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Photo: Mint
Photo: Mint

Zara to continue India expansion

  • Zara could open new stores over the next 12 months
  • The retailer could look at consolidating underperforming stores but will continue to expand

NEW DELHI : Inditex, the parent company that owns the world's top fashion retailer Zara may be shutting down between 1,000 to 1,200 stores mostly in Asia and Europe, but it is planning to increase its presence in India with at least four to five more properties for which it has already signed up with top mall developers. Currently, the company has 22 stores in the country.

The new stores could open over the next 12 months, said people familiar with the band’s trajectory in the market where it operates through a joint venture with Trent under Inditex Trent Retail India Private Limited. Emails sent to Trent remained unanswered.

People familiar with the brand’s plans said that the retailer could look at consolidating underperforming stores but will continue to expand. "India won’t see covid-related shuttering of stores, but there could be some category B cities, where they could close. The reason could be that they consolidate their stores in India. If anything, they will take up more space," said Abhishek Sharma, director, retail at Knight Frank India.

Moreover, in at least three malls where Zara already has stores, the retailer is also undertaking expansion of existing stores as it readies them for the future, said others.

In the country’s top cities of Mumbai and Delhi—the retailer is among the top-performing tenants for most malls developers and draws the country’s affluent and fashion forward shoppers who spend money to buy its quick turnaround fashion pieces such as summer dresses, bodysuits, trousers, and outerwear for men, women and kids.

"Having Zara as a key tenant helps developers charge a premium from others because it brings with it quality footfall," said a real-estate consultant, declining to be named.

Its success has also translated into strong sales.

Revenue at the company grew from Rs1023.10 crore in FY16 to 1,437.87 crore for the year ended 31 March 2019, according to annual filings by its local joint venture partner in India. However, between then and 2019, it added only 2 stores, growing from 20 to 22.

The brand that entered India in 2010 has helped plug the gap for trendy, casual clothing. "Zara appeals to the country's fashion aspirants and has helped plugged the supply gap in casual clothing," said Pakhi Saxena, practice head, retail and CPG, Wazir Advisors.

It also takes orders online through its own website reaching shoppers in markets where it has no presence.

By 2022, online sales are expected to reach more than 25% of total sales, Inditex—founded by Amancio Ortega, one of Europe’s wealthiest men—said on 10 June. The company is transitioning globally investing over $3 billion over the next three years to digitize consumer shopping experience as the pandemic accelerates consumer pivot to e-shopping. The move could see Inditex shut stores across its brands such as Zara, Pull&Bear, Stradivarius, Massimo Dutti, and Bershka, among others.

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