FashionThis Week: Will Zara’s Charmed Run Continue?

This Week: Will Zara’s Charmed Run Continue?

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Zara has had a charmed run these last few years, and most analysts are expecting owner Inditex to report another quarter of robust sales growth on Dec. 11. The Spanish fast-fashion giant has built a seemingly impenetrable moat around its biggest brand. Wednesday’s results should be watched for clues about how it plans to maintain and expand those defenses.

Inditex’s success stems first and foremost from its ultra-efficient supply chain, which is designed to quickly produce limited runs of on-trend items, often in factories close to their intended market, which cuts down on shipping time and logistical costs. This has helped the company improve margins even amid the rise of Shein and Temu, which have built even faster and cheaper production methods. Inditex said in May it would spend €1.8 billion ($1.9 billion) on new distribution centres to maintain its logistics edge.

Zara’s long history of nearshoring should also help shield the retailer should President-elect Donald Trump follow through with his promise to levy steep tariffs on Chinese goods once he takes office next month (less so if he also slaps duties on imports from Turkey, Spain and other garment manufacturing hubs favoured by Inditex). The US is a key growth market for Zara, which has about 100 stores in the country, with more on the way.

In the marketplace, Zara has positioned itself as a premium brand at a mass price point. Here too it’s taken steps to shore up defenses, working with a who’s who of elevated brands such as Nanushka, and fashion A-listers including Steven Meisel, Gisele Bündchen, Stefano Pilati, Kate Moss and next year, Samuel Ross.

Such collaborations have helped separate Zara from H&M and other high street rivals. But perhaps not for long; H&M is in the early stages of a glow-up strategy that will include an upcoming collection from Glenn Martens. In the US, Abercrombie & Fitch already has a Zara-like reputation for being both on-trend and high quality, and Gap is starting to generate some buzz as well. Those two retailers charge higher prices (women’s jeans retail for around $60 at Zara versus $90 at Abercrombie and $80 at Gap). But the difference is smaller for customers with even passing familiarity about the latter brands’ sales events and loyalty programmes, which is why having a regular stream of covetable collaborations matters.

Long story short, it will take a truly seismic shift in the retail landscape to dislodge Zara from its position on top of the mass market. Which is not to say it can’t happen; a Trump-induced trade war or a post-IPO Shein moving upmarket are two possible scenarios to watch for next year.

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.

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