How Zara nailed fashion retail in India

New collections , new designs and a brand new season.Are Indians keeping up? Seems so as Spanish fast-fashion brand Zara has now topped other top apparel brands in India when it comes to average sales per store thanks to its affordable, copycat versions of the latest fashions and trends.

According to a report in the Economic Times,Zara, with an annual turnover of Rs 405 crore, clocked a sales growth six times more than India's largest apparel brand Louis Philippe and a tad higher than the largest department chain Shoppers Stop.

For the high-street fashion brand, there is no looking back.

International clothing giant Inditex that owns brand Zara, opened the first Zara store in Delhi in 2010 and reportedly that day retail history was written as the outlet recorded the largest single-day sale by an international retailer in the country.

And in March 2013, Inditex Trent, the joint venture between Zara and Tata Group, reported high double digit growth of 56 percent in same-store sales in a market where most retailers struggled for a single digit like-to-like growth due to a slowdown in consumer spending in aspirational goods, the report added.

Reuters

A Zara shopping bag is seen in this file photo. Reuters

Recently,Zara opened its new store at Ambience mall, Gurgaon spread over 28,000 square foot across two floors, taking its total India stores to 12. The fashion retailer now wants toopen more than 18 stores in the next three years and expand into smaller cities such as Mangalore, Surat and Indore.

Currently it is present in 86 countries with a network of 1,751 stores.

Zara delivers new fashions as soon as trends emerge

The key to its success is clearly itsability to chase fashion trends around the world, move a catwalk design from the design stage to shop floor in a span of two weeks and launch new lines in the quickest possible time with limited scope for reorders. Zara offers trendy but inexpensive products that are sold in beautiful, high-end-looking stores.

It has a huge product range that changes almost every week. It makes small quantities of each style, thereby retaining its exclusivity.They also use their store staff to identify fashion trends and styles that sell well. In turn, Zara designs and ships new fashions to its stores in limited quantities.This is made possible by controlling almost the whole garment supply chain from design to retail. By reducing the manufactured quantity of each style, Zara creates artificial scarcity and lowers the risk of having stock it cannot sell.

But the secret sauce is the fashion retail giant does not hire world-class designers. Instead it politely copies them. And who would not want the latest catwalk design from premium fashion houses at affordable prices?

"They're able to get the Prada look in store before Prada does," says Karen Webster, chairwoman of the Australian Fashion Council in thisreport.

As Suzy Hansen explained in the New York Times magazine last year, Zara has an innovative solution to both style and marketing problems. With the help of a global network of shopper-feedback it often tweaks its designs for the next line of clothes.Secondly, the stock changes so quickly that shoppers are motivated with a "now-or-never" choice each time they try on a new top that won't be in the store they next time they visit.

''Each individual store is linked directly to the designers in the company, so on any given day information is sent about the design from customers [through purchases] essentially to those designers in real time and products are altered pretty much in real time," says this report in the Sydney Morning Herald.

This has been replicated in India too, which has helped Zara report profits in tow out of the three years it has been year.Zara in India churns out more than 10,000 designs in a season and that helps it stay relevant to customers.

Following Zara's success, other global fast fashion retailers like Sweden's H&M and Japan's Uniqlo are also planning to launch their operations in India.

It maybe too early to call Zara a market leader, given the intense competition in fast-fashion brands in India and the fact that value consciousness drives many consumers to buy during discount sales with delays of 2-3 months, rather than buying current fashions at full price. This can definitely be a problem for a brand that thrives on change.In India Zara is still considered a premium brand and there is no reason why Indian brands can't compete with it effectively. But one thing is for sure, market leader or not, Zara is here to stay.


Updated Date: Dec 20, 2014 22:09 PM

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