By Elizabeth Nash in Madrid
By Elizabeth Nash in Madrid
27 October 1999
HE NEVER grants interviews nor attends official events. When Prince Felipe visited last year, the heir to the Spanish throne was received by a representative. Now Amancio Ortega, one of the biggest and most determinedly anonymous moguls in Spain, boss of the country's mighty Zara fashion chain, has suddenly, and timidly, stepped out of the shadows.
There can be few Spaniards who have not bought a piece of clothing from one of his shops, and fewer still for whom Zara is not a household name. Mr Ortega's Inditex empire that includes Zara and a fistful of smaller fashion chains, is Spain's biggest textile multinational and third biggest of its kind in the world after the US's Gap and Sweden's HM. But scarcely anyone could name the railwayman's son from Valladolid who controls the fate of 12,000 employees worldwide in a business with annual sales of 254bn pesetas (£1bn).
Mr Ortega's stores have 489 branches in Spain, and 259 abroad, in Britain, Luxemburg, Belgium, Italy, Portugal, France, the USA, Mexico, Greece, Germany, Japan, Argentina and Kuwait. This year he plans to expand into Poland, Brazil, Canada and Saudi Arabia. Pre-tax profits last year increased by almost a third, to nearly 38.1bn pesetas (£152m).
The first British branch, opened in London's Regent Street in November 1998, was a success from day one. The second is in the Bluewater complex in Kent. Nearly half the company's revenue comes from international operations.
Mr Ortega himself is a publicist's nightmare. He adheres to the Rockefeller school of public relations which dictates that newspapers should ideally report nothing more than announcements of your birth, marriage and death. For decades the only available photo was an old mugshot from his ID card. Then last month, Mr Ortega took the unprecedented step of issuing the company's first annual report, complete with a photo of himself, wearing an open-neck shirt. (It is said the last time he wore a tie was at his wedding.) That was it. No press conference, no startling announcements, no personal revelations.
Zara's headquarters, in the Galician town of La Coruna in Spain's remote northwestern corner, politely told journalists copies of the photo could be obtained from Spain's national news agency and, no, they couldn't supply a CV of the chairman, or even fashion shots from the latest collection "because these change constantly and we wouldn't like our customers to look for an illustrated item in a shop and be disappointed".
Amancio Ortega's low-key debut is the prelude to launching his family firm on the stock market next year, or possibly the year after. He had to publish a report that summarised the activities of 1998. While this document was in its final stages of preparation, Mr Ortega took his wife and teenage daughter in his private plane to Ireland to look at horses.
Mr Ortega, said to be 63, owns directly or indirectly 80 per cent of the capital of Inditex (Industrias de Diseno Textil Sociedad Anonima). Investment analysts estimate the real value of Inditex at 1,000bn pesetas. That would put Mr Ortega's holding at 800bn pesetas. Forbes magazine cites Emilio Botin as the richest man in Spain with a fortune of 500bn pesetas (£2bn).
Mr Ortega plans to hand over control to a foundation in his name, to keep the empire in Spanish - indeed family - hands and also, as one Spanish commentator put it delicately the other day, "not to provide excessive pleasure to the Spanish tax authorities".
Mr Ortega says in his first chairman's letter: "The desire to innovate and constantly improve with which we began this project 36 years ago is the guiding idea that has brought us to the present situation. Accumulated experience is not enough to guarantee our leadership ... International expansion is the inevitable objective." The company plans to strengthen its position in Britain, Germany, France and the US to prepare for flotation. Expansion in Italy remains on hold, because of failure to agree terms with Benetton.
The young Ortega started work at 13 as a delivery boy for a shirtmaker in La Coruna who supplied the smartest households. He learnt the importance of delivering your product directly to a customer without an outside distributor. His next job, as a draper's and tailor's assistant, taught him the biggest markup was made in this last link in the textile business.
By the early 1960s he had become manager of a local shirtmaker and lingerie shop, with a clear vision of what to do next. It all began with a pink and blue flowered ladies' negligee Mr Ortega saw for sale. He was convinced every woman in La Coruna would love this pretty garment, but it was too expensive for all but a few. So he produced a similar housecoat at half the price, and sought out comparable but vastly cheaper fabric in Barcelona. He spent weekends in his sister-in-law's sitting room working out how to fold the collar without creasing it. Finally, he cut out the pieces by hand, four at a time, using a cardboard pattern.
He went on to produce pyjamas and nightshirts, delivering them to local shops. With the profits he set up his first factory. He was 27, and it was 12 years before he opened the first Zara, in 1975, a spacious shop in a central street opposite La Coruna's most important department store.
Years later, Mr Ortega became renowned for his ability to spot the best site in town, and the austere elegance with which he designed his shops. His idea was to supply a new sector of the Spanish market, that of designer fashion, with economical clothes of reasonable quality. The formula had been tried successfully by Gap in the US and Next in Britain, but in Spain mid-range clothing was controlled by the giants Corte Ingles and Cortefiel, neither of which was at the cutting edge of young fashion.
"Zara's aim was to democratise fashion," says the annual report. "In contrast to the idea of fashion as a privilege, we offer accessible fashion that reaches the high street, inspired by the taste, desires and lifestyle of modern men and women."
By 1989, Zara had 98 outlets in Spain, then came branches in Portugal, elsewhere in Europe, then Mexico and the US. Mr Ortega produced only what he sold in his shops, and controlled his supplies of raw materials - fabric, thread, leather - through buyers round the world, enabling him to negotiate the best price.
Zara has never conducted a publicity campaign. Word of mouth has been recommendation enough. With control of its distribution channels, and in-house designers, Zara's vast manufacturing base can mass-produce the hottest designs within days of catwalk shows. All shops are fully computerised so supplies are restocked, or flagging lines dropped, within a week.
Smarter designers may sniff at Zara's cheap catwalk copies. But they willingly concede that Zara, despite the quiet man who inspired it, has educated a nation's fashion taste and revolutionised the wardrobe of a generation.Reuse content