Amancio Ortega is the third richest person in the world, but is probably the most secretive billionaire
With Inditex becoming available for trading in Trading 212 PRO, we take a look at the company and the man behind it – Amancio Ortega. His wealth is estimated at around $57.5 billion making him the richest person in Europe and the third richest in the world. With brands like Zara, Massimo Dutti, Bershka and Pull & Bear among others, it’s not entirely surprising that he’s achieved such a stature.
But what is the secret ingredient behind a fashion company becoming so successful? It all starts with the 12 year-old Amancio who left school to become a shirt-maker’s delivery boy to help out his family. Learning fast he began to make gowns and lingerie in his apartment together with his wife Rosalia. His aha! moment came when he realised that customers were attracted to trendy things they see on the catwalks, but can’t afford them. So they started making designs that capture the trends, using lower cost materials, and sold them at a price closer to the mass consumer.
This became the foundation of the “fast fashion” phenomenon. The beginnings of the company were highlighted by affordable imitations of the most expensive clothing moved from the drawing-board to stores in only two weeks and the ones that didn’t have high enough sales were pulled out immediately. Customers know that this rotation might make them miss out on the dress they want, so they visit more frequently and ultimately spend more. This engagement allows the company to spend the bare minimum on advertising and keep its costs low.
Ortega’s own frugality – living in an apartment in A Coruna and having a single car – are the foundation of the efficiency of the company (although he does own a private jet and an equestrian club.) The company strives to cause high-frequency feedback and deliver it to the design team quickly enough to always fill the gaps in a rapidly moving supply chain.
All this is epitomised by the “Fashion Street” in the Inditex HQ in Arteixo, Galicia – a full blown mall within the complex that has a Zara and Zara Home store. This is where the products and layout are experimented with, to achieve the best placement and attractiveness. All stores from Tokyo and Hong Kong to New York, London and Madrid have the set up devised there.
Inditex recently reported their net profit was down 2.4% to 928 million euro, although sales were up 5.6% reaching 8.09 billion euro. Developing markets like China, the Middle East and Russia are the main drivers of this growth, but recent political events have cast some doubt if the company can keep its pace of growth. But despite this the company is still opening one store per day and its share price made a 67% gain last year. Something in stark contrast with the turmoil in the Spanish economy and stock exchange.
Mr Ortega handed over the chairman position in 2011, but is said to be heavily involved in the running of the company. His influence, fans like Kate Middleton and the continued expansion in China with Alibaba, make their plans to reach the global middle class seem on track.
Inditex is available for trading in Trading 212 PRO.