Please note! This essay has been submitted by a student.
Culture can be defined as any shared values, beliefs, identities, and interpretations from particular group or societies that are carried across generations India is a newly industrialised country and emerging market, who is the world’s 7th largest national economy, with one of the world’s fastest growing country in terms of annual GDP (average 7.5%). However, there is currently a cultural barrier that are restricting foreign retail companies from fully benefitting from the Indian market. The majority of the female population are still wearing traditional clothing like sarees and salwar kameez and are less familiar with the idea of rapidly-changing fashion. In line with this, India also has a preference for colourful and vibrant clothing. Zara is a Spanish multinational fashion retail brand who operate within the Indian market and still face the challenge of encouraging and attracting the Indian population to adopt western attire. Zara, are a born global company who are a subsidiary brand of their parent brand and fashion retailers Inditex.
The Born Global theory states that companies like Zara start-up with competitive advantages such as; resources, suppliers and capital. This then gives them the advantage to innovate ways in which they can quickly spread globally through access to technology. This explains how Zara quickly was able to reduce impacts of cultural difference by placing tablet devices in their stores to encourage feedback which was analyzed by store managers to defend their position in the market and cater for the Indian population. According to Albert & Micheal if a company does not adapt to different cultures they will not be able to reach the full potential of successfully expanding. In line with this, the Network Approach acknowledges the activities of market entry and states internalization can be achieved through building relationships in order to develop networks and increase access to resources to speed up expansion. This can explain the success Zara has attained, through the partnership deal with Indian retailers Inditex Trent in order to expand the international presence which saw sales grew by 17% By 2028, nearly 40% of the Indian population is expected to be moving to urban areas – adding new consumers to the middle class which forms nearly 50% of Zara’s total customer base. By 2025, The rapid expansion of professional sectors in India means that there will be an increase in the number of women entering the workforce to earn a living. This gives women greater consumer confidence and spending power as it creates a need for people to dress smartly, therefore are more willing to neaten up and accept the western apparel.
This outlook suggests that although Zara may be experiencing a slow growth within the next couple of years whilst the Indian population is shifting to urban areas, Zara’s future with India does look promising in terms of its expansion prospects, sales and profits from this rapid expansion in professional sectors which reduces this cultural barrier. This means that Zara should remain patient by continuing to monitor these changes in preferences and clothing and continue to create new collections regularly. In the meantime, Zara can create clothes that have a blend of Indian and western preferences to reduce the gap on cultural barriers and ease consumers into western attire. Zara should also focus its attention on availability by identifying space to open new stores to prepare themselves for the Indian population to evolve in western apparel. In addition to this, Zara also needs to maintain their competitive pricing strategy to increase their market share, as H&M entered the Indian market last year offering lower prices. This may cause the novelty factor of Zara to wear off leading to a consumer shift to H&M.