The relationship between Zara, the giant created by the Spanish pioneer of "fast fashion" and now the 13th richest man in the world with an estimated fortune of almost 100 billion euros Amancio Ortega, and our country has always been special.
Thirty years ago, the Inditex company of the Spanish businessman had chosen Greece as one of the first destinations of the great project to go abroad that had just begun. Until then, the group's presence was limited within Spanish borders, although it had taken its first steps in France, Portugal, and the USA some time ago.
The store at No. 9 Ermou Street in Athens is considered one of the first to open as part of the Spanish brand's internationalisation strategy.
A real "tsunami" which forever changed the West's fashion industry
Again, however, even today, as explained by the managing director of the Greek subsidiary where all the chains of the Inditex Group, ITX Hellas, Ilias Malamas, and the Director of Communication of the Inditex Group Raúl Estradera, Greece is the second in terms of per capita spending on Inditex Group products, second only to Spain!
Also, the Greek market is currently one of the group's ten largest markets in terms of real sales figures!
Of course, there is also the... myth that circulates and has been written several times in prestigious international fashion magazines... that the very name Zara on the sign of the first store opened in 1975 in A Coruña by Mr. Ortega was almost... an accident.
Legend has it that he wanted the sign to read "Zorba" (from his favourite movie "Zorba the Greek"). But he was overtaken by a bar that had opened two blocks down, using the name. So, he was forced to change his plans.
Since he had already ordered the letters for the sign, he decided to find an alternative name to use for at least some of them. It is even said that the extra "a" was taken from a second set of letters that he had requested at the same time.
And just like that... Zara was born.
Strong imprint
So thirty years have passed since the first store in Athens, on Ermou Street, and the imprint that the chain has achieved on the Greek market is huge in terms of financial - and not only - level, reaching today approximately 150 stores and almost 4,000 employees!
According to the last published financial statements for the year 1/2/2022-31/1/2023, ITX Hellas, as the subsidiary of the Inditex Group is called, had a turnover of around 615 million euros through the chains Zara, Massimo Dutti, Zara Home, Bershka, Pull&Bear, Oysho, Stradivarius, compared to 457 million euros a year ago!
In fact, this does not include sales from the online channel... In comparison, the sales of ITH Hellas are more than three times those of its direct multinational competitor in the country, the Swedish H&M group.
Of course, the Greek subsidiary suffered the pressure of energy, wages and general operating costs, showing a significant contraction in profit margins. Thus, EBITDA profits fell to 75.591 million from 80.491 million euros in 2021, pre-tax profits fell to 27.455 million from 29.536 million, and net profits fell to 21.021 million from 21.110 million euros the previous year.
For the fiscal year that will end next Wednesday, January 31 - after the group chooses to capture the most important part of the winter sales period -information points to impressive growth rates despite inflationary pressures.
This strengthens the management's belief that in a few years, it could reach 1 billion euros in sales in the Greek market!
The increase in wages
The chain has brought changes that are not just about who controls the market but have also shaped… trends. In short, it is perhaps the most influential due to this preference of the consumer public and its philosophy.
Hence, the "Zara model" is what other players are trying to follow both internationally and domestically.
That is why the choice, at the beginning of the month, to proceed with a significant increase in the salaries of all employees in the Greek subsidiary is considered particularly important since it is expected to exert pressure on the rest of the sector as well.
In particular, salaries increased by 10.66%, resulting in the initial full-time wage from 904 euros now rounded to 1,000 euros. By the same percentage, the calculation of the commission on sales received by the employees of the stores also increased.
Thus, the monthly fee, from 125 euros per month, is now calculated at 165 euros. In short, from about 1,029 euros that a full-time employee received in 2023, they currently receive 1,165 euros per month. That is, 49% above the basic salary.
The adjustment for part-time workers, the vast majority of whom are students, is the same.
Together with the ticket restaurant vouchers it provides and travel cards for the urban transport of Athens, the stores of the Inditex Group today are still among the first choices of young people for employment.
That's also why they do not seem to be affected by the big problem of the lack of human resources that most market players complain about, avoiding, of course, talking about the what they offer to an employee...
For the company's management, the increases, apart from showing respect for the person and the effort made by the employees, especially in good years, are also the way in which the hole caused by inflation in the pockets of consumers can be covered - money that will eventually go back to consumption in one way or another.
Something that was tested by Mr Malamas during the difficult years of the crisis, managing through fire and iron not only to keep the steering wheel of the Inditex Group chains stable in Greece but also to achieve an increase in shares, which today offers an even greater advantage against the competition, domestic and international.
The Tower of Piraeus
The "birthday" of the Spanish chain in Greece coincides with the preparations for operating the largest Zara store ever opened in the country. This is the emblematic store that is currently being built in the Tower of Piraeus, with a total area of 6,000 sq.m.!
The preparations, which started last month, are feverish to open its doors by April, thus signalling the company's new strategy in Greece, which focuses on the creation of large stores that can offer a better experience to the consumer, simultaneously using digital tools in the context of the multi-channel approach.
The intention is for this particular store to replace the two smaller ones currently operating in Piraeus and to develop into a "destination" store, on the other hand.
Sources indicates a large store will also open this year in Thessaloniki, on Tsimiski Street.
Characteristic of the new development model is the concept store in Golden Hall, the 3,200 sq.m. store. Opened by Zara two years ago, making a new proposition to its customers and emphasising sustainability, new technologies and an omnichannel sales strategy.
As part of the network changes, last week, the Stradivarius store in River West moved to larger premises, and a new Oysho-branded store, again owned by the group, is being prepared in its place.
According to the data in the report of the Inditex group for the financial year ended January 31, 2023, the store network has a total of 148 stores: 40 Zara stores, 22 Pull & Bear, 11 Massimo Dutti, 27 Bershka, 22 Stradivarius, 17 Oysho and 9 Zara Home.
The implementation of the decision to merge 2021 all the group's subsidiaries in Greece - with absorption by Zara Hellas and the renaming of the company from June 1, 2021, to ITX Hellas - moves in absolute sequence to reduce operating expenses and development of synergies that will strengthen the competitiveness of brands.
Stelios Morfidis is a columnist for New Money.