Zara and H&M in a neck-to-neck fight

Inside Select City Walk, New Delhi, where almost every brand, in their intention to get a piece of the great Indian consumption story, has pitched its tent, a grand fight is in the making. According to industry insiders, Zara’s 17,000 square feet store here rakes in about Rs 10 crores a month or around Rs 6,000 per square feet. H&M’s 25,000 square feet store makes Rs 12.5 crores a month, or about Rs 5,000 per square feet. Since neither label breaks down its country-wise numbers, these numbers, although not completely representative, are the closest reflection of their struggles in the country.

Brands slug it out in Indian market

Experts say, H&M has been faster off its feet. And as Dipak Agarwal, former CEO of DLF Brands points out what has worked for H&M is that it kept its pricing according to India standards, while Zara is relatively expensive to Indian pockets. Initially, Zara wanted to reduce its prices but did not do so eventually. This is true for other brands like Forever 21 and Mothercare as well. However, the big challenge, for both, would be stepping beyond the metros in their next phase of growth. And here H&M holds an edge unless Zara is willing to take a fresh look at its prices. Zara’s entry range (women’s wear) retails at over Rs 2,500 and H&M starts at around Rs 1,500. The feeling is, H&M will definitely impact Zara’s sales in the medium term.

Both Zara and H&M cater to the premium category, however some experts believes H&M will grow faster than other global brands given that it is more affordable, has no partners, and a balanced portfolio. Zara is also the first apparel brand to cross the $100-million (Rs 6,71,79,450) mark in India where it has spent six years and built 16 stores. But its sales growth has slowed. As per Trent annual report for FY15, Zara’s sales are down from 43 per cent in FY14 to 23 per cent in FY15. H&M, on the other hand, is new to the game. It has just two stores in India but its stores are turning in far better numbers. It has a wider range of styles and targets a larger customer base too — it caters to women, men and kids unlike Zara which focuses largely on women although it does have a men’s line. Globally, H&M has moved into Zara’s fast fashion space by offering everyday styles.