Established in 1975, Zara is the flagship of Inditex (Industria del Diseٌo Textil SA), a holding company located in Galicia (north-west Spain). In a relatively short time frame Zara has become the world’s second largest clothing retailer with 2,692 stores (Lopez, 2006) spread across 68 countries worldwide by the end of January 2006.
In addition to Zara which accounted for 66 percent of the group’s turnover in 2005, Inditex owns seven other clothing chains in different segments such as children’s fashion, youth casual clothing, high-quality and conventional fashion, avant-garde clothing, trendy garments for young women, an undergarment chain and household textiles(Lopez, 2006).
Around 60 percent of its products are permanent and the remaining 40 percent varies continually. The company estimates that customers visit a Zara store 17 times a year on an average, as compared to merely four visits for other fashion firms (Castro, 2003). It is due to this reason that the firm spends only 0.3 percent of its annual turnover on advertising (Ghemawar, 2003), normally at the beginning of sales season or the occasions of new store opening. The store is considered its most effective communication tool.
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