A heritage building in the Hutatma Chowk area in south Mumbai will soon be the largest retail space in a high street for a foreign brand in the country.
Spanish fashion retailer Zara has leased 50,000 sq ft carpet space in South Mumbai’s most prime location of Flora Fountain. The space has been leased on the ground floor of the Ismail Building, which is diagonally opposite HSBC India headquarters, located in Fort.
The rent for the property is as high as the space leased is astonishing – Rs 30 crore annually. The lease is for a minimum of 15 years with a five-year lock-in period.
Sources say that the brand will start working on the interiors as soon as the next couple of weeks.
Currently, Zara has three stores in Mumbai including Palladium Mall in Lower Parel, Phoenix Market City in Kurla and Infi nity 2 in Malad suburb. However, the Flora Fountain out let will be Zara’s first store on a high street in India.
The deal was brokered by global commercial real estate services firm, CBRE India.
A recent CBRE report said growing online sales will not deter retailers’ physical store expansion plans in 2016.
The Spanish Success Story
Zara is a Spanish clothing and accessories retailer based in Arteixo, Galicia, and founded in 1975 by Amancio Ortega and Rosalía Mera. It is the flagship chain store of the Inditex group, the world’s largest apparel retailer. The fashion group also owns brands such as Massimo Dutti, Pull & Bear, Uterqüe, Stradivarius, Oysho and Bershka.
Zara was described by Louis Vuitton Fashion Director Daniel Piette as “possibly the most innovative and devastating retailer in the world.
In 1988, the company started its international expansion through Porto, Portugal.
In 1989, it entered the United States, and then France in 1990. During the 1990s, Zara expanded to Mexico (1992), Greece, Belguim and Sweden (1993). In the early 2000s, Zara opened its first stores in Japan and Singapore (2002), Russia and Malaysia (2003), China, Morocco, Estonia, Hungary and Romania (2004), the Philippines, Costa Rica, and Indonesia (2005), South Korea (2008), India (2010), and South Africa and Australia (2011).
The India Story
Zara opened its first store in India in the year 2010. It is operated by Inditex-Trent, a joint venture between Spain’s Inditex and the Tata Group.
In August 2015, Zara opened an outlet in Hyderabad in a mall taking its store count in India to 17 until then.
Profits in India
Zara became the first apparel brand in India to cross the $100-million sales mark, five years after it opened its first shop in India. Inditex Trent, the joint venture between Zara brand owner Inditex and Tata Group’s retail arm Trent, posted 24% annual growth in sales for the year ended March 2015 at Rs 721 crore ($114 million), Trent said in its annual report.
Average sales per store of Zara is about Rs 45 crore a year, far more than top apparel brands such as Louis Philippe, Levi’s and Marks & Spencer, and even slightly higher than department store chains Shoppers Stop and Lifestyle.
Most of Zara’s back-end and merchandise sourcing are handled by Inditex, while the Tata expertise is mainly for identifying real estate and locations. Inditex Trent has replicated in India a model that has worked for Zara globally — creating affordable, copycat versions of the latest fashions or designer wear and making them available to shoppers in double-quick time. Inditex controls almost every bit of its operations, from design to distribution.
If a new style is not a hit within a week, it goes off the shelves of over 2,000 Zara stores worldwide. The brand will face intense competition from similarly-priced, fast fashion rivals such as Gap, which entered a month ago and H&M, which will launch stores soon. As the world’s second most populated country, India is an attractive market for US brands, especially since youngsters in the country are increasingly embracing western-style clothing.