Zara-owner Inditex experienced its slowest sales growth in India for FY24, excluding the pandemic year. The world's largest fashion group is facing increased competition in an increasingly crowded clothing market.

Inditex Trent, a joint venture with Tata that operates 23 Zara stores in India, reported an 8 per cent increase in revenue to Rs 2,775 crore for the last fiscal year, a significant drop from the 40 per cent growth achieved the previous year, as per Trent's annual report. Additionally, net profit decreased by 8 per cent to Rs 244 crore.

A highly successful brand since its foray into the Indian market over a decade ago, Zara initially saw sales double every two years. However, its expansion rate has slowed in recent years due to the rising competition in the market. As the market allows multiple players to coexist at the same time, Trent also remains well-placed to navigate this next phase of growth by leveraging its platform and growth engines, says P Venkatesalu, CEO, Trent.

The operator of Westside, Trent has shifted its focus to its lower-priced fast fashion brand Zudio which opened approximately four new stores every week on average last fiscal year, bringing the total store count to 545. Trent also has a separate partnership with Inditex to operate Massimo Dutti stores in India, which saw revenues rise 14 per cent to Rs 102 crore.

Experts indicate that consumer demand has been subdued over the past couple of years, with brands needing to work harder to achieve same-store growth. Much of the top-line growth has come from opening new stores.

While the Indian market is a bright spot amid the economic gloom in other major economies, global pressures are likely to impact brand confidence in expansion, says Devangshu Dutta, Founder, Third Eyesight. While there is no ‘fatigue’ for the Zara brand, the intense competition for consumer attention and the fragmented choices among various brands can impact individual brand performance, he notes.

As the world's second most populous country, India remains an attractive market for apparel brands, particularly with young people increasingly adopting western-style clothing. Most of Zara's backend operations and merchandise sourcing are managed by Inditex, while Tata's expertise lies in identifying real estate and store locations.