Fashion Forerunners

May 02, 2009
*Special to asia!
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If Esprit has a nemesis, it is Zara. When the Tompkins were building up the Esprit brand in the US and Michael Ying was building it in Germany, Amancio Ortega Gaona was doing the same for Zara in Spain.

Their products overlap – both cater mainly to the below 30s – but their markets seldom. At any rate, the 1980s and 1990s were a period of rapid growth and there were enough room for more than a few young brands looking to establish themselves

Fast forward to 2006. Inditex, owner of Zara and a few other global brands, is now the third largest fashion retailer in the world. Esprit ranks fifth. Rapid expansion has brought them into each other’s turfs. They are now fighting for the same customers in the same markets, which is just about every developed or halfway developed country in the world. A head on collision is unavoidable

Of course there are more retailers than just Inditex and Esprit in the same league. Hennes & Mauritz (H&M) of Sweden is one, Gap of the US is another. Fast Retailing of Japan is also a competitor. And on the fringe there are numerous others, such as Urban Outfitter, trying to muscle into their territory

But when it comes to inexpensively chic apparel with a worldwide presence, Inditex and Esprit stand out among the rest. The next few years will be a time of reckoning between the two of them

Zara is an oddity in the world of outsourcing. While Esprit brings its cost down to the bone by sourcing from China, Zara runs a tightly-controlled factory and distribution network with at least half of its factories in Europe.

This raises cost. But it also enables Zara to take a design from the drawing board and bring it to the shelves of its far-flung store in just two weeks. This allows it to introduce many new items every week, which keeps customers coming back again and again to check out the latest styles

Another advantage of this speedy approach is that Zara produces batches of clothing in such small quantities that even if it brings out a dud design that no one will buy—it happens once in a while, the latest during an unseasonably warm autumn in 2003 – Inditex can cut losses quickly and move onto another trend

This is the essence of fast retailing. And it fits the mood of the market perfectly. Gone are the days where the below 30 crowd would buy a few expensive items of clothing and wear them for a longish period. Today’s consumers change clothes as often as weekly and don’t mind their purchases don’t carry an expensive brand—as long as they look fashionable and good. That was where Esprit made much of its money, and that is where Zara has now become the retailer of choice.

There is an old saying of convergence—two enemies who fight each other will, after a while, take after the traits of the opposition. Esprit is now trying to emulate Zara and speed up its product cycle. And Inditex, weighed down by the strong euro, is looking to outsource to China. Maybe the two should merge rather than fight.


Amancio Ortega Gaona

Birth: 1936

Age: 73

Nationality: Spanish

Company: Inditex

Listing: 2001

Famous brands: Zara, Massimo Dutti, Pull & Bear, Bershka, Oysho (all names are chosen to be content-neutral)

Employees: 14,000

Turnover: US$8.15 billion

First job: Gofer in a shirt store, age 14

First business: 1963, age 27, a housecoat manufacturing factory.

First store: 1975, age 39

Favourite dressing: Jeans, no tie

Management style: Takes a very active part in the production and design processes. Extremely low profile. Never gives interviews, only one picture available to the public.

Marital status: Twice married.


Michael Ying

Birth: 1949

Age: 60

Nationality: Hong Kong Special Administrative Region, China

Company: Esprit

Listing: 1993

Market capitalisation: HK $87.7 billion (US$11.26 billion)

Famous brands: Esprit, Esprit Kids, Red Earth, Saloon Esprit

Employees: 7,700

Turnover: US$3 billion

First job: Reservation clerk, Cathay Pacific Airways, age 19.

First business: 1971/72, age 22, garment manufacturing

First store: 1974, bought one-third share in Esprit Asia. Two thirds held by founders of Esprit, Doug & Susie Tompkins

Favourite dressing: Jacket, no tie, no socks.

Management Style: Very quick on the uptake. Great in selecting capable lieutenants. Micro-manager. Loves to give interviews. Uses fame of actress wife Brigitte Lin to promote Saloon Esprit.

Marital status: Twice married.


lee han shihLee Han Shih is the founder, publisher and editor of asia! Magazine.


Contact Han Shih