Zara devotes its full marketing budget to leasing expensive retail space near high-status brands

Here is a way retailers can take advantage of space: locate near high-status stores.

How about advertising? Basically, Zara doesn’t do it. There is no ad budget. Instead, the company spends ungodly amounts of money buying storefronts next to luxury brands to own the label of affordable luxury:

“The high street is really divided according to brand value,” says [Masoud Golsorkhi, the editor of Tank, a London magazine about culture and fashion], who is also a consultant for fashion brands. “Prada wants to be next to Gucci, Gucci wants to be next to Prada. The retail strategy for luxury brands is to try to keep as far away from the likes of Zara. Zara’s strategy is to get as close to them as possible.”…

Zara stores cozy up to the most famous brands in the world to sing their luxury ambitions even as they profit off a brilliant, cheap, short supply chain that delivers similar fashion at a much lower price.

In this case, proximity matters. By being located near prestigious brands, Zara is pulled up more to their level. Additionally, shoppers willing to wander into the really high-status stores might then also wander into Zara. This seems to be the strategy of the shopping mall as well: utilize several important anchor stores (or anchor facilities/restaurants in “lifestyle centers“) to help bring in more customers who will then also visit other stores along the way.

I wonder: are there any streets or malls where retailers have found ways to expressly disallow stores like Zara? Imagine a high-end outlet mall where there are only high-end retailers and no middle-brow stores or aspiring stores are allowed. Leasing prices is one way to do this but this article makes it sound like firms like Zara can do an end run by paying those big sums and then not spend money on traditional marketing.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s