Zara is renegotiating rental terms with malls in India. This includes a reduction in revenue-share deals and either a lower or a total waiver of common area maintenance (CAM) charges that tenants pay landlords. Zara wants the CAM it pays be linked to sales. Zara has revenue-sharing agreements with most malls, and landlords get about seven or eight per cent of Zara’s revenues – one of the lowest revenue-sharing rates in the industry. Zara has established itself among the strongest fast fashion brands in India and has posed a stiff challenge to homegrown department store chains as the anchor tenant in tony shopping centers. It has helped malls by bringing in footfalls and revenue that the competition has found difficult to match or overhaul.
The Spanish fashion retailer entered India a decade back and has 22 outlets. Inditex Trent, a joint venture between India’s salt-to-software Tata Group and Zara’s global owner Inditex, runs Zara stores in India. The venture saw its revenue rise 17 per cent in fiscal ’19. Zara is still a strong performer even after mounting competition over the last five or seven years – and the arrival of more foreign brands and an explosion of web commerce.