What the industry takes six or nine months to do, Zara does it in 15 days. The brand of clothing and accessories pioneered the term ‘fast, affordable fashion’ in the apparel industry and is the global benchmark in a sector with one of the most complex supply chains. Till now, Indians needed a ticket to Europe, the Americas or South-east Asia to get Zara products. With Zara’s Spanish parent, the euro 11-billion Inditex Group, forming a 51:49 joint venture with Trent, Tata’s retail division, they needn’t venture beyond Delhi and Mumbai.
Of Zara’s 4,700 stores across 77 countries, there now would be three Indian stores. Stores spanning 1,500 square feet will retail apparel under sections such as Zara Woman, TRF, Kids and Man and Basic.
With over a dozen cities comprising over 3 million people, Inditex couldn’t have missed India. According to McKinsey, by 2025 India’s middle class is set to grow to 583 million from about 50 million which is just 5 per cent of the population, making it the fifth-largest consumer market. But Zara has more immediate plans. It expects revenue from Asia and West Asia to account for 20 per cent of its turnover, up from 12 per cent currently.
However, Inditex is being conservative in India, unlike in China where it has no less than 78 Zara stores. “We won’t be present in India with just three stores. Of course, there will be more. But, first we want to be cautious in a humble way. We want to listen to consumers first before going ahead. Getting the right location is also critical because we build awareness through the perception consumers have of our store ambience and our products, rather than advertising,” says Inditex Chief Communication Officer Jesús Echevarría Hernández. Zara would not invest in above-the-line campaigns.
Armed with the knowledge of catering to similar markets elsewhere and a well-oiled team of store managers and liaison officers who will interact with buyers, Zara is confident of feeling the pulse of the Indian consumer. By listening to consumers at each store, Zara’s team would relay the preferences to its 250-strong central design team in Spain. The team would act on it (making changes or reiterations based on feedback) for a new set of designs. It aims to bring in two new trends to fill up aisles twice per week, in line with its global model.
“We will bring several lines in small batches to cater to different tastes. But whatever consumers see in the stores they can trust it to be fashion,” says Hernández. Batches will comprise 15-20 pieces of each trend per store. Zara’s signature lies in creating designs that are inspired by trends set by fashion weeks around the world (where top designers showcase their works), movies, high-street and information from its consumers, which are then made affordable by its lean and fast supply chain. Designers brainstorm on marrying fashion and price, while a computer optimises the prototype to eliminate fabric wastage. Sewing cooperatives which get the prototypes for reproduction churn out products in less than a week. The distribution centre receives around 2.6 million items tagged according to countries and individual stores but needs to hold them for less than a few hours before they move out. Items are trucked to Europe’s stores in a day and flown to off-shore markets in 48 hours.
Yet it is this very model of affordable fast fashion that might be behind Inditex’s cautious tread. Banking on an import model, it would have to absorb high import duties, making Zara’s merchandise expensive. The price range would be Rs 990 to Rs 8,990,which should appeal to the upper-middle class.
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Perhaps the biggest challenge would be India’s slow adoption of non-ethnic and casual clothing. The ethnicwear market for women is almost three times larger than westernwear market. And, on the whole, women’s apparel market is smaller than men’s apparel in India. The difference in the Indian market has made it tough for international labels to carve a foothold. Retailers such as Marks & Spencer have tried to localise production to avoid import duties and bring down prices and customise better, while a few other retailers packed up during the downturn due to poor volumes.
Yet Zara’s business model could also be the trump card. Trends show that even India’s leading designers are replicating its lead times to make the most of demand for fashion in modern retail. Tying up with chains such as Westside, designers now unveil their collections to match the current season, rather than follow top-rung international designers who have a six-nine months’ lead time. With more malls and high-streets opening up, Zara could have a go at establishing itself as a non-ethnic lead brand if it can listen well.