Daybreak - Why Zara India needs to go solo or go home

Episode Date: May 14, 2025

Zara and Tata’s retail arm, Trent, have been partners for 15 years. But that relationship might be coming to an end because Zara’s not pulling its weight anymore. Its share of Trent’s overall sales has dropped from 28% to just 10% in six years. Its rivals like H&M and Uniqlo have moved faster, reached more cities in a much shorter time span.Meanwhile, Trent’s been busy. It used what it learned from Zara and built something better. Zudio, its budget fashion brand, just hit $1 billion in sales in FY25. It’s fast, affordable, and everywhere. Now, Trent’s planning to upgrade Westside into a premium brand to go head-to-head with Zara and H&M.How Zara lost its edge and what did Trent get right?Tune in to find out.If you have any thoughts or questions about this episode, send them to us as texts or voice notes on Daybreak’s WhatsApp at [phone]. Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get an alert as soon as we release our first episode, please follow Intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Zara didn't see it coming. And that is probably the most surprising part, you know. 15 years ago, when the Spanish fast fashion giant entered India, it came like royalty.

It was a glamorous global name, it was a trailblazer in style, and guess who was standing quietly at the door to welcome it? It was the Tatar's. Now, here is where the story actually starts. You see, while Zara was enjoying the limelight after entering India, the Tartas were busy taking notes backstage. Fast forward to today, and they have done something that not many were expecting. They have built brands that not only run,

rival Zara, but may actually be pushing it out of the picture. And what makes this whole thing even more fascinating is how quietly it's happened. No media buzz, no fancy launches, just slow, steady, strategic moves. And actually, the numbers say it all. Zara's share in Tata's trends overall sales is down from 28% in 2018 to just 11% now. Meanwhile, Zodio has has crossed a billion dollars in sales this year. Zodio, the brand that did not even exist when Zara entered India. So now, the bond between Zara and Tatar's that once looked rock-solid is starting to crack. Zara's once glamorous Indian stories beginning to fade and Tata's homegrown stars, Zudio and Westside,

are taking the center stage. So how did the Tatar's go from being Zara's local partners to its best? biggest competition. And why is Zara struggling to keep up in a market that it helps shape? Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nickda Sharma, and I don't chase the news cycle. Instead, every day of the week, my colleague Rahil Filippos and I will come to you with one business story that is worth understanding and worth your time. Today is Thursday, the 15th of May. Back in 2009, when Zara wanted an inn into India, it needed a local partner.

And that is when Trent, Tata's retail arm, came into the picture. Now, Trent was no amateur. Its chain west side was already selling Western clothes in the mass premium space. But it wasn't quite touching the high-end, trend-hungry urban customer. And that is where Zara fit in. The partnership expanded Trent's reach and it gave them a front row seat to the fast-fashioned playbook. But that was just the beginning.

Zara's operations, like its famous Friday drops, where new styles hit stores every Friday, became a playbook for Tata. The Tata studied everything from merchandising to sourcing to inventory turnover, and they applied it first to Westside and then later to Zodio. Zodio's model was Zara, but with Indian prices. They emulated the look and the feel of Zara's stores, but instead of $35 T-shirts, they sold them for $199. and that worked really well. Zudio now sells 90 t-shirts a minute and 20 pairs of jeans every hour. And all of that with minimal delay, small agile teams working to ship new items quickly. In fact, here Zara deserves credit.

It still has the best turnaround which is 7 to 10 days. And Zudio wants to do the same. It has already narrowed the gap quite impressively, even if its exact numbers, are still under wraps. On the sourcing side, Zara was importing from China, from Vietnam and Bangladesh, basically places with cheap labor. And Zodio decided to go local. It sourced materials in bulk, sometimes a year or two in advance.

Think of how Titan handles gold. It is the same idea. So, as a result, Zudio grew at a compound annual rate of 83% from 2020 to 2025. compare that to Zara's 14% even Westside clocked in 20%. So now Trent is cooking up a new plan, which is upgrade Westside to a premium brand, launch a fresh mid-premium line and leave Zodio to dominate the affordable space. Think of it as Westside 2.0 going head-to-head with Zara and H&M. And they will also launch a new brand to serve Westside's current mid-premium.

shoppers. Basically, one brand up, one brand in the middle and one brand below. It is the classic three-tier retail strategy. So where does this leave Zara? Stay tuned to find out. You see, Zara's global story is still strong. Over 2,000 stores worldwide, a fast-moving inventory model that others still look up to, but in India, things have lacked. Since entering the country over 15 years ago, Zara has opened only 23 stores. For comparison, H&M, which came in five years later, still has nearly three times that. And what is worse is that Zara is still mostly confined to India's top eight cities. And even in those, its presence is limited to high-end malls. Take the five-story Zara store in South Mumbai, for example. The rent was as high as

three crore rupees a month. It saw footfall, but low conversions. Basically, people walked in and they walked out. The unit economics was not working, so the store had to be shut down. One expert summed it up like this. A shopper from Vickroli is not going to go to South Mumbai for a shirt. They will go to a mall that is closer to home with more options. And that is where brands like H&M win. H&M also moved faster online.

They tied up with Mintra back in 2019. They built their own e-commerce site and now, 40% of their sales are online. Zara, meanwhile, is still mostly offline. Take Uniclo for another example. Despite being newer to India, Uniclo's average revenue per store is 132 crore rupees. H&M is at 51 crore rupees.

And Zara? Just 54 crore rupees. So what happened? Part of it is structural, you see. Zara India's venture is a joint venture. Most decisions still come from Inditex, which is its parent company. Tata does not have full control. And according to analysts, this deal has little material value for the group anymore.

It is closer to a kind of a passive investment. And another factor is timing. Back when Zara entered India, foreign direct investment or FDI in single brand retail was still quite tricky. The joint venture then made sense. But when H&M and Uniclo came, rules had relaxed. They could run on their own and they did not need a partner. This obviously gave them more freedom and flexibility. Now, the Tatar's are reaping the benefits.

Trent's stock has surged over 1,000% in five years, reaching a market cap of nearly 2 lakh crore rupees. And Zara's contribution to that is shrinking fast. The irony is that Zara showed Trent the way. The Tata's took the blueprint, localized it, scaled it and built a faster, cheaper, and more adaptive fashion machine. And now, it might be Zara that has to play catch-up. The solution? Experts told my colleague the Ken reporter Akriti Bala that it is time for Zara to go solo. It should ditch the joint venture, take control, expand stores and boost online sales,

basically do whatever it takes to stay relevant. Because, If it doesn't move fast in first fashion, it is going to be left behind. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. To subscribe, head to the Ken.com and click on the red subscribe button on top of the Ken website. Today's episode was hosted by Snigda Sharma and edited by Rajiv Siyah.