertising

A Look at the Retailer's Unique Business Model in the Wake of Co-Founder Rosalia Mera's Death

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Over the weekend came the news that Rosalia Mera -- who made the remarkable transition from a young seamstress to head of an international business empire as co-founder of Zara, the Spanish retailer that today ranks as one of the largest clothing chains in the world -- had died at the age of 69.

She died of complications of a stroke, according to various news reports. Ms. Mera was known as a self-made woman, a grade-school dropout who had an eye for design and a strong work ethic.

Credit: Bloomberg

One of the most fascinating things about the brand is that it became popular not in spite of but because of its lack of originality; shoppers flocked to stores to buy its catwalk copycat designs at prices that are friendly enough for nearly any budget. Here, a few more fascinating facts about how Zara over three decades ballooned into a multi-billion brand*.

1. Part of Zara's international appeal lies in having a brand name that rolls right off the tongue. But as the story goes, that name was a total fluke. Ms. Mera's ex-husband, Amancio Ortega, started to sell nightwear to the public through a little shop called Zorba, as in "the Greek". But, as the UK Telegraph reported in 2011, "the owner of a nearby bar of the same name protested. Forgoing costly new moulds, a new name had to come from those already cast. Ironically, Spain is the only country in which Zara is pronounced not 'Zah-rah', but 'Tha-ra."'

2. The first Zara store was in downtown La Coruña, in the Northern region of Galicia in Spain. It opened in 1975. Today Zara is approaching 1,800 locations. That includes two in Tunisia, two in Azerbaijan, 21 in Israel, 44 in the United States, 56 in Mexico and 88 in Japan. E-commerce has been a huge push for the company and Russia is a major focus, where the retailer is launching a new platform this fall.

3. Zara has grown with little to no advertising. It's just not a part of the retailer's business model. "It hardly even has a marketing department, and it doesn't engage in flashy campaigns, as its competitors do, teaming up with fashion designers like Stella McCartney, Karl Lagerfeld, Martin Margiela and Marni," wrote the New York Times last fall. "Zara's designers are completely anonymous; some would say this is because they are copiers rather than designers. The marketing [parent company] Inditex does do is all about real estate. The company invests heavily in the beauty, historical appeal and location of its shops." Further, it's famously a press-shy company. Despite being one of the world's richest men, Mr. Ortega Gaona refuses to do press interviews, and neither does his successor Pablo Isla.

4. One of its biggest marketing moments was an upaid placement: on the Duchess of Cambridge, the day after her wedding. Since she officially became a "royal", Kate Middleton has been very careful to represent the people by dressing using a mix of high and low brands, often favoring "High Street" looks, as the Brits would say. That's been especially lucrative for Zara, as Kate has served as a fashion plate for many of the brand's looks. One unforgettable look was the day after her wedding to Prince William, when she stepped out in a cornflower blue, pleated polyester dress that cost just £49.99 at Zara.

5. The retailer has adopted the speed of a tech company; it gets new designs in faster than most of its competitors. Fresh inventory is key to Zara's sales strategy, with stores getting stocked with new designs twice a week. It's so important to get out the newest styles that a WSJ report said "pieces are often rushed to the shop floor on plastic shipping hangers and only later switched to Zara's customary light wood hangers. Zara regulars know to look for the black plastic hangers with the latest looks, says Dilip Patel, U.K. commercial director for Inditex."

6. Speaking of competitors, they are vocally envious of Zara's business model -- including the biggest luxury brands that are often getting their styles ripped off. Part of the retailer's allure is in the fact it has managed to win over the fashionistas as well as the masses. The chairman of LVMH Investment Funds and former fashion director for the luxury house, Daniel Piette, famously called Zara "possibly the most innovative and devastating retailer in the world." Stacey Cartwright, the former CFO at Burberry Group PLC, had said of Zara: "They're a fantastic case study in terms of how they manage to get product to their stores so fast. We are mindful of their techniques."

*Zara is by the far the biggest brand in the Inditex Group portfolio, which had net sales in fiscal year 2012 of 15.9 billion euros, a 16% jump.

Contributing: Natalie Zmuda

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