Inditex: Zara‘s struggles in China

研报英文原文证据摘录

Inditex: Zara‘s struggles in China

nity in Europe and the US. We think that the strategic actions taken to retrench to Tier 1

cities, invest in flagships and bolster marketing efforts (e.g. livestreaming) make sense and that if there was some improvement

in either the Chinese consumer or Zara’s brand positioning, Inditex would be poised to take advantage of the opportunity.

However, we don’t see this as an opportunity in the short/mid-term.

DETAILS

• Within apparel, we think there is an increasing preference for localized Chinese brands vs. global/Western brands.

It is difficult to separate whether or not this is driven by the growth and improvement of local competition or a distinct

consumer preference to buy local. However, we can see in surveys that Chinese consumers have a growth preference for

localized brands over the last decade and that local Chinese brands are taking share from global players. We think this

remains a large market headwind for Western brands in China.

• The competitive landscape is tough and new entrants have very fast speed-to-market and are competitive on

pricing. The Chinese retail landscape is one of unparalleled competitive intensity and is among one of the most

fast-evolving, particularly when it comes to the lower-priced segment of the market concentrated on fast-fashion, with

players such as Shein, Semir, Peacebird and M Essential (all private, not covered).

• The main direct competitor in the market is Urban Revivo, which is often thought of as being China’s Zara, given it has built

a place for itself in the market grounded in fast design cycles, localized aesthetics, and pricing which undercuts Zara by

c. 20%, whilst offering comparable quality. Importantly, unlike Zara’s global design orientation, Urban Revivo invests in