Another foreign billionaire has passed Warren Buffett on the list of the world's richest people.
He's Amancio Ortega, 76, who founded a clothing shop in his hometown of La Coruna, Spain, in 1975 and now has more than 1,600 Zara stores in 85 countries on six continents, Bloomberg reported.
With economies in Europe in turmoil, Ortega's “cost-conscious lines are ringing up sales,” the story said.
“That turbulence strangely favors a retailer like Zara,” said Nancy Koehn, a retail historian at Harvard Business School. “Among fashionistas, there's a new badge of status in finding the cool at a lower price.”
Ortega's business is Inditex, which is short for Textile Design Industries in Spanish. The company's revenue was $9.3 billion in the first half of this year, up 17 percent from a year ago.
Although he stepped down last year as chairman, Ortega still confers on everything from placing a zipper on a new design to the recent debut of Zara's website in China.
One of his secrets of success: Responding to customer demand, rather than the fashion industry's penchant for forcing customers to go with the latest designs. His prices are affordable despite their high-fashion flair, thanks to automated production and a fast turnover from design idea to sale.
“I thought it was not fair that only wealthy ladies could dress well,” Ortega said in 2003.
The latest wealth rankings show Mexican telecommunications magnate Carlos Slim at $77.5 billion, Bill Gates of Microsoft at $64.4 billion, Ortega at $53.6 billion, Buffett, of Omaha-based Berkshire Hathaway Inc., at $48.4 billion and Ingvar Kamprad of Swedish retailer Ikea at $41.8 billion.
Buffett also has given away Berkshire stock worth $13.3 billion since 2006 and would have placed well ahead of Ortega if he had kept the shares.
Retailer set to grow
Internet Retailer ranks Oriental Trading Co. of Omaha No. 77 out of the top 500 online retailers. Its coming purchase by Berkshire will help the company grow more rapidly, Oriental Trading CEO Sam Taylor said on the industry website.
The company has a database of 20 million customers, especially women between 30 and 45 years old. “That's a great demographic,” Taylor said.
The company's fulfillment center in Omaha can hold 100 million items, has more than four miles of conveyors and can processes more than 40,000 units per hour. “We are the largest direct marketer in our business, and we have the technology, fulfillment and supply chain infrastructure to grow,” Taylor said.
But he said it's not likely that Oriental Trading would become the e-commerce hub for other Berkshire retailers, including Nebraska Furniture Mart, RC Willey Home Furnishings, Star Furniture, Jordan's Furniture, Borsheims Fine Jewelry, Helzberg Diamonds, Ben Bridge Jeweler and Pampered Chef.
“Everyone's pretty autonomous,” Taylor said.
A wrench in the works
A rule against shipping liquid chlorine by pipeline may stop a plan by Berkshire's Lubrizol Corp. to build a plastic pipe factory in India.
Chlorine is a raw material in making chlorinated polyvinyl chloride plastic, the Business Standard of India reported. A joint venture by Lubrizol's office in Dahej, India, and Astral Poly Technik Ltd. of Ahmedabad had planned to supply the $245 million plant via pipeline.
“It seems that the project is not viable considering the legal hurdle,” said Sandeep Engineer of Astral. But if the venture decides to install equipment to liquefy chlorine at the plant, the project might yet work. Construction was to start in January and production to start in October 2014.
The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.
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