H&M expanded sales 28% to Rs1582 crore during the year ended March 2020, according to its latest filing sourced from Altinfo, a data insights firm. In comparison, Inditex Trent, a joint venture with Tata that runs Zara stores in India, saw revenue rise 9% to 1,570 crore last fiscal.
While the difference may be small, H&M’s revenue is significant considering it entered India in 2015, five years after the Spanish rival Zara opened its first door in 2010.
“The product prices of H&M is far more reachable and its consumers are younger compared to Zara which are priced higher with a mature set of consumer base. H&M is extremely aggressive in terms of store launches and its digital push,” said Devangshu Dutta, founder of strategy consulting firm Third Eyesight.
This reflects in their net profits too – H&M’s profit was Rs8 crore, a decline of 82% while Zara’s net profit rose 45% to Rs104 crore during last fiscal. Janne Einola, the country manager for India at the Swedish fast fashion retailer stepped down from the role last month after being at the helm for the past five years.
Both brands have been runaway successes in India since their arrival but Zara’s performance has been tapering off due to slow outlet expansion. For instance, Stockholm-based H&M has opened a store a month in India on average so far since its entry in India in October 2015, taking the total count to 48. In comparison, Zara has opened 22 outlets so far, although its per store revenue is nearly double than its rival.
H&M stocks fast fashion items created in-house and teams up with designers for one-time collections. It keeps a large inventory of basic, everyday items sourced from places including India and Bangladesh that carry lower price tags than those of most of its rivals. Zara, on the other hand, imitates the latest fashion, making affordable versions and stocking them for just a few days. With most of its fast fashion peers offering products at competitive prices, Zara had cut prices to sustain competition over the past few years.
Consumers’ appetite for fashion on demand is at an all-time high, putting at a disadvantage apparel vendors not refreshing their collections regularly. Analysts feel the popularity of fast fashion over the previous decade has taken traditional retailers by surprise and changing customer preferences clearly reflect in the strong outperformance of fast fashion retailers. “H&M and Zara have caught the fancy of India’s consumers and have outpaced growth of other traditional brands. While brands have been impacted by aggressive online discounting over the past three years, H&M and Zara have managed to report strong growth,” said a report by Edelweiss Securities.