Middle East to become one of key markets for Zara

The Middle East is poised to become a key region for Zara (Inditex), according to Reuters.

As Inditex’s pricing varies substantially by market, it ultimately determines which regions are the most lucrative, according to managing director at RBC Capital Markets, Richard Chamberlain.

In Saudi Arabia, Inditex’s ninth biggest market by number of stores, a pair of high-waisted Zara trousers costs 199 Saudi riyals (€49.63), while in Spain or Portugal the price stands at €25.95 euros.

Inditex chooses to sell Zara garments at higher prices in the GCC region because these markets will tolerate bigger price tags, head of retail at pricing consultancy Pearson Ham Group, Alex Romanenko, told Reuters.

“As long as Gulf states’ economies are performing well, the affluence of this particular segment will be pretty high and therefore this strategy will thrive.”

Last year, Inditex opened 23 new stores across six GCC countries, its annual report revealed.

Portfolio manager at Mackenzie Investments in Toronto, a shareholder in Inditex, Adam Gofton, said: “Prices are different by country, but they [Inditex] are going after that universal proposition of high fashion at affordable prices.”

The Middle East will succeed Russia (its second-biggest market by number of stores) as one of the key regions for Inditex following its exodus from the country that generated 8.5 per cent of group profit last year.

Head of European equity research at Amundi, Europe’s biggest asset manager, Ciaran Callaghan, said: “The consumer is remaining a bit more resilient than we would have expected last year.”

Last year, Inditex agreed to sell its business in Russia to Daher Group of the UAE. The decision came after the retailer suspended its operations in the country following Moscow’s invasion of Ukraine.

FashionNews

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