Man behind Zara keeps out of
limelight
By The Financial Times
He is richer than Warren Buffett, and his company
owns a piece of real estate on New York’s Fifth Avenue that was bought in one
of the most expensive property deals in US history. Yet few of the shoppers at
his Zara stores
have any clue who Amancio Ortega is.
Mr Ortega, the founder and majority shareholder of
Spain’s Inditex,
the world’s largest clothes retailer
by sales, likes it that way.
In crisis-hit Spain, where
one in four is unemployed, the continuing international success of Inditex has
almost become a point of national pride.
But while being its country’s biggest success story
and now its largest company by market value, Mr Ortega and Inditex have in many
ways not fitted in with their flashier peers at the forefront of Spanish
business.
Based in the rainy north-western region of Galicia,
several hundred miles away from the economic hubs of Madrid and Barcelona, and
almost entirely shunning the use of advertising, the company’s management
maintains a culture of diligent silence.
Epitomising this is Mr Ortega, recently judged by Forbes
magazine as the third richest man in the world after Inditex’s share price rose
by 60 per cent over the past year. This lifted the company’s value to €66.7bn,
and Mr Ortega’s 59 per cent stake to €39.3bn.
While other countries’ most famous self-made men
are frequently splashed across magazine covers, or made the subject of gushing
biopics, those keen to shed light on the life of “the man that created Zara”,
as one biography is titled, have long struggled for material.
Against the best efforts of Spain’s ravenous
celebrity magazines the private life of Mr Ortega remains shrouded in secrecy,
having never granted a formal interview, apart from once to an official
biographer.
When Zara was listed on the Spanish stock market in
1999, with the flotation crystallising Mr Ortega’s position as then Spain’s
richest man, only one official photograph was released of its founder, and he
skipped attending the formal bell-ringing ceremony at the Madrid stock
exchange.
He is known to live in a modest apartment in La
Coruña, the Galician capital, with his second wife, and almost only appears at
public events in a sombre blue blazer and open-necked white shirt.
Born in the northern region of Leon in 1936, the
year the Spanish Civil War began, Mr Ortega is rare among the country’s
business leaders for his humble upbringing.
His early teens was spent working in a small
shirtmakers’ shop in La Coruña after his family moved to Galicia when he was
14, because of his father’s job as a railway worker.
Later he began to produce clothing in his home with
his ex-wife, seizing on a dormant demand among the population of the
traditionally poor Galicia for clothes that were fashionable but cheap.
The first Zara store was opened in La Coruña in
1975, with the company by the late 1980s growing beyond the region and opening
its first outlet in Madrid.
Key to the nascent company’s business model was the
ability to produce garments quickly, with short production lines, delivering
new fashions cheaply and while demand remained strong.
But customers at first treated the Zara brand with
suspicion.
José María Castellano, who served as Mr Ortega’s
number two at Inditex for 30 years, told the Financial Times last year of how
upmarket Madrid shoppers were at first ashamed to be seen to shop at what was a
low-market brand.
“When I was in Inditex, we watched clients throw
away the Zara bags when the first store opened in Madrid in 1988, as people
thought it was cheap and bad quality. Now Zara is worn by royalty,” he said, referring
to the Duchess of Cambridge’s fondness for the brand.
Today, Inditex continues to expand internationally
at a mind-boggling pace, having opened 360 stores in 54
countries in the first nine months of the year, or more than one a
day.
At the heart of its success is a business model
many envy and none have been able to replicate. By taking the decision to
eschew cheap Asian labour to keep large amounts of its production in Galicia,
and in other nearby countries, the company was able to produce clothes very
quickly.
A new trend at Paris Fashion Week could be
reflected in a range of garments that would arrive in stores less than two
weeks later. This model allows it to pick up on trends and respond to demand at
stores across the globe at a pace far faster than its rivals.
Mr Ortega, now 76, retired as chairman of the
company and handed over full day-to-day running of Inditex to Pablo Isla in
2011, having handpicked him from the tobacco company Altadis to be
Zara’s chief executive in 2005. Speculation that Mr Ortega’s 29-year-old
daughter Marta may succeed him has often been floated in the Spanish media.
Since the baton was passed to Mr Isla, Inditex has
been identified by analysts as being at risk of falling victim to its own success.
After its shares have risen past successive all-time highs, an expanding line
of analysts now doubt whether the company will be able to continue meeting
already sky-high market expectations.