How Zara keeps expanding
Fashion Week is over. It is always the industry’s biggest celebration, but the 26 S/S season felt especially electric. Chanel, Gucci, Balenciaga, Bottega Veneta—the first collections from each brand’s new creative directors all arrived at once. Some even described this season as “the opening signal of a generational shift.” As a result, I spent the entire Chuseok holiday immersed in runway videos, photographs, and articles.
By the time the holiday was drawing to a close, my feet were carrying me, inevitably, to the department store. I started, as always, at the Balenciaga boutique, then wandered into Dior—a place I probably would never have stepped into if not for Jonathan Anderson. I tried on a few pieces, stored the prices in my head, and walked back out. I decided I would wait until the 26 S/S collections actually reached the sales floor. (I especially want to see Balenciaga’s new bag lineup. Two Cagoles are enough for me now.)
And then, as I always do, I headed to ZARA. Filled with inspiration, I picked up a new blouse and a pair of trousers. Through all the creative director reshuffles, the single biggest share of my wardrobe still belongs to ZARA. Back when I was in university, ZARA felt to me like a “department store with good value for money”: a wide assortment, fast-moving trends, and reasonable prices. And now, somehow in my thirties, I still find myself going back. As my lifestyle has changed, ZARA too has evolved—becoming more elevated, more layered, and more sophisticated. Perhaps my life cycle and ZARA’s strategy have aligned in an oddly perfect way.
Beyond its core apparel business, ZARA has continued to widen its reach by moving into new categories.
In 2021, it officially entered the beauty market by launching the “ZARA BEAUTY” line, spanning lipstick, eyeshadow, nail products, and brushes. Since it was entering a market already saturated with countless brands, each with its own identity, the strategy ZARA chose was somewhat unusual. It focused on “making niche categories more accessible.”
Rather than opening standalone beauty stores like traditional cosmetics brands, ZARA displayed its beauty line inside its existing fashion stores. In doing so, it was able to expose consumers more naturally to less mainstream colours and textures—products that would have been harder for a standalone beauty brand to push. In other words, it chose a strategy that increased accessibility while avoiding direct head-on competition with beauty brands.
On the apparel side, its expansion into sportswear and lingerie stands out. In step with the rapid growth of the athleisure market, ZARA entered the sportswear category in earnest in autumn 2021 with the launch of its men’s “ZARA Athleticz” line. Then, in 2022, it introduced a women’s outdoor collection featuring functional clothing suitable for high-intensity outdoor activities such as cycling, climbing, and skiing.
What is interesting is that unlike competitors such as H&M or Uniqlo, which leaned into more mass-market sportswear, ZARA chose to interpret relatively niche areas of sport through a fashionable lens. Rather than competing in already crowded categories like joggers, leggings, and sports bras, it appears to have selected items that are less accessible, less competitive, and more open to styling interpretation.
Its move into innerwear can be understood in the same context. Recently, ZARA renamed the relevant category on its official website not “Underwear” but “Lingerie.” The product mix also reflects this shift. Instead of focusing on basics such as bra tops or simple sleepwear, it offers more sensorial, more elevated pieces—bras with bead detailing, satin slips, corsets—items that are not necessarily easy entry points, but are delivered with a strong sense of design.
More recently, Zara has been diversifying its price positioning, shifting away from traditional mid-priced fast fashion and toward a partly premiumised strategy. This is visible in both the launch of higher-priced capsule collections and the broader rise in price points. The result appears to be a dual-track model: maintaining its core mid-priced range while selectively introducing more elevated product lines.
Beginning in the first quarter of 2022, Zara pushed through bold price increases, signalling an upmarket move aimed at higher-end consumers. For example, it introduced leather coats priced around KRW 700,000 and leather blazers in the KRW 500,000 range—items that would once have been difficult to imagine at Zara. Products made from premium materials, such as cashmere sweaters and evening dresses, are now displayed alongside the brand’s traditionally affordable, trend-driven pieces.
These premium products partly reflect the pass-through of higher input costs after Covid, but they also appear to be part of a broader strategy: differentiating Zara from ultra-low-cost fast fashion while attracting consumers who are looking for reasonable prices relative to quality. In fact, even during the economic slowdown, Zara and Mango posted strong sales on the back of better quality and greater experiential value. One interpretation is that consumers had grown tired of products that felt too cheap in quality and were increasingly willing to pay a little more for something more satisfying.
This also serves as a competitive advantage against fast fashion’s emerging giants, such as Shein and Temu.
Finally, ZARA has also been focusing on expanding the spectrum of its customer base.
As mentioned above, its premiumisation strategy has naturally had the effect of attracting older and higher-income consumers. Zara’s premium collections—such as the Studio Collection and designer collaboration lines—have raised both quality and design sophistication, enabling the brand to extend beyond its traditional twenties-based customer base and appeal to contemporary-brand shoppers in their thirties and forties as well.
In fact, Inditex defines Zara’s core target not by age, but as “all fashion customers seeking good quality and value,” regardless of generation.
ZARA is also making a strong effort to build its male customer base. In an attempt to move beyond its historically female-centred brand image, it has been testing dedicated men’s stores in selected markets. In 2023, it opened its first standalone “ZARA MAN” store in Los Angeles. The aim is to offer male customers a more differentiated shopping experience and, in turn, strengthen brand loyalty.
At this point, one question naturally arises: how does ZARA maintain profitability while expanding into so many areas?
The short answer is that ZARA has achieved not only quantitative growth, but qualitative growth as well.
Inditex, the parent company that owns Zara, recorded its highest-ever sales in 2022. In the first quarter of 2023, it achieved a gross margin of 60.5%, the highest level in a decade. This helped propel Inditex to become the world’s fourth most highly valued fashion company by market capitalisation, behind only LVMH, Nike, and Dior. Given that the three companies ahead of it are all luxury brands, this is an exceptionally unusual kind of success.
In the next piece, I will look at another pillar supporting ZARA’s strong profitability: its online and offline distribution strategy.