Spanish fashion fleet hitting rough seas

MADRID At first glance, the glittery 70 blazer on sale at the Zara megastore in central Madrid seems to have little in common with the silk-embroidered T-shirt going for 802 at the uptown Victorio & Lucchino boutique.

But the Spanish retailing giant and the exclusive design house do share a mission: They are striving to make Spanish labels a formidable force in the fashion industry, even as better-known companies like Benetton of Italy, the Belgium-based C&A or Marks & Spencer of Britain regroup, retrench and struggle to bolster their brands.

Inditex, owner of Zara, is clearly the leader, with 2,244 stores in 56 countries that sell a quickly evolving array of trendy and relatively inexpensive clothes, or “fast fashion.” Now so many other robust Spanish retailers, like Mango, Cortefiel and Pronovias, are following in its wake, that some outsiders are calling them “Spain’s new invincible Armada,” said Covadonga O’Shea, president of the ISEM fashion management school in Madrid.

The Andalusian designers Victorio & Lucchino, with a total of six shops stocked with 1,500, or $1,845, adresses, even recruited the former head of Zara’s domestic operations, Eduardo Martín Cardona, to lend

fast-fashion savvy to their haute couture. He drafted a plan – which still awaits an infusion of venture capital – to open 35 boutiques in cities like Milan, Tokyo, Paris and Kuwait in the next five years, as well as 100 new stores selling a more affordable, casual line.

“When I started 15 years ago in Zara, it was almost unthinkable to export fashion outside our borders,” Martín said in a recent interview before dashing off to promote his project in Japan.

“Now all the doors are open.”  The trip appears to have been successful: While in Japan, he said later, he received competing offers for the exclusive distribution of Victorio & Lucchino products.

But like the Spanish Armada itself, this new fashion fleet faces a battery of global economic challenges. Cheap textiles from China are flooding Europe, putting Spanish mom-and-pop retail operations out of business and forcing even Zara to produce some basic garments overseas to keep costs down.

All of the Spanish companies now do at least some manufacturing in nearby Morocco or as far off as Asia – even if they finish them back home with hot-off-the-runway touches, said Javier Mata, an industry analyst at Banes to Bank in Madrid.

Meanwhile, European consumers, pinched by higher fuel prices and worried about high unemployment, are spending less on clothing, and seeking bargains at megastore chains like Carrefour. Department stores are withering, with a few exceptions like El Corte Ingles of Spain, which has recently begun to expand into Portugal and Italy.

Even too much success is a threat. Analysts worry that rapid expansion and an increasing reliance on overseas manufacturing are curbing the speed of fast fashion because goods have to travel farther.

In fact, stock turnover has slowed in recent years at Inditex, probably because of the expansion of non- Zara brands and the increased proportion of goods produced in Asia, according to the analyst Nathan Cockrell of Credit Suisse First Boston in London.

“It is faster fashion, not quite fast fashion,” Cockrell said. “I can’t overstate how complicated it is to open a store a day. Most analysts would prefer more moderate rates of expansion.”

 

José Luis Nueno opinion citation in Dale Fuchs’s article published in The New York Times, August 20th, 2005

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