Jacob & Pramugdha Mamgain, The Economic Times
Delhi, April 27, 2011
The world's largest clothing retailer Inditex entered India with
its flagship brand Zara on a Friday in May last year and that
day the South Delhi outlet recorded the largest single-day sale
by an international retailer in the country.
Less than a year later, Zara fever has gripped several retailers
who are chasing shop space next to the Spanish brand's outlets
to leverage on its ability to pull shoppers in herds.
"Zara has nailed it," Natasha Chopra, who heads personal
shopping services at Select Citywalk mall in South Delhi where
Zara opened its first shop, said. "It's a hot favourite among
shoppers because it offers trendy styles between 1,500-2,300."
Zara's ability to chase fashion trends around the world, move
a design from a drawing book to shop floor in two weeks and launch
new lines sometimes twice a week has helped it ensure steady flow
of consumers who now embrace global trends like never before.
It's fast. It's fashionable. And it has won the attention of
several apparel brands, both Indian and multinational, that now
launch more collections in a year and have stylized their shops.
"Zara has been selling very well over the past ten months
in India," said the head of a rival international brand.
"Its success has proven that there is definitely a market
for fast fashion, especially in western women's wear," the
person added, requesting anonymity.
The day Inditex's Indian joint venture with Tata Group's retail
arm Trent opened the first Zara outlet, it sold apparel worth
a record 90 lakh, according to industry estimates. The 18,000
sqft shop at Select Citywalk sells 5-6-crore clothes a month.
The average sales at Mumbai's Palladium Mall outlet is similar,
while it's nearly 4 crore a month at DLF Promenade shop in New
Delhi, industry insiders said.
Inditex refused to confirm this. "Please let us leave this
in complete confidentialitya¦Let us say that we are really
honored by the good reception that our customers are given us
in India," its global spokesperson said.
But other brands' rush to become its neighbour and mall developers'
keenness to host it reveal Zara's crowd-pulling power. In January,
retail planning consultancy Asipac Projects received requests
from some international apparel brands, a jewellery major and
a cosmetics chain have sought shop space bang opposite Zara outlet
at Hyderabad's City Capital mall, which will be operational by
2013 end, an official at retail planning consultancy Asipac Projects
At Select City Walk , two store executives with international
brands operating near Zara said customer visits in their stores
have increased nearly 20% since Zara became their neighbour.
DLF Promenade in South Delhi, where Zara opened its second store
in June, settled for a revenue share of 7% of sales, compared
to 8-20% that developers usually charge, to attract the Spanish
retailer. The mall developer also deleted the minimum sales guarantee
clause for Zara and did the interiors and air conditioning of
the store that usually retailers do. Clearly, many brands would
rather leverage Zara's visibility than fight it.
Zara's early success in India reflects its impressive global
growth. Amancio Ortega Gaona founded Zara in 1963 as a maker of
ladies' lingerie in the Galician town of La Coruna with just 5,000
pesetas, or $83. Today, the 75-year-old Ortega is the richest
man in Spain and owner of the world's largest apparel retailer
ahead of GAP.
Zara owes its success to its control in every part of the business
from design to distribution. It controls fabric supply, design,
cutting and finishing that goes to company-owned stores. It even
owns a large part of production.
It has 200 designers who chase fashion trends and refreshing
designs all the time. And it takes just 2-3 weeks for a new fashion
idea to reach store racks, while most apparel brands typically
take six months to get new merchandise to the store.
From high-waist trousers for women's corporate wear and casual
suits at price points that count to new trends such as animal
magnetism-fashion lingo for animal motifs on clothing-and flesh-coloured
apparel, Zara has a huge product range that changes almost every
If a new style is not a hit within a week, it goes off shelves.
Even popular styles don't stay long. Zara makes small quantities
of each style to retain a sense of exclusivity. Thanks to its
success, the 12.53-billion euro Inditex will launch Zara's urbane,
more premium counterpart Massimo Dutti in the country in less
than a year.
Inditex and Trent have earmarked 4-5 store locations for Massimo
Dutti, which straddles men's, women's and children's apparel and
accessories, across Mumbai and New Delhi, retail industry executives
But the road ahead is not easy for Zara. The competition is strong.
The western fashion market has been growing steadily in the country
where more people now travel abroad and are exposed to global
trends due to rising incomes and aspirations, improving lifestyles
and infrastructure, and India's rise as an economic power.
More than 20 international brands have been entering the country
every year since 2005, according to Third Eyesight, a consumer
goods and retail planning consultancy. Zara effect or not,
many fashion retailers focus more on design novelty, widening
product lines and premiumising stores.
"Retailers here have been evolving very rapidly, learning
as they grow and growing as they learn; from each other and from
the rest of the world," mall management firm Star Centres
MD Pranay Sinha said.
Premium men's formal wear brand Van Heusen has expanded into
sport, club wear and women's wear and increased store sizes to
5,000-7,000 square feet. "Our competition benchmarks have
changed," Madura Fashion & Lifestyle's Van Heusen brand
head Ajay Ramachandran.
ITC's Wills Lifestyle has doubled the number of new collections
it launches in a year to eight for women and six for men, said
Atul Chand, divisional chief executive of lifestyle retail business
at ITC. Brands like Wills Lifestyle, Raymond and Reid & Taylor
owner S Kumar Nationwide have roped in western design houses to
modernise their stores and improve displayand have hired executives
with international experience.
"Brands have realised that the fashion industry is still
young in India and that they have to think global," S Kumar
Nationwide Apparel & Retail President Ashesh Amin said.
All this may impact Zara's prospects. With a model that depends
on 100% imports within India's high duty regime, low penetration
of women's western wear and the need for upscale real estate locations
to fit its large-format stores, it could be challenging for Zara.
A person who has invested in fashion brands in the country and
follows Zara like a hawk said it is not easy to sustain six fashion
cycles in India. Head of an international apparel brand said it
is premature to declare Zara a success in India just yet.
"Zara has done exceptionally well in two malls where incidentally
all brands have high sales. But in New Delhi, the largest market
for premium brands itself, its third store in Rajouri Garden has
not performed as well," the person said.
Star Centres' Sinha, who earlier headed Select City Walk, said
it will be difficult for Zara to repeat its first shop's success
in other malls, but the brand is here to stay. "Whether Zara
emerges as a market leader or not, it may be too early to tell.
That it will not fail is an easier one," said Sinha.