BrainTrust Query: Expecting Zarafication?
By Devangshu Dutta, Chief Executive, Third Eyesight
Through a special arrangement, presented here for discussion
is a summary of a current article from the Third Eyesight blog.
What does the
Zara’s launch in India mean for the nation’s fashion and retail sector? Is
this the beginning of a new era? Should we expect Zarafication of the market,
where the customer is driven by fashion, and the supply chain will turn and
churn products faster than ever before? Should other international brands and
Indian fashion brands be worried?
A peek at history is useful here. It is said
that when Spanish conquistadors landed on the shores of the Americas they managed
to conquer the land and the people through a combination of guns, germs and
steel. [Credits to Jared Diamond for that evocative phrase.] That is, the Spanish
carried guns and fine steel swords but, most importantly, they also carried
diseases that were alien to the local population. In many places, the weakened
and leaderless indigenous people were simply too battered psychologically and
physically by disease to fight with the colonizers.
But it’s not doom
and gloom for brands and businesses that have a competitive spark of life.
business model in its home market was built on getting up-to-date fashion into
the market before anyone else, and at lower costs. Its prices encouraged fashion-conscious
consumers to buy more frequently, and though its limited production quantities
were a way of reducing risk, it added to the allure of the brand. In most overseas
markets, however, Zara is a somewhat more premium brand. The “value-for-money” for
the brand rests on fashionability rather than product quality.
The Indian consumer
base, on the other hand, is less fashion-sensitive than the European consumer.
This is not equivalent to being less sensitive aesthetically — Indian
consumers can tell good design from bad; allowing, of course, for varying taste.
However, value consciousness drives many consumers to buy during discount sales
with a delay of 2-3 months, rather than buying current fashions at full price.
This can be a problem for a brand that thrives on change.
Zara will initially
have a limited physical footprint. It is targeted at the premium to luxury
end of the market, fitting a certain physical profile of customer. Its products
that are imported are disadvantaged by a hefty import duty and shipping costs,
as well as the shipment lead-time. So, there is time available to Indian businesses
that want to adapt their business model, and learn from this new competitor.
the product development strengths and the agility that Indian apparel companies
have displayed in the past, there is no reason why Indian brands cannot compete
effectively with Zara on their home turf. When it comes down to it, I think
Indian businesses (the small ones, with less “organization” and “process” orientation)
are fast on their feet in identifying design trends and are able to respond
to the trends with products being available in the market very quickly. I would
call them the Indian “baby Zaras.”
So the real question is this: can
these Indian “baby Zaras” learn
to be disciplined and structured, and learn to scale up their businesses?
Discussion Questions: How have fast fashion retailers such as Zara recast
the competitive landscape in apparel? How should independent fashion shops
and national brands respond? Do you think Zara’s entry in India will have a
different outcome than here in the U.S.?