Castro's latest collection has just had its unveiling - all sharp white suits and natty striped polos teamed with specially designed trainers. Not quite what you'd expect from a major fashion house gearing up for the winter season, but this is not an ordinary launch - this is the Castro Olympic Collection.

The Olympic delegation's official uniform.
Photo: Courtesy/Dudi Hason

The pieces - white suits for both men and women, with the option of a three-quarter-length pant - have the dignity "of something that has to represent a nation" but at the same the flavor of the house of Castro. "It's all about the cut and how it looks," says designer Assaf Biton. "The colors were inspired by the national flag."

The process of producing the uniform is the antithesis of how the company works to produce the fashion collections that are sold through its 130-plus retail outlets. Sportsmen by nature have non-standard physiques, and as such every athlete has to be fitted and tailored individually, resulting in a process that takes up to 18 months. In some senses, this detailed kind of work has more in common with the humble beginnings of the company which lay in the dressmaking business belonging to the mother of founder Aharon Castro.

But the business has changed dramatically in its almost 60 year history. The Castro of 2008 is a lean, mean fashion producing machine with state of the art logistic centers in both Israel and Holland, a global manufacturing base and a sophisticated retail and marketing team adept at tapping the pulse of the fashion forward Israeli shopper.

The journey itself hasn't been straightforward. By his own admission, CEO Gaby Rotter, son-in-law of Aharon Castro, joined the company in 1980 to help close down the business. By that stage the company, which had exploded during the '60s and '70s as a supplier to some of the country's most prestigious stores, was bleeding profusely as a result of rampant local inflation and a financial crisis in Europe that was impacting its export business. So what happened?

Says Rotter: "I come from a family which says if you have a business, a customer who is buying from it and a supplier that is willing to give you credit, you find a way to make it work."

So he spent the early years of his involvement riding out the economic storm and learning the ropes from his father-in-law. By the time things stabilized in the mid-1980s, the family had decided to keep moving forward and, as Rotter puts it, "the rest is history." In the 20 or so years since then, several strategic decisions and changes in the local landscape have shaped the Castro of today.

"First," says Rotter, "was the decision to switch the focus of operations from wholesale to retail. In the end we realized that you have to have direct contact with the consumer. Before that we never really knew what the customer actually wanted or how much he really liked the product."

The group's reentry into the retail sector began in 1985 and an aggressive expansion campaign throughout the '90s saw the chain grow to more than 130 stores that employ in excess of 1,500 people worldwide.

Just as significant, says Rotter, was the 1997 decision by the government to drastically reduce import duties on textiles, which in some cases ran as high as 42 percent. Almost overnight the company's dominant position in the local fashion market came under threat from international chains keen for a piece of the Israeli fashion retail pie.

Castro responded with an extensive reorganization that included the discontinuation of a majority of local manufacturing in favor of production in places like Turkey, China and India. "If we hadn't embraced these sorts of changes, we wouldn't be around today, particularly given the problems in the historical centers of production: the West Bank and Gaza," Rotter says.

For Castro the resultant global production has benefits: "We are now able to produce the product where it's best for the product - there are just some items that can only be done with the right integrity if you do them in a particular country, and I'm proud that we're doing it. There is no other way to bring this kind of richness to the collection."

Rotter also reflects on the competition that came with the drop in import duties, citing the onslaught from international powerhouses like Zara as having been beneficial to the company. "It pushed us because it made us institute a lot of changes. To the ones who can move forward, competition is inherently a good thing because you find ways of doing things that you wouldn't if you were in a non-crisis situation. For those who can't meet this challenge, it's not good. At the end of the day it's an ecological process and only the fittest survive."

In addition to the move from wholesale to retail and the opening up of the Israeli market, two more significant recent developments have shaped Castro - the move into menswear and the company's decision to focus on marketing and branding.

Until 2000 Castro was focused solely on the womenswear market, but that September it opened seven shops under the name "Castro Man." Israeli men quickly embraced it and today the 40 store chain is one of the dominant players in the market.

FOR ROTTER, the beginning of the 1980s was the start of the company's real appreciation of branding and the need for a powerful marketing message. It started with large billboards on the Ayalon Freeway and then eventually moved into television, when the country first allowed commercial advertising in the early '90s.

"It seemed ludicrous at first," he recalls. "Until that point our main advertising cost $5,000 to produce, and all of a sudden we were considering spending $100,000 just to make the commercial, not to mention the media buy on top. Also, at that time no one really understood what you were getting for the money; there were no ratings."

But the company pushed ahead and its first ad remains an iconic part of the country's advertising history. Castro advertising has continued to make a splash and remains an integral part of the local advertising landscape. Dudi Balsar, considered the country's first male supermodel, got his start as the face of Castro Man. One ad, which featured a clothed Balsar being followed off a nude beach by a bevy of beauties, was deemed too risque for television and was relegated the Internet. More than 700,000 hits were recorded, an extraordinary number for the time.