SPAIN’S Inditex, Europe’s largest clothing retailer, plans to start opening stores of its flagship Zara brand in India next year as part of its aggressive expansion into the fast-growing Asian market.
The company, which opened its first shop in China in 2007, expects to open 25 Zara shops during its first three years in India in major cities such as Mumbai and New Delhi in partnership with India’s Tata conglomerate, Inditex chief executive Pablo Isla said recently.
The move is part of Inditex’s strategy of hedging its dependence on western Europe, which accounted for over half of its total sales of $14bn (£9.4bn) last year, said Greg Hodge, the retail research manager at London-based market research firm Planet Retail.
“Of course Asia will be affected by the global credit crisis to some extent but in the long-term, it offers great potential for growth, with consumers demanding Western brands,” he said.
While the Indian economy expanded by 5.3 per cent in the three months to December on an annualised basis, its slowest pace in nearly six years, the US and other major developed economies in Europe contracted sharply at the end of last year.
Investment bank Goldman Sachs predicts India will expand annually by some 6.2 per cent from 2011 to 2050.
Sonika Mittu, who runs a garment export business with her husband in New Delhi, said she routinely asks her spouse to bring back items she has seen on Zara’s website when he goes abroad on business trips.
“I love the stuff. Mainly their formal wear and winter jackets,” the 37-year-old, who belongs to a group of Zara fans on the social networking site Facebook, said in an email.
While China is usually seen as the key emerging market for international retailers, India offers the best long-term growth opportunities because it has a greater amount of untapped potential in spending, said Jon Wright, head retail analyst at market research firm Euromonitor International.