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Zara to slow down its expansion

Zara would go slow on expansion, due to lack of availability of high quality retail spaces, which can generate reasonable sales throughput and global fashion retailer Hennes & Mauritz plans to open eight stores in the second half of 2017, while Inditex Trent is the joint venture between Zara brand owner Inditex and Tata Group’s retail arm Trent. When it entered India in 2010, Zara was an oasis to Indians thirsting for fashion. Long lines of shoppers queued up at malls, in a frenzy only a few brands in India have managed to replicate. It was instant retail success for Inditex, Zara’s Spanish-based parent company, and for a long time, sales were phenomenal.

But almost six years later, growth at the world’s largest fast-fashion brand has slowed down a notch in India, as a shortage of new shopping malls makes it hard for Zara, which has more than 2,100 stores in 88 countries, to keep adding outlets in India. For the year ending March 31 2016, Zara’s revenue in India grew 17 per cent to Rs842.57 crore, trailing the 24 per ecnt growth reported a year earlier. Further Zara clothes are much more upmarket in terms of fashion which is also a reason for the brand unable to expand in smaller cities.

Arvind Singhal, chairman, Technopak, says that many malls are on revenue sharing basis and given the strong sales performance shown by H&M many mall owners are ready to offer them cheaper rentals compared to its rivals, which is helping the company to focus on aggressive expansion.

H&M has signed leases for eight new store locations, to open in the second half of 2017, and is also planning its online shop launch in 2018. With an accumulated space of more than 160,000 sqft, these stores will be launched in new cities as well as cities with currently operational stores, said a spokesperson of the company. H&M will continue its strong expansion in new cities. The brand plans to open two more store in the Southern part of the country.