To compete with Chinese-founded rival Shein, Inditex, the owner of Zara and the largest listed fast fashion company in the world based on sales, is growing its budget-friendly Gen Z-focused brand Lefties.
Shein is an online marketplace that does not have any physical storefronts, and its quick growth is forcing retailers like Inditex and H&M in Sweden to find ways to compete with its low costs.
Since Inditex began raising prices at its main brand to shield profit margins from inflation and as part of a move towards more affluent clients, Zara has lost some of its competitiveness in the market. However, the Spanish business is also covertly expanding its price points.
One of the main components of that plan is the growth of Lefties, which offers clothing for 17.99 euros ($8.64), purses for 5.99 euros, and dresses for as low as 7.99 euros.
Originating as a venue for repurposed Zara items, Lefties currently operates locations in 17 nations, such as Egypt, Mexico, Romania, Saudi Arabia, Turkey, and the United Arab Emirates.
Even though Inditex has successfully increased earnings at Zara, a considerably larger brand than Lefties in terms of sales and number of stores, its rise indicates that it also wants a presence in the value end of the market.
Lefties is expanding in both its native market of Spain and Portugal at a time when a lot of customers are cutting back and competitors are feeling the pinch from Shein's incredible low rates.
Based on estimations, the market research firm Kantar has opened a new tab and shows that Lefties, which has 25 outlets in Spain, has risen from around 3.5 million clients in 2019 to 5 million customers in 2023, placing it only behind Shein with 5.2 million.
The existence of lefties in a number of emerging economies implies that Inditex is trying to appeal to customers who might not be as inclined to splurge at Zara, according to Swetha Ramachandran, a portfolio manager at London's Artemis Fund Managers, whose fund owns Inditex.
Meetings with Inditex management frequently revolve around Shein's influence on the quick fashion industry and how Inditex can best counter it, Ramachandran continued.
Not on the list According to Coresight Research, Shein holds an estimated 18% market share, making it the largest fast-fashion store globally.
Zara's high fashion approach is contrasted with Lefties's use of micro-influencers in majority of its posts on Instagram and TikTok, which follows Shein's similar tactics.
In Inditex's financial records, Lefties is still included under Zara, hence its outcomes are not available to the general public.
Regarding Lefties' sales and strategy, Reuters questioned Inditex, but Inditex did not respond. According to the corporation, the brand has been providing its own lines of clothing for men, women, and kids for over 20 years.
"We don't have much visibility on it but I think it is working wonders because it is the only one in the low-cost segment with a good online service," said Patricia Cifuentes, senior analyst at Bestinver Securities.
Lefties is a better offer than competitor Primark in Spain, which does not provide home delivery, according to Cifuentes. She also added that Inditex is stalling by keeping the brand's performance a secret.
"A retailer usually needs some time to attain the necessary profitability and, hence, the critical mass. Furthermore, there is a benefit to withholding the results from the rivals for the time being "added the speaker.
Although Shein's customer base in Spain increased to 5.2 million in 2023 from 421,000 five years prior, Kantar's market estimations show that the Chinese retailer still lags well behind Zara and Primark.
Shein responded that it doesn't comment on other businesses when asked about Lefties. The retailer announced that, following pop-ups in Berlin, London, Paris, and Rome last year, it will establish "several" pop-up stores throughout Europe this year.
According to Primark, it doesn't discuss rival businesses.
Unreleased Kantar data show that Lefties drew even more customers to Portugal than Zara did the previous year.
"The competition is still very strong considering the extremely low price point," stated Grace Su, a portfolio manager at Clearbridge Investments with headquarters in San Francisco, whose fund owns Inditex shares.
"If they [Lefties] can drive a business with adequate returns, it's all accretive as long as it's not cannibalising the rest of the brands."
In addition to adding locations in the United Arab Emirates, where it conducts business through franchise partners, Lefties launched its first locations in Romania and Turkey last year.
At the same time, the number of stores that Zara and the other Inditex brands, including Bershka and Pull&Bear, have worldwide is decreasing. By October 31, 2023, Inditex had 585 fewer stores overall than it did the year before.
Similar to Zara, Lefties concentrates on constructing massive flagship stores in important towns in Spain. Its largest location will open in Madrid around the end of 2022.
Diana Doina, 47, and her 13-year-old daughter Carla were waiting to pay at the Lefties store in Madrid when she commented, "This is the first time we have shopped here." "I'll take some cargo trousers, and the trainers are really cheap."
(Source:www.reuters.com)
Shein is an online marketplace that does not have any physical storefronts, and its quick growth is forcing retailers like Inditex and H&M in Sweden to find ways to compete with its low costs.
Since Inditex began raising prices at its main brand to shield profit margins from inflation and as part of a move towards more affluent clients, Zara has lost some of its competitiveness in the market. However, the Spanish business is also covertly expanding its price points.
One of the main components of that plan is the growth of Lefties, which offers clothing for 17.99 euros ($8.64), purses for 5.99 euros, and dresses for as low as 7.99 euros.
Originating as a venue for repurposed Zara items, Lefties currently operates locations in 17 nations, such as Egypt, Mexico, Romania, Saudi Arabia, Turkey, and the United Arab Emirates.
Even though Inditex has successfully increased earnings at Zara, a considerably larger brand than Lefties in terms of sales and number of stores, its rise indicates that it also wants a presence in the value end of the market.
Lefties is expanding in both its native market of Spain and Portugal at a time when a lot of customers are cutting back and competitors are feeling the pinch from Shein's incredible low rates.
Based on estimations, the market research firm Kantar has opened a new tab and shows that Lefties, which has 25 outlets in Spain, has risen from around 3.5 million clients in 2019 to 5 million customers in 2023, placing it only behind Shein with 5.2 million.
The existence of lefties in a number of emerging economies implies that Inditex is trying to appeal to customers who might not be as inclined to splurge at Zara, according to Swetha Ramachandran, a portfolio manager at London's Artemis Fund Managers, whose fund owns Inditex.
Meetings with Inditex management frequently revolve around Shein's influence on the quick fashion industry and how Inditex can best counter it, Ramachandran continued.
Not on the list According to Coresight Research, Shein holds an estimated 18% market share, making it the largest fast-fashion store globally.
Zara's high fashion approach is contrasted with Lefties's use of micro-influencers in majority of its posts on Instagram and TikTok, which follows Shein's similar tactics.
In Inditex's financial records, Lefties is still included under Zara, hence its outcomes are not available to the general public.
Regarding Lefties' sales and strategy, Reuters questioned Inditex, but Inditex did not respond. According to the corporation, the brand has been providing its own lines of clothing for men, women, and kids for over 20 years.
"We don't have much visibility on it but I think it is working wonders because it is the only one in the low-cost segment with a good online service," said Patricia Cifuentes, senior analyst at Bestinver Securities.
Lefties is a better offer than competitor Primark in Spain, which does not provide home delivery, according to Cifuentes. She also added that Inditex is stalling by keeping the brand's performance a secret.
"A retailer usually needs some time to attain the necessary profitability and, hence, the critical mass. Furthermore, there is a benefit to withholding the results from the rivals for the time being "added the speaker.
Although Shein's customer base in Spain increased to 5.2 million in 2023 from 421,000 five years prior, Kantar's market estimations show that the Chinese retailer still lags well behind Zara and Primark.
Shein responded that it doesn't comment on other businesses when asked about Lefties. The retailer announced that, following pop-ups in Berlin, London, Paris, and Rome last year, it will establish "several" pop-up stores throughout Europe this year.
According to Primark, it doesn't discuss rival businesses.
Unreleased Kantar data show that Lefties drew even more customers to Portugal than Zara did the previous year.
"The competition is still very strong considering the extremely low price point," stated Grace Su, a portfolio manager at Clearbridge Investments with headquarters in San Francisco, whose fund owns Inditex shares.
"If they [Lefties] can drive a business with adequate returns, it's all accretive as long as it's not cannibalising the rest of the brands."
In addition to adding locations in the United Arab Emirates, where it conducts business through franchise partners, Lefties launched its first locations in Romania and Turkey last year.
At the same time, the number of stores that Zara and the other Inditex brands, including Bershka and Pull&Bear, have worldwide is decreasing. By October 31, 2023, Inditex had 585 fewer stores overall than it did the year before.
Similar to Zara, Lefties concentrates on constructing massive flagship stores in important towns in Spain. Its largest location will open in Madrid around the end of 2022.
Diana Doina, 47, and her 13-year-old daughter Carla were waiting to pay at the Lefties store in Madrid when she commented, "This is the first time we have shopped here." "I'll take some cargo trousers, and the trainers are really cheap."
(Source:www.reuters.com)
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