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Fast Fashion Giant in a Clinch: Speed or Sustainability

„What Zara does is nothing short of a miracle in terms of logistics and speed. They can capture a trend and have it in their stores faster than anyone else.”

– Alexander McQueen

arvy’s teaser: Inditex, the mastermind behind Zara, revolutionized fast fashion with unmatched speed and efficiency. Dominating the industry despite sustainability challenges, it faces fierce competition while striving for greener practices.


Fast Fashion.

The aim is to achieve high sales with inexpensive, seasonal and trendy clothing.

The business model is to replicate current catwalk trends and high fashion designs, mass produce them at low cost and get them to market quickly when demand is at its highest. The origins of this trend date back to the 1960s. The most influential figure in this movement was the Spaniard Amancio Ortega, the founder of Zara.

Over decades, he built up one of the largest fashion houses in the world.

Industria De Diseno Textil SA.

In short: Inditex.

Chart 1: Inditex, the Spanish Fast Fashion Empire

Source: Four Week MBA

15 Days from Idea to Store

The company’s flagship brand remains Zara and Zara Home, which accounts for 72% of revenue, but it also owns several other brands, including Bershka, Massimo Dutti, Oysho, Pull&Bear, Stradivarius, Uterqüe and Lefties (chart 1).

Inditex’s business is based on a simple proposition – to respond quickly to the market.

While it takes a traditional fashion company almost a year to get its products from conception down the catwalk to the stores, Inditex takes less than two months to fill the stores with new and different products on a weekly basis. At Zara stores, it can even take as little as 15 days for a new garment to go from design and production to store shelves.

Talk about being fast!

And you must be fast, because the competitive pressure is enormous.

You know TEMU (PDD Holdings) and SHEIN (private), mainly online, from China, Primark from the Republic of Ireland (ABF Holding), H&M (Hennes & Mauritz) from Sweden, GAP in the USA or Uniqlo (Fast Retailing) from Japan (chart 2).

Lots of competition meets another problem.

The sustainability of fast fashion.

Chart 2: Fast fashion companies and their brands alongside TEMU, SHEIN and Primark

Source: TFR Strategy Consulting

Sustainability vs Overproduction

This is a difficult topic.

The main clientele of Inditex and fast fashion brands are, of course, young people. But they are also the most critical – and loudest – when it comes to the sustainability of garment production.

This business model has always been under scrutiny because of the notoriety of poor working conditions, water waste and pollution, but also because of the focus on short-term trends, such as wearing a garment for one summer only, rather than classic and enduring style.

While most brands produce in India, Bangladesh, Vietnam, China, Indonesia or Cambodia, Inditex focuses on local production close to its main market, Europe. The company mainly produces in the Spanish provinces and in nearby low-wage countries such as Morocco and Portugal.

To address this issue, Inditex is pursuing numerous sustainability goals, which were announced in 2023. These include a net zero target for 2040, more sustainable fibers, a more circular economy and money for renaturation projects.

The criticism remains: The targets do not address the main problem of fast fashion, namely overproduction. The number of items produced shall be significantly reduced and a good solution for used clothing shall be found (plan: introduction of Zara pre-owned).

As you can see, it remains a difficult topic where improvements are clearly recognizable, where there is an awareness of the need for change, but where every customer must ultimately be at peace with themselves.

However, this does not happen overnight.

Chart 3: Demonstrators against fast fashion

Source: Stefan Müller, Wikipedia

Bridging the Gaps

Ortega still owns 59% of the company and his family, with his daughter Marta Ortega Pérez as Chair of the Board of Directors, is also represented in the company.

Inditex bridges the succession gap.

Over the decades, Inditex has built a best-in-class model based on speed and efficiency while maintaining quality (though our female friends do not always approve this statement 😉), which competitors struggle to replicate.

Competitors are nowhere near being able to close the gap between speed and quality.

Whether in terms of business or management, Inditex is clearly focused on being prepared for whatever may come. What’s more, it wants to continue reinvesting in the business and, in addition to paying a high dividend of 3.4%, use the profits and a net cash position of almost EUR 12 billion to expand both into new stores and geographically, particularly in the US.

The Fast Fashion giant has no intention of resting on his laurels.

Chart 4: Inditex over ten years

Source: TradingView

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