Zara Closes Half Its Stores in China: Beats Chinese Brands Shein and Temu in the Fast-Fashion War, Focuses on Premium Customers, Achieves Record Sales of ₹4.3 Trillion
When Chinese brands like Shein and Temu took the fashion world by storm with their “ultra-cheap” model, it was widely believed that Zara would have to lower its prices to survive. However, the Spanish giant Inditex did the exact opposite, adopting a “premium strategy.” Inditex is the Spanish clothing group from which Zara generates two-thirds of its total sales. The result? In 2025, the company’s annual sales reached ₹4.3 trillion, and its net earnings hit a record ₹670 billion—a 6% increase compared to the previous year.
Zara’s operating profit is five times higher than that of its rival, H&M. According to Jeff Lowery of Rothschild Bank, selling fast fashion with a “luxury look” is now paying off. Inditex shifted its focus to style rather than price. To mark its 50th anniversary, the company launched a “luxury campaign” featuring renowned photographer Steven Meisel and top models, a move that transformed the brand’s image. Meisel is known for his work with high-end luxury brands; the hairstylists and makeup artists involved in this shoot were of the same caliber.
These advertisements featured every top-paid model of the past 30 years, shown dancing to Donna Summer’s hit song, “I Feel Love.” This display of glamour serves as a symbol of Inditex’s successful strategy. Today, Zara’s advertisements on Instagram look indistinguishable from those of an expensive luxury fashion house.
The group’s founder, Amancio Ortega, has built Zara upon an agile logistics network that introduces new stock every week. This approach minimizes the risk of dead stock and empowers the brand to command higher prices. William Woods of Bernstein notes that Zara targets buyers aged 30 to 40—a demographic more affluent than H&M’s customer base.
Competition from Chinese “even-faster-fashion” retailers like Shein and Temu has compelled several rivals, including H&M, to lower their prices. Óscar García Maceiras, the head of Inditex—which operates an agile business model and launches new items every week—attributes this success to the company’s decades-old operational framework. Founder Amancio Ortega built the business around a nimble logistics network that allows for the rapid rotation of merchandise based on customer preferences. Zara and its sister brands aim to introduce new items every week—and sometimes even twice a week. This strategy mitigates the risk of the brand producing garments that fail to find an audience, thereby avoiding the need to offload unsold inventory at steep discounts. It also affords Zara the flexibility to command higher price points, as its clothing line rapidly incorporates and adapts the latest popular styles.
Since Marta Ortega assumed the presidency in 2021, Zara has shifted toward a more “premium” positioning. The brand has recently forged partnerships with legendary designers such as John Galliano and Stefano Pilati. The styling of the singer “Bad Bunny” for his Super Bowl appearance is also an integral part of this broader strategy.
Inditex chief Óscar García Maceiras highlights a significant paradigm shift—one inspired by the concepts of personal shopping and luxury boutiques—stating, “Customers are now seeking something more—an experience—that extends beyond the mere act of purchasing clothing.” Zara has halved its physical footprint in China; however, it has transformed its remaining stores into larger, more opulent spaces. This strategic move has yielded impressive results: according to Deutsche Bank, sales per square meter surged by 46% between 2022 and 2025. The brand is now shedding its ‘fast fashion’ image to pivot towards ‘affordable luxury,’ offering customers an experience akin to that of a high-end boutique. Stores now feature dedicated boutique sections for handbags and footwear, along with ‘personal shoppers’ available to assist customers. This ‘luxury touch’ introduced by Zara is now scripting a new chapter of profitability.
