From the shadows, the 81-year-old Spanish billionare continues to influence the future of Inditex - owner of the Zara brand. After having structured his assets, he dreams of seeing his daughter Marta take over the reins of the family empire which began in 1975. A look back at four decades of uninterrupted success.
With a fortune estimated at 70.1 billion dollars at the end of 2017, Amancio Ortega is the sixth richest man in the world. Despite his success, the Spanish businessman is also one of the most discreet. It was not until 2001 when his group went public that Ortega agreed to an official photo of being taken of him. Born at the beginning of the Spanish Civil War in 1936, he had a difficult childhood. In his official autobiography, this son of a railway worker recounts the trauma endured when aged 12 he saw his mother come out of a shop empty-handed because the shopkeeper refused to give her any more credit. His entrepreneurial spirit dates back to this period in his life. He left school to work for a luxury men's shirt shop in A Coruña, taking his very first steps in a textile sector that he would never leave.
Endeavour and organization
Self-taught, he asked his employer if he could produce his own models. With the help of his sister, brother, sister-in-law and future wife, Rosalie Mera, he set up a workshop. He was soon slashing prices by offering products at half price. With this success behind him, in 1963 he launched his own shop, called Goa. In 1975 in A Coruña the first Zara boutique was born – the brand that would give him a global profile. From then on, everything moved at breakneck pace: new stores opened in Spain in 1980, internationalization in 1990 and a stock market listing in 2001 with a valuation of 9 billion euros. Today, the business’ market capitalization is not far off 80 billion euros.
So what is his recipe for success? Work and continuously challenging the status quo. "I have always believed that to be successful, we have to turn the organization upside down every day," he explains. To lower costs, he was the first to understand the importance of logistics. In 1984, he revolutionized processes by creating his first warehouse. He set up an organization that increased his competitiveness. Not afraid to learn from his mistakes, he tried lots of things. When he is wrong, he can count on his responsiveness and hard work to rectify things. "My university is my business," he likes to say.
Today Inditex still produces one third of its clothes in Spain. Wherever they are made, the items pass through A Coruña before being distributed to the end store. Every store is delivered to twice a week from Spain. A necessary organization to cope with the pace of production. To stay one step ahead, he was the first to introduce several high street collections per season. Since 2000, Zara has worked on the basis of permanent rotation. The group designs 10,000 new models a year. In 2017, Inditex manufactured 700 million articles of clothing that arrived on the shelves in just five weeks against nine months for other players in the sector. Speed that allows it to closely reflect its customers wishes and spend very little on marketing. His greatest source of pride? Having been able to create a global brand from scratch without making any commercials.
A successful transition
When in 2011, at the age of 75, he handed over the reins of Inditex to his right hand man Pablo Isla, his group had 5,000 boutiques in 77 countries, employed 100,000 people and generated a turnover of 12.5 billion euros. A totally successful exit. Seven years later, the former vice president, who joined the company in 2005, has managed to maintain double-digit growth.
Thanks to the conquest of the Asian market and the acceleration of internet sales, revenue increased by 82% between 2011 and 2018 to reach 25.3 billion euros. The eight Inditex brands (Zara, Pull & Bear, Massimo Dutti, Berschka, Zara Home, Stradivarius, Uterqüe and Oysho) represent 7,300 stores in 93 countries. As of this year, the group is world number one in ready-to-wear ahead of Swedish rival H&M. Which makes Amancio Ortega a very happy man.
From his native Galicia where he has returned to live, the businessman continues to watch over his empire from the wings. Once a week, he chats with Pablo Isla to discuss the most important issues. He has also tackled the question of his legacy. At the end of 2017, he transferred his fortune to the holding company Pontegadea Inversiones which controls 50.1% of Inditex. In total, Amancio Ortega holds 59.3% of the ready-to-wear group since he also holds a personal stake. Finally, his holding company includes 100% of Pontegadea Inmobiliaria, a real estate company where the Spanish multibillionaire has gathered together his real estate assets. At the end of 2017, it had assets of 6.1 billion euros - up 8.3% year-on-year ‒ an empire that he built up through dividends distributed by Inditex. Today, all these activities combined account for revenue of over one billion euros per year.
Amancio Ortega has never really hidden the fact that Pablo Isla is only an intermediate solution. His dream is to bequeath his empire to his youngest daughter Marta, from his second marriage. It must be said that the alternatives are limited. His elder daughter Sandra has said she is not interested and focuses on the group's charitable foundation. And his son Marcos is disabled. Since 2001, his youngest child Marta has continued to climb the ladder in the product department - one of the most strategic. Her father hopes to be alive to see her accession to the throne.