Chief Financial Officer
P Venkatesalu, vice-
chairman
Noel
Tata and the company's MD Sanjay Rao - are Indians. Rao, who was previously financial
controller at the company in
North America
, relocated to India and launched the operations.
Zara’s annual sales in last fiscal soared to Rs 580 crores in India, with each of Zara's nine stores in the
country making Rs 45 crore on an average, over six times more than the country's largest apparel brand
Louis Philippe and a tad higher than the country's largest department chain
Shoppers Stop
.
Inditex Trent, the Indian arm of Inditex, clocked 56% growth in sales without any new store
addition in the year ended March 2013, according to its latest annual report.
What Makes Zara Different From Its Competitors
In terms of revenues and growth,
Zara’s
main global competitor is the Swedish firm H&M.
H&M has already got permission from FIPB in November 2013 for opening its wholly-owned
subsidiary in India. They have been eyeing India for some time now and have finally got the
permission for opening their stores in India. The two leading fashion retailers have been
competing to grab larger market shares across the globe which will also be the case in India,
though Zara has a big first-movers advantage. In the rat race to supremacy, both the labels
have transformed their philosophies into business models intricately, which has been a major
motivator to drive towards success.
In the Indian market, Zara is competing with Marks& Spencer (Major British multinational
retailer), Tommy Hilfiger (American fashion designer) and French Connection (British
multinational retailer commonly known as fcuk).
“Runaway
fashion at
runaway prices
is what Zara is
for me. I visit
the store for its
unique clothing
range having
something new
to offer on each
visit, thus
bringing
exclusivity to
my wardrobe”,
explained one of
Zara’s
customers
outside its Pune
Page 9
Zara
Zara
offers mid-market chic at down market prices. Zara when compared with its competitors is a clear
winner when it came to turnaround time. For a typical brand, the entire process starting from defining a
concept to receiving goods in the retail store took anywhere from 9 to 12 months. As Zara geared up to
enter the US in a big way, it was being compared to Gap (a leading fashion retailer in the US) and H&M
(Swedish retailer who had also entered the US recently) more frequently. A key differentiator was Zara
having the shortest turnaround time. Zara's turnaround time was 14 days, whereas H&M took 21 days
and Gap needed 9-12 months to reach stores.
The profit margin on the products manufactured is also low, but Zara invests a meagre 0.3% of its sales
to market its product because of the fast changing fashion trends unlike its competitors and as the
manufacturing is done in less quantity, a failure of a fashion trend still leads to minimal loss. It has been
proved that only 18% of the total production goes for an annual sale compared to 35% of its competitors
in the international market. (Refer Fig. 7 Annexure I)
Zara is a smart choice of those that want to combine fashion with great price. A customer survey in Pune
