Spanish retail brand's ability to pull shoppers makes it most-preferred neighbour in malls 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 brands 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. CHASING ZARA  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 sq ft 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 confidentialityLet 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 reveals Zara's crowd-pulling power. In January, retail planning consultancy Asipac Projects received requests from some international apparel brands, 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 says. |
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 SECRET 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 week. 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 said. CHALLNGES AHEAD But the road ahead is not easy for Zara. The competition is strong. 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 Indias 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 of 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 & Lifestyles 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 display and 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 shops 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. Originally published in the Economic Times 27th April, 2011 written by Sarah Jacob & Pramugdha Mamgain; they are associated with theBangalore/New Delhi |
No comments:
Post a Comment