Revamped Outlets, More Sections: Why Retail Brands Are Focusing On Physical Stores

India’s fast fashion has grown significantly in the last decade or so. Thanks to the initial success of brands like Hennes & Mauritz (H&M), Zara, Forever 21, and Mango, among others, several other players are now eyeing the growing Indian market. Brands like H&M and Zara are increasingly focusing on re-imagining their offline retail stores to cater to the resurgence of offline retail after the lull during the pandemic. They’re seeking to curate an omnichannel presence for better consumer experience. 

Swedish fashion retailer H&M and Spain’s Zara are aiming to build on customers’ demand for an omnichannel buying experience. Brands are now combining the advantages of in-store shopping with the convenience of online to deliver a superior customer experience. A renewed importance in upping their retail game has led both H&M and Zara, market leaders in the segment in India, to give their stores a new look. 

In May, Zara reopened its refurbished store at Mumbai’s Phoenix Palladium Mall. The store is spread over 26,000 sq ft and spans three floors. “This store has become much brighter. The old Zara store was all black. Now we have a much brighter store, with ample lighting and wooden accents,” a store manager at Zara told The Core.

What’s Changed? 

According to the Zara store manager, the footfall in the store increased considerably post the refurbishment. H&M too upgraded its Saket store in New Delhi. The new store, spread over almost 30,000 sqft, added the H&M Home collection to the outlet. The brand has also introduced its beauty offerings, consisting mainly of nail paint, to its physical stores. 

These new stores are also getting bigger, storing more merchandise and bringing the renewed vision of aesthetics that the brand carries internationally. “Brands are no longer differentiating. They want to give Indians the same experience they’d find internationally,” Pankaj Renjhen, COO of Anarock Retail told The Core. 

The renovated Zara store in Mumbai resembles the international store design and elements

Upgrading stores at regular intervals is not new in the retail business. However, because of the pandemic, companies lost out on significant business periods due to restrictions. To make up for the lost time and get customers back into physical stores, brands are focussing on making stores bigger and differentiated.  

Zara’s flagship store in India opened in 2010 at Phoenix Palladium in Mumbai’s Lower Parel area, the only premium mall in the city. After its May renovation, the store now looks quite like the brand’s international stores. The brand’s cosmetics offering, Zara Beauty and the Origins section in menswear are also new additions to the store. Zara has 21 stores in India run by Inditex Trent, a joint venture between the global distribution giant Inditex and Tata owned Trent Limited.

The beauty section at Zara store in Phoenix Palladium, Mumbai.

“The interior is predominantly white, clean and neutral with hints of colour and warmth from the wooden furniture and the natural tones of the textiles,” the company said. The statement also added that the store reflects the company’s current strategy of opening stores in a bigger format that are equipped with the most efficient technological tools.

The store manager at Zara said, “There are much more open spaces now to allow customers to roam around more freely within the store and get a better retail experience,” He also added that the store is now storing almost twice as much merchandise as it used to earlier. 

The Core reached out to the official spokesperson for Zara and H&M but they declined to comment.

Others Follow Suit

H&M and Zara are not the only fast retail brands focussing on renovating their retail stores.  Brands like Lifestyle, United Colours of Benetton, and Starbucks, opted to revamp their stores to give customers a more modern shopping experience. 

Benetton’s South Extension store in New Delhi was recently redesigned to offer a display of the entirety of the store’s collections and provide an international shopping experience to its customers and focus more on women’s fashion. Benetton overhauled its business post-covid by closing a few stores and making others larger and more differentiated.

Competition in fast retail has also increased significantly. Others like Gap reopened its stores in India earlier this year. Uniqlo made its India debut in 2019. A number of standalone beauty chains have taken premium space in malls. Birkenstock, Tira, and Mango Man are expanding their presence in India. 

Also Read: Premium Outlet Malls Are A Hit In The West, But India Isn’t Likely To See One Soon

More Space For Consumers and Merchandise

 Zara earlier had a two-storey store and added a third floor in its revamped store. Analysts say that store size expansions have started gaining prominence across categories.

Renjhen says, “ Market sizes are increasing, and consumption levels are going up. So, expanding retail stores’ offerings has become a priority. Brands have realised that a 16,000 - 20,000 sqft. store is not going to suffice. They are moving towards the 30,000 - 32,000 sqft. sizes.”

Both Zara and H&M have recorded a substantial increase in revenue and profit in FY23. Zara recorded a 40.42% year-on-year growth in India revenue at Rs 2,562.50 crore for FY23 and profit rose 77.66% to Rs 264.30 crore, as per Trent Ltd's annual report. H&M recorded a 40% increase in sales at Rs 2,960 crore in FY23 while profits increased by 72% to Rs 43.6 crore.

However, bigger stores and better sales do not necessarily mean that the stores are displaying more merchandise upfront. Rather, these brands are prioritising open spaces and minimalistic designs. 

The goal is to create a more pleasant and immersive shopping experience for customers. By decluttering their store layouts, they are able to highlight key products and enhance the overall aesthetic. Renjhen said that stores are maintaining the same density of merchandise on display while increasing store space and deepening merchandise offerings. 

And this is happening mainly because of the rise of omnichannel retail. “While all brands today offer a broad assortment, with the advent and integration of digital tools it is not essential to have all the products in the store. Digital tools – like kiosks / order in store & deliver home / see in store and order on app / etc. – allow brands to keep curated assortment in the store and sales staff are able to convert (other colours / different size) through the use of this,” Abhishek Malhotra, partner at McKinsey & Company told The Core. 

Experience is Everything

The nature of retail stores has now changed from serving as a point of sale to offering an immersive consumer experience. Brands are treating physical stores as spaces to give their consumers a complete shopping experience. This is where the aesthetics, displays, and salesperson conversations come into play. 

Malhotra said, “Stores have always served two purposes – point of sale and consumer/brand engagement with the former being easy to measure and being the primary objective. As consumer journeys become more omni-channel, it is tougher to just measure physical store sales. The second dimension – which is consumer and brand engagement is becoming an increasingly important dimension for all stores.”

Krati Sharma, who heads Design by Krati, a visual merchandising firm said, “It’s about giving customers a holistic experience, activating all their five senses. They should be willing to stay in your store for a longer time.” 

Sharma said that newer brands are experimenting with utilising store spaces as community spaces as well. Making space in store for events, activities and meetups goes a long way in building a brand community. 

That’s Not All

These makeovers are not a one-off strategy either. Renjhen said that eventually, these retailers would refurbish all their stores. Apart from the Saket store, H&M has already made changes in their Vasant Kunj store in New Delhi as well. Zara started its renovation drive with its store in DLF Promenade in New Delhi. 

In addition to the design and merchandising changes, these stores are also incorporating technical innovations to improve customer experience. For example, Zara’s store has a self-checkout counter and also allows customers to check the availability of a product in-store from the app itself. Going forward, in addition to the design and visual merchandising changes, brands will also be integrating more digital tools to elevate the overall shopper experience.

“As consumer education and awareness increases (due to traditional and social media), consumers are increasingly looking for better experiences across all walks of life – where this is about travel or dining or apparel shopping.” Malhotra said. And to deliver this shopping experience, brands across the board are expected to soon bring a combination of design and tech-enabled changes to their stores. 

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