ZARA'S Unique Business Model Puts Pressure On Its Competitors.

Spain

The unique business model is making its rival H&M and

In the face of pressure, compared with the slowdown in the performance of these competitors, ZARA parent Inditex Group recorded strong growth in the first half of July 31st.

In the first half of this year, group store sales rose by 11%. After excluding the exchange rate effect, the same store sales recorded a 16% increase. The group's core brand ZARA gained 13% of the high sales growth, while ZARA HOME gained 17% sales growth. Other brands such as Bershka and Massimo Dutti all recorded an increase in the number of units. Analysts said in a report that Inditex group could continue to grow with its rich brand portfolio and strong business model.

Bernstein analyst Jamie Merriman and Jennifer Wong pointed out in a research report earlier: "when most fashion retailers complain about the negative effects of weather on the sales environment, the performance of ZARA parent group Inditex proves the strong power of the business model and its ability to create outstanding performance."

Inditex group's first quarter turnover amounted to 4 billion 880 million euros, up 12% over the same period last year, which exceeded FactSet analysts' earlier estimate of 4 billion 840 million euros.

Between August 1st and September 18th, group stores and online sales continued to show a strong growth rate of 13%. The group said it had launched a global online sales tracking system.

In October of this year, all brands of the group will launch e-commerce in Turkey. Up to now, the group's e-commerce business has covered 39 markets.

Group CEO Pablo Isla stressed that the group will continue to invest in physical stores, entity shops and online sales channels are fully integrated.

Inditex group's outstanding retail performance in the first half of the year continued to exceed analysts' average expectations and beat all its competitors.

The fast selling group of Japan's fast fashion UNIQLO parent group rose 6.4% in the first three quarters of May as a record of $12 billion 480 million, but the pre tax profit dropped by 46.4% to 617 million dollars, and business profits fell 23% to $1 billion 270 million.

In the second quarter of the US, fast fashion Gap group was dragged down by factors such as company cost expansion, closing stores and declining sales. Net profit dropped to US $125 million from US $215 million in the same period last year, a 41.8% decline.

In the first half of the fiscal year, Sweden's fast fashion H&M group profits plunged 21.5% to 945 million 500 thousand dollars, pre tax profits plummeted 22% to 1 billion 240 million dollars, during which the turnover grew by 5% to 12 billion 560 million US dollars, up nearly double digit growth in the same quarter last year. Obviously, H&M has entered a path of slow down.

In today's fast fashion retail market, the trend is changing rapidly, and the impact of climate fluctuation is even greater. This also makes ZARA the core of competitive advantage.

Some analysts have pointed out that ZARA, which is able to adapt to climate change and make rapid adjustments, is panicking the fast fashion brands including GAP, H&M and UNIQLO.

The rapid growth of fast fashion has begun to show signs of fatigue. Brands are considering adjusting their product structure. In China, with the fast fashion market becoming more and more saturated, in order to maintain high growth performance, fast fashion or price war will break out.

In May this year, the implementation of price cuts by ZARA in the India market may be a price test for emerging market products including China.

Forced by strong pressure from rival ZARA, H&M said at the end of June that it would follow the market trend to further price adjustment.

As of the first half of the year, Inditex group has 7096 stores in 91 markets around the world. After the ZARA brand entered Vietnam in the beginning of this year, the group business market has expanded to 92 markets in the world.