Inditex, owner of a range of brands such as Zara, Massimo Dutti and Bershka, easily beat its closest rival, Sweden's H&M, in terms of earnings last year, booking a bottom-line net profit of over €3.0 billion ($3.4
Thanks to the success of Inditex's “fast-fashion” brands, along with that of two other major Spanish high street clothing retailers, Mango and Desigual, Spain is a key player in the global fashion sector.
Clothing and textiles account for nearly three percent of the country's gross domestic product. And in terms of sector sales, Spain is Europe's fifth-largest producer behind Italy, Germany, Britain and France, according to Spanish textile association Texfor.
Texfor calculates that the number of Spanish suppliers of fabric, fibres and accessories such as buttons has plunged by about a third since 2008.
The Spanish sector, like its counterparts in other western countries, has been hit by fierce competition from Asia, as well as a slump in demand due to the global economic downturn.
Spanish textile firms were slow to innovate and adapt to the increasingly fast-changing demands of the fashion industry, said Antonio Valdivia, professor in strategy and marketing at the EAE Business School.
Many company bosses in the sector still have “a mentality of industrialists, not of entrepreneurs,” he complained.
'Respond more quickly'
But last year, the number of textile firms stopped falling for the first time since 2008, stabilising at around 3,500 companies.
The sector is benefitting from Spain's economic rebound – growth stood at 3.2 percent in 2016, double the eurozone average — and the disappearance of less competitive firms.
“The firms that survived were those that were export-orientated, able to diversify their order book” and respond more quickly to customers' demands, said Manuel Diaz, the head of the CIE, the body that represents Spain's main textile firms.
Spain's textile exports, which account for 60 percent of sector-wide sales, rose by 7.0 percent last year.
Indeed, Spain now ships raw fabric to Morocco – the number one destination for Spain's textile exports – where it is transformed into clothes for major international brands.
After having “neglected” Spanish suppliers in the past, major retailers such as Inditex and Mango have started using them more and more, but there is still room for improvement, Diaz said.
Inditex says the number of Spanish suppliers that it uses, not only for textiles, has increased by nearly nine percent since 2012.
Higher added value
The focus on international sales adopted by major fashion retailers has also pushed smaller firms to modernise and shift their focus to activities with higher added value, analysts said.
“I would rather see 50 people busy doing high-level graphic design than 50 people sewing T-shirts,” said Frederic Sabria of the IESE business school.
Companies have also diversified away from fabrics destined only for fashion and now also make “technical” fabrics for the automobile, agriculture or sports sectors.
Products with a higher added value represent 60 percent of the output of Spain's textile firms, according to Texfor chief, Andres Borao.
The textile sector hired 45,000 people in 2016, 3.7 percent more than in the previous year, welcome news in a country grappling with the EU's second-highest jobless rate of 18.6 percent.
While most new hires in Spain are offered temporary contracts, the majority of those hired by the textile sector last year were given open-ended contracts, said Borao.
“That's satisfying,” he said.
By Emmanuelle Michel