CASE STUDY ON ZUDIO

"Affordability Unveiled:
Decoding Zudio's
Pricing Strategy "

PRESENTED BY:

Sr. No. Name Registration No. Signature

1 Anchal Thakur 122001311

2 Varanjot Kaur 12200519

3 Parminder Singh 12201029

4 Sahil Gupta 12201298

5 Tanish 12200647

1|Page
 CASE STUDY ON ZUDIO

ABSTRACT
In a dynamic Indian fashion retail landscape, where trends evolve rapidly and consumer
preferences constantly shift, Zudio stands out for its remarkable strategy of offering trendy
apparel and accessories at incredibly affordable prices. Zudio, being a low-cost fashion
retailer, adopted a generic strategy focused on cost leadership. This strategy aims to offer
products at the lowest possible prices in the market. In this case study, we delve into the
strategic underpinnings behind Zudio's remarkably affordable pricing. Zudio, a notable player
in the fashion retail sector, has gained widespread attention for its ability to offer trendy
clothing and accessories at prices that are often lower than its competitors. It delves into the
core of Zudio's pricing strategy, unraveling the secrets behind its ability to maintain
competitiveness in a market characterized by diverse consumer segments and intense
competition. By peeling back the layers of Zudio's pricing model, we aim to uncover the
unique insights and strategies that have propelled the brand to success in the Indian fashion
retail industry. Low-cost generic strategy refers to a business approach where a company
aims to become the lowest-cost producer in its industry while maintaining satisfactory quality
standards. This strategy involves minimizing costs at every stage of the value chain to offer
products or services at prices below those of competitors.

Elements of this strategy are:

• Cost Minimization Techniques

• Streamlined Operations Processes
• Efficient Supply Chain
• Economies of Scale
• Lean Resource Allocation
• Price Leadership Position

In the context of Zudio, the brand's ability to offer affordable pricing is closely tied to its
ability to leverage economies of scale. By expanding rapidly and adding numerous stores
every month, Zudio is able to achieve higher levels of production and sales volume. This
allows the brand to spread its fixed costs (such as overhead, marketing, and administrative
expenses) over a larger output, leading to lower average costs per unit of production
2|Page
 CASE STUDY ON ZUDIO

INDIAN FASHION RETAIL INDUSTRY

The fashion retail industry in India is a vibrant and rapidly growing sector that caters to a
diverse consumer base with varying tastes, preferences, and purchasing power. With the rise
of disposable incomes, changing lifestyles, and increasing exposure to global fashion trends,
Indian consumers are becoming more discerning and demanding in their fashion choices.
This has led to a proliferation of fashion retail brands, both domestic and international,
competing fiercely for market share. In 2023, the market size of fashion retail in India
amounted to over six trillion Indian rupees. This was an increase as compared to the
previous year. However, the fashion retail market is likely to increase to over 11 trillion
rupees in 2027, AND NOW at present it has captured 50 billion of market. (SEE EXHIBIT
1)

INTRODUCTION OF COMPANY1
When it comes to shopping, there are countless options available to us. From high-end
boutiques to budget-friendly stores, the choices seem endless. However, there is one store
that has been making waves in the retail industry with its unique pricing model: Zudio. If you
haven’t heard of Zudio before, you’re in for a treat. Zudio is a store that has gained popularity
for its incredibly affordable prices. Zudio, a trailblazer in the fashion industry, has
revolutionized the way customers perceive and engage with fashion through its
unconventional marketing strategies. Zudio is a fast-fashion company that debuted in India in
2016 and is owned by the retail giant Tata Group. Zudio has expanded its presence to over
300 stores and counting. The company has a large selection of reasonably priced clothes,
accessories, and shoes for men, women, and children. By making its prices lower than many
other fashion names. Zudio is a rapid fashion company that creates fashionable clothing in
large quantities. Zudio is utilizing economies of scale to its advantage! We can effectively
produce and distribute high-quality items in big quantities thanks to this strategic advantage,
which significantly lowers manufacturing costs.
The business is able to keep prices low by using economical production techniques and
obtaining raw materials from inexpensive vendors. Zudio successfully positioned itself as an
inexpensive fashion destination by combining quality, style, and affordability. This appealed
to the demographic of fashion-forward yet budget-conscious individuals. Zudio adopts a
1
https://medium.com/

3|Page
 CASE STUDY ON ZUDIO

novel strategy by sparingly spending money on conventional marketing and advertising

techniques. Zudio's profitability has increased dramatically as a result of its low-cost
marketing techniques, which include influencer marketing and word-of-mouth advertising.
Zudio successfully amplified their brand message by utilizing content marketing and
influencers.Understanding how influential people and social media have a big influence on
consumer behaviour. No intermediaries Zudio uses a direct-to-consumer strategy, doing away
with the need for middlemen or wholesalers. It avoids further expenses by selling its goods
directly to consumers via its physical storefronts and internet platforms. Zudio gives sales
volume a higher priority than sales margin. With a large number of locations across India, the
business depends on a high product turnover to earn a profit.
Zudio’s pricing strategy has been a game-changer, attracting customers far and wide! The
brand offers a wide range of trendy fashion at incredibly affordable prices! From just Rs.99
to Rs.999. This has assisted Zudio in establishing a loyal customer base, particularly among
the middle-class segment of the population.
- Zudio’s vision is simple yet profound: to design and deliver fashion brands that resonate
with our customers on every level (SEE EXHIBIT 2). They strive to be more than just a
clothing retailer; they aim to become synonymous with style, quality, and affordability.To
achieve their vision, they are committed to creating value for all our stakeholders. This
means understanding their needs intimately, earning their trust through exceptional service,
and providing them with top-notch products at prices that are accessible to all. It’s mission
is to Emphasise aspirational fashionability, expand exclusive brand offerings, accelerate
store openings to enhance accessibility, focus on delivering the latest fashion trends
weeklyand strengthen omnichannel presence.
At Zudio, the way everyone works together is really important. They want everyone to feel
included and valued. This means they listen to everyone's ideas and let them use their own
skills and experiences. They believe that when people work together and support each other,
they can come up with really great and new ideas.They don't just copy what other people
are doing. Instead, they want to be the ones leading the way and showing others what's cool
and fashionable. They believe in being honest, working together, taking responsibility, being
creative, and always trying to do their best. They want to make sure that they're not just
making clothes, but also making a positive difference in the lives of their customers and the
communities they're part of.To support its growth strategy, Zudio prioritises human capital
readiness. The company has implemented initiatives to enhance organisational capabilities,

4|Page
 CASE STUDY ON ZUDIO

including recruiting over 5,000 store colleagues and investing significantly in their training
and development. By leveraging advanced recruitment technology, Zudio has streamlined
hiring processes, resulting in a significant reduction in decision-making time and improved
candidate experience. As part of the Tata group, Trent upholds the highest standards of
governance and fairness, ensuring transparency and accountability in its operations.

FUTURE OUTLOOK
India's fashion retail landscape is witnessing a paradigm shift towards affordability and
youthcentric offerings. “Today, organised retail is less than 30 percent in apparel, and 70
percent is in the unorganised space. And the unorganised space is around Rs 1.3 lakh crore.
So, what we have been seeing over the last 10 years is a move from unorganised to organised.
And, hence, that segment is very, very large,” former MD & CEO Venu Nair said in Shoppers
Stop’s first quarter FY24 earnings call. With brands like Zudio, Yousta, and Intune leading
the charge, the market is ripe for innovation and expansion. While the path to success may
not be paved with high margins, the potential rewards are significant. As long as retailers
prioritize efficiency and understand the pulse of aspirational India, the future of fashion retail
in the country looks bright, fashionable, and pocket-friendly.If you look at the overall market
in India, the largest segment of the market is in tier-2, tier-3 and beyond. In FY ’24, Zudio
launched over 100 outlets in India and expects to increase its total store count to
approximately 500 by March 2034. It intends to open 150-200 outlets in FY ’25.Zudio,
Trent’s retail arm, has enabled the firm to more than treble its independent sales from around
Rs 3,500 crore before the pandemic to Rs 8,000 crore in 2022-23, boosting the retail arm’s
market valuation to more than US $ 5 billion.A few such brands are Azorte competing with
H&M, Roadster challenging Pepe and Levi’s, Louis Phillipe, Ralph Lauren. Additionally,
within this ecosystem, certain brands like Reliance’s mens wear line Netplay, DNMX and
Teamspirit, which have very similar design feel and quality and range of products including
T-shirts, socks, shirts, trousers, bottoms, are experiencing rapid growth, outpacing brands like
Superdry, Scotch & Soda and US Polo in a nutshell. Similarly, Trent Ltd., conceptualised
Zudio, a brand that is trend-focused like Zara but offers products at approximately one-third
of its price. This move has proved to be strategic, especially during times of high inflation
and less luxury spending, making Zudio an ideal pocket-friendly yet super-trendy alternative
appealing to the young consumers who are trendconscious.It is accurate to state that Zudio in
just 7 years boasting of approximately 350 stores, is set to soar, propelled by the opening of
around 130 new stores within this calendar year. This expansion initiative aims to bring

5|Page
 CASE STUDY ON ZUDIO

Zudio’s total store count to 500 marking a significant step in its offline expansion. Zudio’s
gross revenue stood at Rs.3200 crore+ The company added 125 Zudio stores in FY 2023 and
will be adding 200+ Zudio stores in FY 2024. With a run rate of selling 2 million garments
per week in FY 2023 has propelled Tata to shift gears and accelerate the brand’s expansion
even further.2

TIMELINE OF EVENTS
YEAR EVENT
1952 Lakme Ltd. (later renamed Trent Ltd.) was incorporated.
1998 Trent Ltd. acquired 100% equity shares of Trent Ltd (formerly known as
Littlewoods International (India) Ltd).
1998-2000 Establishment of Westside lifestyle retail chain in Hyderabad, Chennai, Mumbai,
and Pune.
2001-2003 Expansion of Westside stores in New Delhi, Kolkata, Ahmedabad, Noida,
Mulund, and Bangalore. Acquisition of Fiora Services Ltd.
2004-2005 Acquisition of Satnam Developers and Finance Pvt Ltd. Launch of Star India
Bazaar hypermarket in Ahmedabad.
2005-2006 Acquisition of Landmark Ltd. Opening of new Westside stores and expansion of
operations in Delhi, Noida, and Mumbai.
2006-2007 Opening of new Westside stores in Jaipur, Lucknow, Surat, and Mysore.

2008-2009 Opening of additional Westside and Sisley stores. MoU with Inditex
Group to develop Zara stores in India. Sale of equity shares in Landmark Ltd.

2009 Sale of shares in Landmark Ltd. to TVS Shriram Growth Fund I.

2010-2013 Approval for rights issue, MOU for Massimo Dutti stores, and QIP issue.
Acquisition of East West Books (Madras) Pvt Ltd.
2014-2015 Investment agreements with Tesco PLC for Trent Hypermarket Ltd.
Launch of Sport Zone stores in India. Divestment of stake in Westland
Publications Ltd.

2
https://bootcamp.uxdesign.cc/truths-behind-zudio-s-500-million-dollar-success-bcaf44dda8b5
6|Page
 CASE STUDY ON ZUDIO

2016 Sub-division of equity shares and divestment of stake in Westland Publications

Ltd.
Launch of Zudio brand by Trent Ltd., offering affordable fashion retail.

2017 Acquisition of stake in Westland Limited. Agreement for acquiring value fashion
apparel business from Trent Hypermarket Private Limited.

2018 Incorporation of Fiora Online Limited.

2019-2020 Expansion of Westside stores and integration with online platforms.
2022-2023 Further expansion of stores and consolidation efforts.

The Tata Group shines as a beacon of innovation and strategic foresight, boasting two distinct
clothing brands - Zudio and Westside. Despite both brands being part of the same corporate
family, they maintain separate identities and market positions, a testament to Tata's
commitment to catering to diverse consumer segments. This strategic approach stems from a
deep understanding of the importance of brand recall and consumer perception in the fiercely
competitive retail market.While the notion of sharing stores might seem economically
enticing, Tata recognises that the potential loss of brand identity and consumer trust far
outweighs any short-term cost-saving benefits. Hence, Zudio and Westside operate
autonomously, each carving its niche in the market and catering to specific consumer
preferences.The genesis of Zudio can be traced back to Westside's struggles in penetrating
tier 2 cities, where consumer preferences diverge significantly from those in metropolitan
areas. In tier 2-3-4 cities, affordability and trendiness take precedence over premium quality
and subtle designs, posing a challenge for Westside's traditional market positioning. Faced
with this dilemma, Tata seized the opportunity to introduce Zudio, a brand tailored to the
needs and aspirations of consumers in these burgeoning markets.
Positioned as a trend-conscious and budget-friendly brand, Zudio aims to bridge the gap in
tier 2-3-4 cities and capitalise on the growing demand for affordable fashion. By offering
stylish yet pocket-friendly clothing options, Zudio aims to democratise fashion and empower
consumers from all walks of life to express their individuality without breaking the bank.

BUSINESS MODEL OF ZUDIO

Zudio operates on the FOCO (Franchise Owned and Company Operated) Model.

7|Page
 CASE STUDY ON ZUDIO

In this model investment is done by franchise and the store is operated by the company.(SEE
EXHIBIT 3). This model can be appplied by anyone who wishes to start a new business.
There are some requirements for applying for this business. Investing in a Zudio franchise
offers a gateway into the world of affordable fashion backed by the esteemed Tata
Group. With over 300 stores nationwide, Zudio has established itself as a go-to destination
for trendy yet budget-friendly clothing, footwear, skincare, fragrances, and beauty products.
As a franchise owner, you’ll benefit from Zudio’s proven business model, extensive training,
and ongoing support. With a diverse product range catering to customers of all ages and
preferences, there’s ample opportunity for growth and success. Beyond business, being part
of the Zudio community means engaging with fashion enthusiasts and fostering meaningful
connections. Choose a Zudio franchise for a chance to be at the forefront of India’s fashion
revolution, offering style, affordability, and inclusivity to customers across the nation. 3

ZUDIO FRANCHISE REQUIREMENTS?

AREA: 4000- 6000 SQ. FT.

ZUDIO FRANCHISE COST: RS 2-3 CRORES
ZUDIO FRANCHISE PROFIT MARGIN: 16% OF THE TOTAL SALES (GROSS PROFIT
OF THE FRANCHISE)
NET PROFIT:
Net profit calculation example(SEE EXHIBIT 4)

COMPETITORS
In the Apparel Retail industry, Trent faces a mixed landscape of competitive forces. While
rivalry among existing players, such as MAX and Pantaloons, is moderate, ZUDIO stands out
with its rapid growth and expansive store network. ZUDIO's strategy of offering low-priced,
high-quality products gives it an edge, despite limited presence in the e-commerce space.
With ZUDIO controlling its entire supply chain, the bargaining power of suppliers is very
low. Similarly, buyers have minimal bargaining power, as ZUDIO sets fixed prices in its
stores. However, the industry faces significant threats from new entrants like YOUSTA,
introduced by Reliance, which could challenge ZUDIO's market position. Additionally, the
rise of e-commerce and influencer marketing poses significant threats, urging ZUDIO to
consider expanding its online presence and investing in promotional strategies. Overall, while
3
Zudio Franchise in India: Cost, Profit & Process [March'24] (daalchini.co.in)
8|Page
 CASE STUDY ON ZUDIO

ZUDIO enjoys advantages in certain aspects, it must remain vigilant to navigate the dynamic
landscape of the Apparel Retail industry effectively. ZUDIO, as one of India's largest retailers
with over 300 stores nationwide, boasts significant strengths such as strong customer
retention, efficient order management, and a keen understanding of evolving consumer
preferences. Its pricing strategy of offering high-quality products at affordable prices,
coupled with a wide range of clothing options for all demographics, has fostered brand
loyalty and appeal, particularly among the youth. However, ZUDIO faces weaknesses
including a lack of advertising, excessive product options leading to brand switching, and
limited presence on social media platforms. Opportunities lie in leveraging digital marketing
strategies and establishing an online presence to tap into the growing e-commerce market.
Nonetheless, the company must remain vigilant against threats from e-commerce websites,
local competitors, and established brands like Pantaloons and MAX. Strategic adaptation to
these factors will be crucial for sustaining and enhancing ZUDIO's competitive position in
the dynamic retail landscape.

STRATEGIES FOLLOWED BY ZUDIO4

Strategic Locations: Zudio adopts clever cost-cutting tactics to maintain its low prices. One
strategy is selecting costeffective locations for its stores. Instead of high-rent areas, they
choose locations with lower rental costs. For example, they might opt for malls like City
Mall in Raipur, known for its affordable rental rates.

Avoidance of E-commerce: Zudio consciously stays away from the online retail game. This
decision is based on statistics revealing high return rates in e-commerce, which can
significantly impact margins due to logistics costs associated with returns. By skipping e-
commerce entirely, Zudio saves on delivery expenses and minimises the headache of dealing
with returns.

Economies of scale: Following the Dmart strategy, Zudio focuses on bulk production to
benefit from cost reductions. These savings allow them to offer competitive prices to
customers while maintaining profitability.

4
https://www.linkedin.com/pulse/10-key-strategies-how-zudio-conquered-indian-value-fashion-nag-tex8f
9|Page
 CASE STUDY ON ZUDIO

Thin margins: Zudio faces challenges with its thin margins, impacting both Trent Ltd's
overall margins and investor satisfaction. Following the announcement of quarterly results,
Trent Ltd experienced a 3% decrease in its shares. This decline was attributed to the decrease
in gross margin from 51% to 45%, driven by increased revenue from Zudio stores, which
inherently operate on lower gross margins compared to other brands under the company.The
discrepancy in average selling prices between Zudio and Westside further illustrates the
impact of Zudio's pricing strategy on its margins. While the average selling price at Zudio is
Rs. 500, it's three times higher at Westside, at Rs. 1500. Consequently, Westside maintains a
healthier gross margin of 55% and a robust EBITDA margin of 13%, whereas Zudio operates
on a narrower gross margin of 35% and a modest EBITDA margin of 6%.

High throughput (revenue/sq. ft.) and quick inventory churn: Given the low gross
margins, Zudio’s success lies in its strong turnover – revenue/sqft of ~12-15k/ sq. ft. (v/s
industry average of INR8-10k/sq. ft.). This is derived through a combination of strong
footfalls and healthy conversion, which is ~2x v/s other retail outlets in the apparel/value
fashion category. Zudio’s high fashion appeal and sharp pricing has led to an encouraging
store operating metrics. Also, the store’s inventory churn is less than one month with weekly
~15% product refresh, thus, products are changed every two months.

Effective Inventory Management: This focus ensures that Zudio's stores remain visually
appealing and inviting, providing the brand with a competitive edge.Zudio’s rate of churning
out its inventory is rapid; they refresh products on a weekly basis at a rate of 160%, making
sure their store looks new with new products and styles every two months.

Direct-to-Customer Approach: Zudio embraces a direct to

customer approach, eliminating intermediaries and distributors.
The brand sells its products directly through retail stores and
online channels, reducing additional costs. This decision has
proven to be successful, as the brand has effectively attracted
value-conscious customers nationwide.

High-Volume Sales Strategy: Prioritising high-volume sales over high-margin sales, Zudio
maintains a vast network of outlets throughout India. The company's profitability hinges on a

10 | P a g e
 CASE STUDY ON ZUDIO

high turnover of products at reduced pricing, sustaining its position as an affordable fashion
brand.

100% Private Label Strategy: ZUDIO, like the renowned WESTSIDE, adopted a 100%
private label strategy. This approach ensures maximum control over product quality, design,
and pricing, ultimately resulting in higher profit margins.

The FOCO Model: ZUDIO's unique franchise-owned

company-operated (FOCO) model has been pivotal in
streamlining operations. This approach significantly reduces
capital expenditure and ensures efficient customer handling, enabling ZUDIO to provide an
exceptional shopping experience.

Offline Dominance: In a time when e-commerce is reshaping the retail landscape, ZUDIO
has placed its bet on an offline-first strategy. Understanding the intricate dynamics of a lean-
profit-margin label, the brand realised that delivery costs and high return rates could
potentially hinder profitability. (SEE EXHIBIT 4)

Marketing Costs: Zudio focus on building a product their core users rave about. Their
acquisition hope for getting massive footfall is clear, right?“Everything under 999”.But their
ability to take a large number of customers and convert them into Regular paying buyers at a
rate twice as high as other retail outlets is the true magic. Customers are surprised by the
quality offered and the price that they’re paying. This makes them brag about Zudio with
their friends and solve for repeat purchase easily.

QUESTIONS

1. What role does visual merchandising play in Zudio's retail stores?

2. How does Zudio ensure sustainability and long-term growth in a competitive
market landscape?
3. What potential challenges do you foresee for Zudio in maintaining its
competitive edge in the fashion retail market?
4. What are the key components of Zudio's marketing strategy?

11 | P a g e
 CASE STUDY ON ZUDIO

5. What are the benefits of Zudio's franchise model for both the company and its
partners?
What are the potential risks associated with Zudio's business model?

EXHIBITS
Exhibit – 1

Exhibit – 2

MISSION, VISION AND CORE VALUES OF ZUDIO

MISSION
 Emphasise aspirational fashionability
 Expand exclusive brand offerings
 Accelerate store openings to enhance accessibility
 Focus on delivering the latest fashion trends weekly

12 | P a g e
 CASE STUDY ON ZUDIO

 Strengthen omnichannel presence

VISION

Zudio’s vision is simple yet profound: to design and deliver fashion brands that resonate
with our customers on every level. They strive to be more than just a clothing retailer; they
aim to become synonymous with style, quality, and affordability.To achieve their vision,
they are committed to creating value for all our stakeholders. This means understanding
their needs intimately, earning their trust through exceptional service, and providing them
with top-notch products at prices that are accessible to all.

CORE VALUES
Their journey is guided by a set of core values:
 Integrity: From its dealings with customers to its relationships with suppliers and
stakeholders, integrity serves as the cornerstone of its operations.
 Unity: company values the collective strength of its team, understanding that by
working together, they can achieve more than they could individually.
 Responsibility:Taking ownership of actions extends beyond mere accountability;
the company acknowledges its impact on society, the environment, and the
community at large.
 Pioneering:Embracing innovation is a core aspect of the company's ethos.This
pioneering spirit drives the company to explore uncharted territories and stay ahead
of the curve in an ever-evolving industry.
 Excellence:The pursuit of excellence is ingrained in the company's culture. Every
aspect of the company's operations, from product design to customer experience,
reflects this commitment to excellence.

CULTURE
 At Zudio, the way everyone works together is really important. They want everyone
to feel included and valued.
 This means they listen to everyone's ideas and let them use their own skills and
experiences.
 They believe that when people work together and support each other, they can
come up with really great and new ideas.
 They don't just copy what other people are doing. Instead, they want to be the ones

13 | P a g e
 CASE STUDY ON ZUDIO

leading the way and showing others what's cool and fashionable.
 They believe in being honest, working together, taking responsibility, being
creative, and always trying to do their best.

Exhibit – 3

FOCO BUSINESS MODEL OF ZUDIO

FRANCHISE OPERATE
OWNER COMPANY

From day to operations to training the employees, everything is handled by the

company.

Exhibit- 4

14 | P a g e
 CASE STUDY ON ZUDIO

Scenario 1 Scenario 2
Store size 4000 sq ft 6000 sq ft
Annual revenue/sq ft 12000 Rs 15000 Rs
Total annual revenue 4,80,00,000 Rs 9,00,00,000 Rs
Annual profit share
76,80,000 Rs 1,44,00,000 Rs
(16% of total sales)
Monthly profit shares
6,40,000 Rs 12,00,000 Rs
(average)
Operational expenses 4% 4%
Net profit
(12% of annual 57,60,000 Rs 1,80,00,000 Rs
revenue)
Monthly profit
4,80,000 Rs 9,00,00,000 Rs
(average)

Exhibit – 4

15 | P a g e