Zara a leader in India with its winning strategies

Friday, 02 May 2014
Zara, the iconic Spanish fast fashion label is creating waves in India. Zara’s Indian unit Inditex Trent, a joint venture between the brand’s owner Inditex and Tata Group’s retail arm Trent registered profits in two out of the three years it has been present in the country. Is it only their fast fashion approach or a combination of retail strategy and fast fashion that’s driving growth in the country?

In fact, the last end of season sale and the sale at Zara stores witnessed heightened activity, this, while the overall apparel retail segment waited patiently for customers to turn up at their stores.

The fast fashion approach

Zara continues to replicate the same model that has worked for it globally, that is: Creating affordable, copied versions of the latest in trend or designer-wear and making them available to shoppers at a faster pace. Inditex not only owns Zara, but it also takes care of every bit of operations, from design to distribution and a large chunk of manufacturing. If a new style is not a hit within a week, it goes off the shelves instantly. Also, its prices are at least 20 percent lower than its main competitors Mango and Vero Moda in some categories.

According to experts, even before the brand entered the country in 2010, it’s online sales from India was highest in the world. Though compared to the western counterparts, Indian consumers may be shopping at the brand stores once in five to six weeks, given the current economic situation and low consumer buying, it is significant. Of late, the Indian apparel retail has been under pressure due to low consumer response.

Retail strategy drives business

Unlike others, the company follows a revenue sharing models instead of a fixed rental one and even mall developers are willingly accommodating the brand given its popularity in the country. It has emerged as a crowd puller when most malls are witnessing either window shoppers or almost zero footfall.

Zara has 13 stores in Mumbai, Delhi and Bangalore. Globally, it has 1,808 stores in 86 countries. As per experts, even in terms of per square foot sales, Zara has been registering the highest in the industry.

Moving ahead, Inditex Trent JV plans to open over 18 stores in the next 3 years in Tier II cities. However, as experts point out, when it comes to best deals, consumers don’t look at the newness or freshness of the product. Moreover, so far it did not have direct competition but now other leading global names like H&M are set to enter the country, but Zara should be able to take advantage of its early entry in the country.

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