Global Fashion Brands See Divergent Fortunes as Zara Outpaces H&M in India

Fashion retailers are reassessing their store networks as changing consumer preferences reshape the industry, with Zara continuing to report revenue and profit growth while H&M closes stores and experiences declining net sales. In high-street retail in India, Zara operates around 22 stores compared to H&M's 67, yet generates double the net sales. While H&M reported increased operating profits in fiscal year 2025, its net sales dropped by 3 per cent, with overall profit driven by operational cost-cutting and the closure of 128 stores over the year.

Luxury And Market Shifts

In the luxury sector, Prada's subsidiary Miu Miu recorded a 30 per cent rise in net sales, pushing the group's overall sales up 3 per cent in the fiscal year ending March 2026, following a 4 per cent decline the previous year. Burberry reported a 2 per cent increase in store sales under its new "Burberry Forward" strategy, which returns the brand to British heritage staples and artisanal cashmere, though its sales have generally been declining for years. According to Vogue magazine's Pinterest Predicts trends, consumer tastes are shifting from neutral aesthetics toward maximalism after fast-fashion suppliers overproduced neutral styles and caused visual boredom. Meanwhile, McKinsey and Company's State of Fashion 2026 report notes that United States tariffs since 2024 have raised merchandise prices and added to uncertainty around consumer confidence and discretionary spending.

Athleisure And Pricing Strategy

Athleisure pioneer Lululemon saw its market capitalization fall by over 50 per cent alongside falling revenues, undermined by the abundance of market dupes and reliance on synthetic fabrics. Successful brands pair optimized premium pricing with intensive inventory management, as seen with Zara taking 15 to 20 days to adapt runway trends into small batch quantities that create artistic scarcity. In contrast, H&M relies heavily on Asian manufacturing in China, Bangladesh, and India with lead times as long as six months for basics. According to Redseer Strategy Consultants, organised retail channels in India are expected to account for 73 to 83 per cent of incremental fashion gross merchandise value between 2026 and 2030, while branded products will account for 62 to 66 per cent of online fashion gross merchandise value by 2030.

Context

Retail performance in the apparel industry depends heavily on balancing agile supply chains with distinct design identities that avoid direct price wars with mass-produced competitors. As consumer awareness grows regarding materials and manufacturing, brands must adapt to shifting preferences across different price segments and distribution channels.