New Delhi

Inditex, the parent company of Zara, has embarked on a strategic move to expand its low-priced brand Lefties in response to the growing presence of the Chinese-founded rival Shein.

Advertisment

Shein's rapid growth in the online marketplace has put pressure on major retailers like Inditex and H&M to devise strategies to tackle its competitive edge.

Once a leader in fast fashion, Zara has faced challenges in maintaining its competitive pricing due to Inditex's price hikes aimed at safeguarding profit margins amidst inflation and targeting more upscale clientele.

However, Inditex is quietly strengthening its budget-friendly offerings, with the expansion of Lefties being a pivotal aspect of this strategy. 

Advertisment

Lefties, originally conceived as an outlet for Zara's excess inventory, has evolved into a brand selling jeans for as low as $19.48, dresses starting from $8.65, and handbags priced at $6.48.

The expansion of Lefties extends beyond its origins, with stores now present in 17 countries, including emerging markets like Egypt, Mexico, Romania, and Saudi Arabia. 

This strategic move signals Inditex's commitment to catering to consumers seeking value-oriented options, a market segment that Lefties aims to capture amidst the competitive landscape dominated by Shein.

Advertisment

Lefties' growth trajectory has been particularly noteworthy in Spain and Portugal, where it has attracted a significant customer base.

Lefties has witnessed a substantial increase in customer numbers in Spain, reaching close to 5 million, just behind Shein's estimated 5.2 million customers. 

This trend underscores Inditex's ambition to diversify its consumer base and tap into market segments that may prefer more affordable options, compared to Zara's offerings.

The competition posed by Shein has prompted discussions within Inditex management regarding strategies to effectively compete against the fast-growing online retailer.

While Shein remains unlisted, its significant market share, estimated at 18 per cent by Coresight Research, emphasises the need for Inditex to devise innovative approaches to maintain its competitive edge.

Inditex's decision to keep Lefties' financial results private reflects a cautious approach aimed at allowing the brand to reach critical mass and profitability without undue pressure from competitors.

Lefties is focusing on providing a robust online service and leveraging its low-cost segment. By doing so, it aims to establish itself as a formidable player in the fast fashion market, particularly in regions where competitors like Shein face delivery challenges or lack home delivery options. 

(With inputs from Reuters)