Zara drops merchandise prices by 10-12 per cent to match up to H&M

It’s a tug of war in prices out there. To compete with H&M, Spanish fashion brand Zara has slashed its merchandise price by 10-12 per cent. The idea is to make it more affordable to the Indian consumer. The cuts were brought in late last year.

Zara became the fastest fashion brand to achieve 100 million dollars (Rs 662 crores) revenues but in recent years its sales growth has dipped. As per the annual report by Trent, the company Zara has a joint venture with in India, Zara’s sales were down from 43 per cent in FY14 to 23 per cent in FY15.

Zara’s prices are 30 per cent higher than that of H&M. So, when H&M stepped into India, Zara wanted its clothes to be more affordable. However, experts believe that it doesn’t make sense to drop prices and assume that Indian markets cannot support both brands adequately. Also, both the brands have separate images. Zara has a fashion forward image globally as well as in India whereas H&M has a higher disposable fashion image and its clothes are cheaper.

So far, H&M has opened stores in New Delhi, Noida and Bengaluru. It is looking at opening stores in Mumbai and Mohali this year. Zara, too, is on an expansion spree, and has grown double despite H&M’s entry. Worldwide, Zara has 7,013 stores while H&M has 3,900 stores in 61 markets.