Zara is one of the most popular clothing brands globally and part of the Inditex group, the largest apparel retailer across the globe. Its owner has always been in the news for being one of the richest persons on earth with a wealth of around 73 billion dollars as of November 30th, 2021. But the latest news to come out of the fashion giant is that Amancio Ortega has appointed his youngest daughter to head the family business.
This may seem like just another decision, but the consequences can be very expansive when it comes to big companies that are also listed on the stock exchange. And in this case, too, the share price of Inditex dropped by over six percent after the news became public. Only time will tell you whether this will be a bad move for the company, but at the moment, just the news has put the company in hot waters.
Businesses nowadays do not just rely on strategic thinking as to how to grow and expand their stores worldwide. Or how to outfox their competitors in the latest marketing campaign. One of the most important factors is how the company is being perceived by the market, and especially by the investors and its customers. In this case, currently, Zara is facing a backlash as it will now be termed as a family-owned business rather than a famous apparel house dealing in fast fashion.
The daughter of the apparel giant is named Marta Ortega Perez, and she is 37 years old. She has been working with the company for the last 15 years and started with a clerk position in London and has since worked in several departments in the company. But she hasn’t had any department, nor is she on the board. That is why investors are sceptical about her performance as your head of the company. Surely, some anxious time ahead for the investors and the customers and how the company will fare.
However, it is likely that fans of Zara won’t be too interested in whoever is running the company. As long as the quality of the products remains intact, not many people will bother too much about this latest happening. But as I have mentioned above, the investors will be watching keenly as to what will happen with this new development in the company. Especially the decisions she will take will have a far-reaching effect not only on the company but also on its stock’s performance in international bourses.
As far as marketing is concerned, there is not much to be discussed here. Zara is one of the top brands in the world, and that is why it seldom needs advertisement like other brands. The faithful customers go only to Zara stores and won’t be interested in what is happening in the boardroom of the company. So, marketing or no marketing, Zara will be on top anyway? Not exactly.
Let me describe this aspect further in the subsequent paragraphs so that you can grasp what is going to be the situation in the coming few months as Marta will take charge in April 2022.
Most of my readers would think that the top brands in the world don’t need marketing. But the reality is quite different as the top companies in the world spend the most on marketing. This is because they need to be in the news all the time and need to get the eyeballs consistently to retain their number one position. Please go through the example below so that you can get my viewpoint.
The best example is Pepsi and Coca-Cola, as they spend hundreds of billions of dollars on new marketing campaigns. It would be foolish of a person to think that people will stop drinking fizzy drinks if they won’t come with a new ad every few months. But this is done only to develop something new and exciting for its customers.
Big brands always spend a large sum signing up celebrities and sports personalities. This is done because celebrities have a built-in audience, and whatever they do is followed by their friends. These followers are sometimes in millions, as in the case of a famous footballer like Cristiano Ronaldo. Nike earns billions of dollars in revenue each year from selling sneakers and joggers, and a major chunk can be attributed to the charisma of Ronaldo.
You can imagine the frenzy of Zara’s clothing when Kate Middleton, Duchess of Cambridge, makes an appearance in even a simple white outfit. And when Olivia Palermo comes out with a new gown at the premiere of a new movie, the fans of the outfit as well as of Olivia, go crazy. Miley Cyrus has also been snapped wearing Zara, and these celebrity endorsements are enough for Zara to make a Splash at the international fashion scene without spending much on marketing.
The above scenario doesn’t mean that Zara doesn’t spend on marketing. When they collaborate with celebrities, they pay a fee to them. Sometimes it is undisclosed as there is a mutual agreement between the model/celebrity. Zara Also knows that other famous brands are trying to take their place. But to dethrone the number one company in the world is not easy. And that is why Zara has been on top for several years now, with revenues also soaring high.
The future looks rosy for Zara as the aftereffects of its owner’s daughter taking the helm of affairs are still four months away. And who knows that she may come up with a great marketing strategy, and the revenue stream will start generating big bucks, as is the case with Zara anyway. Of course, there are chances that the stock price may fall further, but this is all speculation as nothing can be said with certainty at this moment.
Some industry analysts are of the view that Zara could have done better by making someone else its head. But again, there are chances that this gamble will work well, and the company is not taking this as a gamble at all. And that is where the current uncertainty can be a blessing in disguise for the retail giant.
If you think that you can add something valuable to this blog or have a query in mind, please speak up. You can use the comments section below in this regard, and I will get back to you at my earliest.
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