Revolutions in retail: Dressed for success

He started making clothes on a kitchen table and now runs Europe's biggest retailer. Elizabeth Nash reports from Arteixo, La Coruña on Amancio Ortega, the reclusive Spaniard who set up Zara

Forget transient football stars, the high street chain Zara has become one of Spain's best-known and most successful international exports. The British fashion chains Marks & Spencer and Next may be battling brutal price competition from the likes of Matalan and New Look, and even Tesco, but Zara is steaming ahead with plans for next year to open scores of shops across Europe. Britain, despite its particularly cut-throat market, remains a priority.

As a further gesture of its confidence in Britain, Zara is planning the UK debut of its interiors chain, Zara Home, set to go head to head with Habitat as the nation's favourite source of inexpensive designer home furnishings.

Britain's first Zara Home standalone store (it already occupies the top floor of the Brompton Road store near Harrods) opens this year in Regent Street. Zara barely advertises. It does not sign up star designers such as Karl Lagerfeld or Stella McCartney as H&M has done to court publicity and burnish its designer credentials. Its public face is essentially the elegant stripped-down shop-front, and its arresting window displays. Zara strives to plant itself in the best spot in town, preferably in an upmarket street alongside luxury designer shops, where the sleek shop design holds its own and the budget prices make your eyes pop.

The store is the flagship of the mighty Inditex empire, which also owns the teenage fashion chain Bershka and other outlets targeting different niches of the young fashion market. Bershka's biggest branch outside Spain is in London's Oxford Street, with another store in Newcastle, aimed at the jugular of Top Shop and New Look. Its aggressive pace of store openings has led to Inditex outstripping the Swedish fashion giant H&M as Europe's largest retailer.

In Spanish towns, some high streets seem to consist entirely of one Inditex outlet or other. Expansion in Spain is therefore taking second place to frenetic growth planned for Europe and the Far East. Slicing through market difficulties, Inditex is to spend €900m (£626m) on opening some 490 shops worldwide next year, the company's chief executive, Pablo Isla, said this week. That is more than one ribbon-cutting ceremony per day, a massive global expansion that will double the number of shops within five years.

In a rare gesture of glasnost, this discreet conglomerate flew a planeload of journalists to company headquarters in Arteixo, in Spain's remote north-west town of La Coruña, to announce its annual results on Wednesday and give a grand tour. The owner of the company, the man who launched Zara 30 years ago from his sister-in-law's kitchen table, was nowhere to be seen, even on this most public of occasions. Amancio Ortega, said to be 69, is the richest man in Spain, seventh richest in Europe, and 23rd in Forbes' rich list, with a fortune estimated at €12,500m.

Mr Ortega is a publicist's nightmare. He rarely makes public appearances, except at a race meeting with his daughter; he is keen on horses, and owns several. He never gives interviews, lives in a modest flat in Coruña (albeit with a fine view over the Atlantic) and has never been known to wear a tie.

Only two official photos of him exist, one issued when Inditex announced plans to launch on the stock exchange in 1999, the other in the 2001 annual report. Mr Ortega did not attend the stock market launch, when shares were oversubscribed five times. And he released only 24 per cent of Inditex's share holding. Some 60 per cent remains in the hands of his immediate family.

But Mr Ortega is reclusive only towards the outside world, insist his employees. He turns up at the plant every day, in Zara clothes (he likes to check how his product wears), he spends his day meeting colleagues, visiting his vast warehouses and distribution centres in Arteixo, and lunches in the works canteen. He just does not see the need to put his face about in public.

He is the driving force behind Zara and the architect of its success. From the start he was determined to control every link in production, from design to customer. This is the heart of Zara's unique, rapid-fire supply chain.

Amid the misty, gorse-clad Galician countryside west of Coruña, huge slabfaced buildings sprawl through the industrial suburb of Arteixo. Inside the warehouse, you squint to take in the racks of thousands of beige raincoats and red jackets receding into the far distance. In the four-storey "logistics centre", a computerised system of sorting and packing automatically labels and allocates Zara clothes to every one of its 981 shops worldwide.

Hooks dangling huge baskets of cardboard boxes bear down upon you, and young men (in a rare example of the use of human labour) shuffle out the bagged T-shirts and put them into passing trays conveyed on a belt to the distribution point for each country. It is an assembly line as swift and as automated as a hi-tech motor plant.

Ironers finish each garment, each presser specialising in a shoulder or a lapel, but no one seems to sew anything. Garments cut and designed in Arteixo are made up in numerous small factories and workshops dotted around Galicia and northern Portugal. This minimises the time for raw materials to be distributed, and the final product collected, and permits maximum control of the process. Nearly all Zara clothes for its stores worldwide are produced in this remote corner of Spain. Galicia is traditionally a region of skilled seamstresses. They tell you with pride how their womenfolk would tramp the isolated villages balancing their Singer sewing machine on their head, calling door to door offering on-the-spot mending and tailoring. When I mention this to my guide in Arteixo, he smiles and shakes his head. "There are no Singers now. Our workshops have the most advanced technology available."

Critics claim Zara owes its success to sweatshop conditions, but the company says it meets labour law requirements, and trade unions (not encouraged) say the main pressures on employees are the killer deadlines.

"Fast fashion" they call it. It is the magnet that keeps drawing young fashionistas through Zara's doors. Reports on hot fads are keyed into Zara's HQ every day from all store managers, enabling popular lines to be tweaked and slow movers whisked away within hours. New designs appear in shops every two weeks. If you do not grab what you like when you see it, you will miss it, because designs are rarely repeated.

The global operation is masterminded from Arteixo, and computerised from beginning to end. "Our information system is absolutely avant-garde," Mr Isla said. "It's what links the shop to our designers and our distribution network."

That dizzying two-week turnaround from designer sketch in Arteixo to shopfloor in Tokyo has competitors floundering like dinosaurs. Snootier competitors will admit Zara's inhouse offerings have the edge in cut and quality over cutprice equivalents. "We sell the latest trends at low prices, but our clients value our design, quality and constant innovation," a company spokesman said. "That gives us the advantage even in highly competitive, developed markets, including Britain."

At Arteixo, complete working mockups of Zara stores are built and redesigned every season. The company employs shop designers, architects and display artists. The window displays and shop layout are photographed and shipped to every store to be exactly replicated everywhere. No concession is made to local tastes, except that skirts in Arab markets are slightly longer.

This is a formula heading for world domination, a far cry from the days when 14-year-old Amancio Ortega, a railwayman's son, worked as delivery boy to a Coruña shirtmaker who supplied the smartest households. He learned the importance of delivering your product directly to the customer without an outside distributor. His next job, as a draper's assistant, taught him the biggest mark-up was made in this last link in the textile business.

By the early 1960s, as manager of a local shirtmaker and lingerie shop, Mr Ortega copied a pretty, but expensive, quilted housecoat with fabric bought cheaply in Barcelona. He improvised a cardboard pattern and cut out the pieces four at a time, and sold the finished product for half the price.

He produced pyjamas and nightshirts and delivered them to shops. With the profits, he set up his first factory. He was 27. Twelve years later, in 1975 - the year General Francisco Franco died - he opened the first Zara, a spacious shop in a central street opposite La Coruña's most important department store.

In a society emerging from the stifling legacy of Franco's dictatorship, young Spanish women had started to earn and were keen to exercise their new freedoms. Mr Ortega supplied designer fashion at accessible cost. That won over a generation of Spanish women. Zara boomed.

"Zara's aim was to democratise fashion," Mr Ortega wrote in his 1999 annual report. "We offer accessible fashion that reaches the high street, inspired by the taste, desires and lifestyle of modern men and women."

Driven by the same philosophy, Inditex produced successful sidelines including Oysho, the underwear chain, teenager-oriented Bershka and Stradivarius, the children's line Kiddy's Class, and acquired Massimo Duti menswear and Pull&Bear casual and sportswear, and finally - diversifying for the first time from clothing - Zara Home.

Visitors to Arteixo are offered coffee in Zara Home cups, and Zara Home soap gel and handcream in the loo. Spaniards, already over-dependent on Habitat and Ikea, are flocking to Zara Home for designer fripperies to beautify their homes.

Zara is the jewel in the Inditex crown, accounting for more than 70 per cent of the group's turnover. Now the store has stormed mainland China - heartland of cheap clothing - with a shop in Shanghai's main shopping street. (Hong Kong already has four). Next month Zara opens in Beijing. On Monday, it opens in Stirling. Wherever you are on the planet, if Zara is not already on your doorstep, it will soon open on a high street near you.