Overview – Zudio is a new jewel in Tata Group
Tata got Zara to India in 2010. They saw there is a gap at Zara minus 1 segment and created Zudio. At Rs. 3,200 cr in 5 years, it is arguably the biggest retail success ever in India!
As per Mr. K. Radhakrishnan. a retail veteran, mentor and founder of StarQuik, a TATA Enterprise on why this brand works. He explained the reasons of achieving the Product Market Fit (PMF) so quickly.
Zara hit Rs. 2,500 cr in sales last year so it is definitely working in India. But, while it is a mass premium globally – in India it is still premium.
Here customers are still looking for the sweet spot that intersects price, quality and fashion. With most global fast fashion brands one of those factors is always compromised.
Zudio filled that niche and exploded.
Reasons for Zudio becoming a super success for Tata’s retail business
Understanding this gap has them to an insane level of sales. The secret sauce in their business model:
1. Their stores are simple – black and white: There are no extra overhead costs and the focus is just on the vibrance of the garments. Unlike in most other stores where there are racks based on style or size, in Zudio the racks are based on price. Thus, a customer can choose their price point and see all the offerings in one go.
2. They have almost ‘0’ marketing cost: They rely on the value they are providing to generate loyal customers. These are their brand ambassadors who do the heavy lifting of marketing for them. Simple insight: word of mouth is the most powerful channels for marketing. If you don’t believe, just check their Instagram page (Rs. 3,200 cr and less than 100k followers 😂).
3. The business has a large TAM: 71% of young Indian consumers are looking for aspirational and quality lifestyle purchases. Recognising this, Zudio has been able to focus their pricing and sales strategy directly in the sweet spot for these consumers to generate serious volume in a short period of time.
4. Efficiency with production and sourcing: Zudio has taken full advantage of its parent company’s efficiency with production and sourcing. By gaining raw materials from low-cost suppliers they are able to pass that benefit onto the customers.
5. TLDR: Indian customers have always loved quality products at reasonable prices and this has helped Zudio achieve PMF. This is what sets it apart from the likes of Zara, H&M etc.
People say India is a very complex market. But, if one understands the gap – the opportunity is infinite!
Why do you think Zudio worked? Have you seen any other examples of this level of PMF?
PS: It was told that customers have even waited in lines outside Star Bazaar for Zudio, and not groceries! That is the level of PMF they have.
Credit: Arjun Vaidya, Co-Founder @ V3 Ventures
