How Zara disrupted India's Retail market silently

India’s addressable market for apparel and clothing is about Rs 4 lakh crore and that is growing about 12 percent year-on-year. Out of that one-third of the business is for branded apparels that is growing 15 percent annually.

Spain’s Inditex, the owner of Zara fashion brand, saw the brand’s net profit surge more than 70 percent in India in 2017-18, even as the world’s largest fashion group grew at one of its slowest rates in the country amid increasing competition from global rivals. Inditex Trent, which runs twenty Zara stores in India, saw its revenue increase 19 percent to Rs 1,221.67 crore in 2017-18 from Rs 1,023 crore in the previous year, according to Trent’s annual report.

         What makes it innovative and stands out in this competition ?

• Zara follows what it calls an “oil stain” strategy. It means Zara opens its first few stores in a country to get an understanding of a market and then uses that knowledge as it expands into that market.
• Starting sometime in the mid-Seventies in Spain, Inditex – the Euro 11 billion (revenue) company that owns Zara and some other labels – built a hugely successful business model by taking the latest catwalk designs and converting them into affordable high street fashion in a matter of three weeks. Zara focuses on rapid product development & design and outsources the manufacturing in small batch sizes to a network of dedicated suppliers. Its ability to bring changing fashion quickly to market has meant that, while customers in Europe visit other fashion stores just three times a year, they visit Zara 17 times according to one study. Zara stores also show a 40-50 percent increase in shopping mall foot traffic in India (Delhi & Mumbai).

   Let's Analyze Zara's winning strategy ?

    

• Fast Fashion: Zara delivers new fashions as soon as trends emerge. Its success is clearly its ability 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.

 

• Packaging & Variety: Zara offers trendy but inexpensive products that are sold in beautiful, high-end-looking stores. Their huge product range changes almost every week. Zara in India churns out more than 10,000 designs in a season and that helps it stay relevant to customers.

 

• Artificial Scarcity: Zara makes small quantities of each style, thereby retaining its exclusivity. By reducing the manufactured quantity of each style, Zara creates artificial scarcity and lowers the risk of having stock it cannot sell.

          

• Integrated Customer Feedback: 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 immediately. Customer insights are the holy grail of modern business; the more companies know about their customers, the better they can innovate and compete. But it can prove challenging to have the right insights, at the right time, and have access to them consistently. One of the secrets of Zara’s success is that the brand trains and empowers its store employees and managers to be particularly sensitive to customer needs and wants, and how customers enact them on the shop floors.
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• Disclaimer - this post is created for learning purpose and crawled through various webpages.
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