Prestigious brands like H&M and Zara have significantly reduced their pricing in the Indian retail markets owing to pressure on volumes and competition. In this December’s sales seasons H&M products touched the INR 250 lower limit whereas the corresponding figure for Zara stood at INR 390.
In the absence of volumes and driven by competition, both the brands decided to rope in new customers and build their loyalties from a long term marketing perspective. To sum it up, both the Swedish Fashion retailer Hennes & Maruitz (H&M) and the the Spanish fashion retailer Zara raced to the finishing line with crashing prices.
The prices were down by a good 25 per cent to 30 per cent. The pricing point of these two brands at the lower echelons ranged from INR 500 to INR 700. Both the brands are busy exploring virgin markets in newer cities with their low pricing strategy.
According to fashion observers, the two brands had a wide gap when it came to their entry point in the Indian market. Zara had made its debut in India during the year 2007 and at that point of time priced their average products higher than INR 1200. Even without competition they found it difficult to take a chunk of the market as their pricing was unfavorable by Indian standards. The problem further accentuated with H&M entering the market two years back and offered their products at a lower price. Succumbing to the price war, Zara lowered its average products to the INR 800 range.
After the 2017 festive season ended, the retail sales of all brands hit a low path and left these two high-end brands with the unenviable task of clearing their inventory. Retail observers however, stated that the pricing was not an issue with the brand’s margins as they had the ability to recover profits from products that were highly priced that catered to a niche market. The price war that is currently raging is more acute in the tier 2 and tier 3 cities which are smaller and on the whole are endowed with less purchasing power.