Spain's Inditex opens first Zara shop in India(70134)

Inditex takes its first Indian steps

Zara, the flagship fashion brand of Spain's Inditex group, opens its first Indian shop in the Saket area of Delhi tomorrow.

Covering 1,500 square metres in the CityWalk shopping centre, the store will open its doors after a day of festivities involving a celebrity fashion parade and appearances by Bollywood stars.

When the party packs up, however, Spain's most globalised retailer will get down to the business of gauging early consumer response in what could prove its most challenging market to date.

In spite of inventing fast fashion - the term for quickly dispatching small, rapidly assembled batches of affordable catwalk-inspired clothing to thousands of shops - Inditex has been relatively slow to venture into the second most populous market.

It has been present in the first - mainland China - since 2006, and has 78 Zara stores there. Last year alone it opened 41 Zara outlets there.

Pablo Isla, Inditex chief executive, has made it clear that the rate of expansion in India will be slower. Only one other Zara opening, in Mumbai, has been announced for this year.

In an interview in March, he was careful to distinguish India from any other Asian market.

"This is a very important strategic step for us," he told the Financial Times.

"However, we are not talking about the same scale of operation that we have seen in China.

"That said, over the medium term we expect India to become an important market for us because of the size of the population, the number of big cities and the fact that it has a large and growing middle class."

Although similar to China in all these respects, India is a more complex proposition for foreign retailers, but particularly fashion groups.

Shopping centres and galleries of the sort favoured by Zara remain scarce by western measures.

And foreign retailers were restricted to franchising arrangements in the country until 2006, when laws were changed to allow 51 per cent foreign-cont-rolled joint ventures.

Inditex, for example, has teamed with Trent Limited, part of the Tata group, for its Indian venture.

The investment reform had an almost immediate effect on the operations of luxury brands in the country, according to a report from Bernstein Research.

"Brands formerly relying on franchising, such as Burberry and Ferragamo, have entered newly formed 51 per cent-owned ventures," it says.

"Others, as in the case of Herm s, have chosen this period to open their first retail forays in the country."

In spite of this concession, many clothing retailers are struggling to find the right formula for success in the Indian market, where high import duties, little seasonal variation and unique tastes preclude the simple importation of global models.

Most Indian women still wear traditional garments for special occasions.

Although they increasingly don western attire for work, they tend towards modest cuts and styles. Indian women also have a greater affinity for bright colours than in most western, and many eastern, cities.

The short or non-existent winter in most Indian cities also means that clothes designed for European winters are unsuitable.

To tackle these challenges, retailers such as Marks & Spencer are trying to localise production, to avoid high import duties and make clothes more affordable, and better cater to India's tastes.

Inditex says it has no such plans. It does source some knitwear from Indian factories, but this is coincidental.

Its Indian outlets, like those in the 74 other countries where it operates, will be served mainly from Inditex's production and logistic platforms concentrated in northern Spain and Madrid.

The store's range and prices will be the same as everywhere else, though one of the keys to Zara's success has been its quick response to customer tastes.

If a line that sells well in London fails to excite passions in Beijing, it is quickly taken out of the twice-weekly dispatches to the Chinese capital.

When it comes to cultural nuance, Mr Isla says that there are "many Indias" and that Zara has a strong following among Indians living in or visiting cities such as London and Dubai.

"We have managed to create a great deal of expectation with this opening," he said.

"This is a very exciting venture."

Spain's Inditex opens first Zara shop in India

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