But as designer labels pushed up prices and the premium fashion sector got squeezed by the pandemic, mainstream stores have rushed in to fill the middle-tier void — and Zara’s leading the charge. It now sells luxurious party wear and real suede jackets to rival those in pricier boutiques.Inditex’s flagship brand has long been known for its cheap chic. Its scale, combined with the fact that it makes about 60% of products close to its headquarters in northern Spain, including in factories in Portugal, Morocco and Turkey, meant it could deliver clothes and accessories within a fashion season for a fraction of the price of catwalk styles.
Lately, though, Zara has been taking advantage of the shrinking so-called aspirational luxury marketคำพูดจาก เว็บสล็อตเ. Brands including LVMH’s Louis Vuitton, Kering SA’s Gucci, independent British rival Burberry Group Plc and the US’s Ralph Lauren Corp. are moving further upmarket, with price tags to match. Meanwhile, the pandemic put huge pressure on premium retailers such as the US’s J. Crew and Gap Inc.’s Banana Republic, as well as European names such as Hobbs, owned by South Africa’s Foschini Group Ltd, and privately held Jigsaw, although both have expanded again recently. This has widened the gap between ultra-high and ultra-low fashion, and Zara has stepped right in.Although the average prices of Zara’s menswear and womenswear available online in the US are up only 1% compared with a year ago, they are 20% higher than in 2022, according to retail intelligence company Edited. This can be explained by inflation in materials and transport costs affecting all retailers. For example, H&M’s average prices are 12% more expensive than in 2022, according to Edited.But it also reflects the fact that Zara is stretching its range upwards. A limited edition real leather collection, available on its website and in some physical locations, boasts a camel coat costing $699 and a dress at $489. That’s a far cry from the $30 tops the brand has been known for. Sure, you can still find these — its popular $50 Marine jeans are a case in point — but nowadays they will likely be featured alongside cashmere sweaters and silk dresses. Fashion, too, may be playing a part. The last year or so has seen the rise of quiet luxury, including suits and outerwear in premium materials, which tend to be more expensive. Such garments, which require a focus on fabric and fit, are notoriously difficult for fast-fashion retailers to emulate. But Zara’s design and production skills outpace those of rivals such as H&M, Primark and Shein Group Ltd. Its store managers also famously communicate to the head office what customers are buying. So, as shoppers demand fancier pieces, more are made.
Zara isn’t alone in bridging the gap between high and low.Cos, the minimalist brand owned by rival H&M Hennes & Mauritz AB, has an upmarket Atelier collection, as does premium retailer Reiss, which is majority owned by Britain’s Next Plc. Even cheaper chains are getting in on the act, with H&M’s Studio line and Primark’s Edit. Meanwhile, Abercrombie & Fitch Co. Chief Executive Officer Fran Horowitz has repositioned the retailer’s namesake brand away from teen fashion to polished essentials. That is paying off, with sales and shares in the company up.But among the traditional fast-fashion cohort, Zara is one of the few with the authority to offer an alternative to higher-priced retailers, thanks to the design and production capabilities within its sprawling head office in Arteixo.Then there are Zara’s collaborations, such as the current tie-up with Clarks, whose Wallabee shoes are enjoying a comeback, and a collection last year with photographer Steven Meisel. Add in its strategy of closing smaller locations and opening larger ones, and shopping feels like a more premium experience. At a Zara at London’s Battersea Power Station, separate rooms displaying shoes and underwear wouldn’t look out of place in a luxury department store.For Inditex, which generates more than 70% of sales and profit from Zara, this reflects the continual evolution of the business rather than a deliberate strategy. But it’s no coincidence that the elevation has come since Marta Ortega Perez, the 40-year old daughter of Inditex’s billionaire founder Amancio Ortega Gaona, took over as chair in April 2022.The approach is paying off. Unlike the super wealthy, middle-class shoppers in the US and Europe are under pressure. As the big luxury groups see these customers retrenching, it looks like they may be choosing Zara — along with sister label and quiet-luxury favorite Massimo Dutti — instead.After a period when Inditex’s sales growth slowed, amid fewer trends to chase and rivals speeding up supply chains, followed by the disruption of the pandemic, revenue is accelerating again. The company, which reports annual earnings later in March, said in December that sales in the preceding six weeks rose 14%, while its full-year gross margin would increase by 0.75 percentage points compared with its previous expectation that it would remain stable. The shares hit a fresh record earlier this week.But taking on the luxury brands isn’t without risk. It was an advertising campaign for expensive jackets that sparked a backlash last year.But the biggest danger is that Zara’s positioning alienates cost-conscious shoppers, particularly as ultra-affordable Shein expands ahead of a possible $90 billion listing and as Associated British Foods Plc’s inexpensive Primark targets the US — Zara’s second-biggest market.Inditex is committed to maintaining Zara’s historic affordability. Indeed, in a chichi store in London’s Chelsea earlier this week, there was a display of flat shoes priced at £22.99. But the brand can’t afford to lose its focus on value, nor must its image become so upmarket that it deters cash-strapped customers — even if it has the products to satisfy them. Alongside slick runway-style photography showcasing its online collection, Zara needs to ensure that its more reasonably priced items have prime billing too.This will be even more crucial if, as inflation wanes and interest rates come down, aspirational shoppers are tempted to return to their previous haunts. For now, that’s still far off. Trading down is the latest trend that’s getting the Zara treatment.
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