Spain's Inditex turns sight on India as part of push into Asia
Monday, 6 April 2009
MADRID, Apr 5 (AFP): 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 like 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 10.4 billion euros (14 billion dollars) 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 told AFP.
While the Indian economy expanded by 5.3 percent in the three months to December on an annualised basis, its slowest pace in nearly six years, the United States and other major developed economies in Europe contracted sharply at the end of last year.
Investment bank Goldman Sachs predicts India, the world's second-most populous country after China, will expand annually by some 6.2 percent from 2011 to 2050.
The country will overtake Germany as the world's fifth- biggest consumer market by 2025 as the size of its middle class expands to 583 million people, or about 41 percent of the population, from about 50 million, or roughly five percent currently, according to global consultancy firm McKinsey.
Many members of this rising middle class are already familiar with Zara's stylish designs which resemble those of the big-name Italian fashion houses and are sold at moderate prices.
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 like 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 10.4 billion euros (14 billion dollars) 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 told AFP.
While the Indian economy expanded by 5.3 percent in the three months to December on an annualised basis, its slowest pace in nearly six years, the United States and other major developed economies in Europe contracted sharply at the end of last year.
Investment bank Goldman Sachs predicts India, the world's second-most populous country after China, will expand annually by some 6.2 percent from 2011 to 2050.
The country will overtake Germany as the world's fifth- biggest consumer market by 2025 as the size of its middle class expands to 583 million people, or about 41 percent of the population, from about 50 million, or roughly five percent currently, according to global consultancy firm McKinsey.
Many members of this rising middle class are already familiar with Zara's stylish designs which resemble those of the big-name Italian fashion houses and are sold at moderate prices.