Tata Group-owned Trent Ltd has been synonymous with its flagship apparel chain, Westside, for many years. But the retailer’s centre of gravity is shifting now. It is slowly, yet steadily, moving towards six-year-old Zudio—a fast-fashion brand whose unique selling point or USP is to sell everything under Rs 1,000 ($12.5).
This transition would have been unthinkable till recently. Westside was responsible for over 60% of Trent’s revenue in the year ended March 2022.
But in the same period, Westside’s expansion paled in comparison to that of Zudio. Trent added just 26 Westside outlets even as it set up 100 Zudio stores. Since March, too, Zudio’s expansion has continued to outpace Westside’s.
A Zudio outlet may be just one-third the size of a typical Westside counterpart. But Zudio’s frenetic expansion is still quite uncharacteristic of Trent’s conservative, profitability-first approach.
A $5.8 billion-market cap company, Trent needed two-and-a-half decades to get to over 200 Westside outlets because it didn’t want to compromise on the bottomline. But it has managed to take Zudio’s store count to 250 in just six years.
“Our internal tagline for Zudio was, ‘Fashion at Star prices,’” says Subrata Siddhanta, the first business head of Zudio who left Trent in 2018 and is now a consultant. Star is a supermarket run by a joint venture between Trent and UK’s retail giant Tesco Plc.
While both apparel chains are in roughly 90 cities, Westside’s likely geographical footprint may be capped at 150-200 cities, a limitation Zudio is free of, according to Nihal Jham, a retail analyst at brokerage Edelweiss Securities. The key reason: Zudio’s aggressive pricing strategy. Westside’s average selling price is just under 3X of Zudio’s.
As a result, Zudio may soon become Trent’s most visible retail brand in the coming years and maybe Tata Group’s as well. The steel-to-software conglomerate, through different companies, also runs electronics retailer Croma and jewellery chain Tanishq, among others.
But value fashion is a cut-throat category. Zudio competes not just with Reliance Trends, Landmark Group’s Max Fashion, and V-Mart Retail. Its prices are in the same range as those charged by supermarket chain DMart DMart The Ken DMart’s e-commerce tortoise squares off against the JioMart hare Read more , even if the latter has a minimal range in apparel.
Meanwhile, investors have sent Trent’s shares soaring nearly 5X in the past five years. In comparison, rival Aditya Birla Fashion Retail Ltd’s (ABFRL) shares have risen less than 2X. And that’s partly because Westside has made up for its measured expansion with industry-leading gross margins of 60%. But with its rapid store addition and rising contribution to Trent’s business, Zudio–whose margins are only 40%–will drag the company’s profitability down.