Zara Franchise in the UK

05/01/2019 08:00 | International franchises

zara franchise

As one of the biggest fashion brands in the world, Zara is a would-be franchisee’s dream investment. With around 7,475 stores already in operation, the brand benefits from excellent exposure and access to some of the world’s most lucrative markets. Here, we take a look at how the company grew to become a fashionistas’ favourite and whether it offers franchising opportunities.

What is Zara?

Zara is a Spanish fashion retailer that has successfully developed a significant international presence and is considered one of the leading high street brands both in the UK and abroad. It has earned a name for being able to keep up with the latest trends and is associated with the fast fashion revolution. The fast fashion movement is typified by the use of modern manufacturing processes and supply chain logistics to ensure that new trends come to market in a remarkably short period. Zara appears to have perfected this process and now requires just one week to design a new product and get it into stores.

This approach allows Zara to bring approximately 12,000 new products to market every year and to release an astounding 20 clothing collections over the same period. It has also made it one of the world's most influential fashion brands and a popular choice among consumers who appreciate the business' ability to renovate their product lines constantly.

Zara is part of the Inditex group, which also owns Massimo Dutti, Bershka, and Stradivarius, amongst others. It is the largest clothing retail group in the world and Zara is considered its most prestigious brand.

A brief history of Zara

Founded in 1975, by Amancio Ortega and Rosalía Mera, Zara began life as a single store in the heart of A Coruńa, Galicia. The business aimed initially at affordable retail products based on expensive, high-end fashion items by utilising innovative manufacturing techniques. Using A Coruńa as its base of operations also had symbolic meaning, as the area was once renowned for its textile industry.

During the ‘80s, Ortega and Mera worked tirelessly to refine the design and manufacturing processes that allowed them to get their products to market as quickly as possible. The idea was to create “instant fashions” that were responsive to the latest trends, and that would change as quickly as consumers’ tastes. By the end of the decade, this had largely been achieved, and the company began considering international expansion. Zara’s first store outside of Spain opened in Porto, Portugal, in 1988.

A year later, the brand made the jump across the Atlantic and then, in 1990, it opened its first store in France. Throughout the ‘90s, the brand expanded into new countries at an astounding rate, with a new market opening up every year. Greece, Belgium, and Sweden followed Mexico. The first UK store launched in 1998.

The ‘00s was also a decade of significant growth, with the brand moving into a number of Middle Eastern, Asian, and Central European markets. Since then, it has focused on pioneering new technologies for greater efficiency in its supply chain and store management. The business also has a “no advertising” policy, preferring to spend the money it would earmark for marketing on opening new stores and facilitating further expansion.

Who’s in charge at Zara?

Zara’s parent company, the Inditex Group, is still owned and operated by Amancio Ortega. Ortega is the wealthiest individual in Spain and the most prosperous retailer in the world. His $63.3 billion fortune makes him the second wealthiest person in Europe and the fifth most affluent in the world. Despite this, he is known for his preference for a relatively simple life and for being notoriously reclusive. For much of his life, no known photograph of Ortega had been published, and he has only given three interviews to the media.

How has Zara performed financially?

In 2017, Zara generated approximately €25 billion in revenue, ensuring it placed on Forbes “most valuable brands list” for the year. In the UK, it earned £600 million in the same year, despite substantial investment in store refurbishments and moving their UK headquarters. Despite this financial success, the brand has a relatively small market share in the UK, particularly when compared to key competitors. For instance, market leader Marks & Spencer boasts a market share of 9%, while Zara is only able to achieve a market share of 1.5%. This does suggest that there is room for the brand to grow further in the UK.

Is Zara a franchise?

In the past, Zara has offered franchising opportunities to large organisations that it feels have the capital and capabilities to maintain the brand’s high standards and to introduce the business to a new market. For instance, the Al-Futtaim Group from Dubai owns the Singapore franchise. This group also owns the rights to the Ikea franchise in many Middle Eastern nations.

However, in recent years, the business has begun to buy back stores from its franchisees, bringing them back under the control of central management. In 2006, it bought out its franchisees in Russia. This was followed by agreements with franchisees in Kazakhstan in 2011 and franchisees in Finland in 2013.

Zara franchise UK

There are currently no franchised Zara’s in the UK and there seem to be no plans to offer franchising opportunities in the future. The brand appears to be moving away from the Zara franchise model and is attempting to acquire back franchises in the vast majority of European markets. As Inditex is the largest retail group in the world, it does not deem it necessary to offer franchising opportunities to facilitate further expansion.

What does the future hold for Zara?

Though e-commerce operations are challenging the future of many high street fashion chains, Zara appears well positioned to survive and continue to thrive. Its design, manufacturing, and distribution processes make it a market leader and ensure it maintains significant competitive advantages over any business that attempts to take its place.

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