Zara expansion to hit slowdown street even as Hennes and Mauritz to open 8 stores in H2

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Mumbai | Updated: July 7, 2017 6:03:54 AM

Global Fashion retailer Hennes & Mauritz plans to open eight stores in the second half of 2017, while Zara would go slow on expansion

Zara, Zara india, Zara stores in india, Zara expansion in india, h&M, hnm, Hennes & Mauritz, h&Mindia, h&M stores, h&M expansion in indiaWhile Zara is finding it difficult to expand, its rival H&M would continue its aggressive expansion.

Global Fashion retailer Hennes & Mauritz plans to open eight stores in the second half of 2017, while Zara would go slow on expansion, due to lack of availability of high quality retail spaces, which can generate reasonable sales throughput, company officials said. Inditex Trent is the joint venture between Zara brand owner Inditex and Tata Group’s retail arm Trent. Zara which is present in the country for the last seven years operates 20 stores at present while H&M which entered the country two years back has 16 stores. H&M plans to open another 8 stores in the second half of 2017. Zara said that it has plans to open a few more Zara stores in India over the next three to four years in the major cities. The primary challenge to faster expansion is the availability of high quality retail space which can generate reasonable sales throughput, Trent has said in its latest annual report. Zara reported revenues of Rs 1,023.10 crore and net profit of Rs 47.62 crore in 2016-17.

While Zara is finding it difficult to expand, its rival H&M would continue its aggressive expansion. “H&M is especially excited to expand its reach in India, a market that has tremendous potential both in Tier I & Tier II cities and now online,” Janne Einola, Country Manager at H&M India said. H&M India reported strong sales growth of Rs 445 crore for the year ending November 30, 2016. “From the earnings it is evident that H&M is performing extremely well in the country compared to its peers and is growing fast.

Affordable fashion is what is driving the sales of H&M which is at least 30% to 40% cheaper than Zara, and not surprising the company is focusing on aggressive expansion,” said Anurag Mathur, partner, Pricewaterhouse Cooper adding that fast fashion at affordable price is growing globally. Experts said that H&M has more number of customers visiting the store compared to Zara due to affordable pricing and is preferred by mall owners as an anchor tenant as the brand attracts footfalls.

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Arvind Singhal, chairman, Technopak, said, “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. 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.”

Zara at present has stores operational in cities like Delhi, Mumbai, Bangalore, Pune, Surat, Jaipur, Chandigarh, Chennai, Mohali, Hyderabad, Gurgaon and Noida.

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 sq ft, 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 with openings planned in Coimbatore at Prozone Mall, in Indore at TI Next and in Amritsar at Mall of Amritsar. Further strengthening its presence in existing locations, there will be a sustained focus on Tier 1 cities- Mumbai will see the launch of two new stores at Le Palazzo, South Mumbai and Seawoods Grand Central Navi Mumbai making a total of five store locations.

Delhi NCR will see the opening of its sixth location at Red Mall, Ghaziabad. The brand plans to open two more store in the Southern part of the country one in Bengaluru at Vega Mall and another in Mantri Square, the city has two existing stores at VR Mall and 1MG Mall, the company said.

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