How the bottom-of-the-pyramid strategy worked out for Zudio

Encouraged by the runaway success of its apparel brand Zudio, which marries style with low price, Tata Group company Trent has now launched Zudio Beauty. The first store has opened in Bengaluru and Trent is planning to add more in top cities such as Gurugram, Pune and Hyderabad. Zudio Beauty is part of Trent's strategy to tap into the affordable beauty space as most of the rivals such as Reliance, Nykaa and Shoppers Stop are focussing on premium and luxury categories, executives aware of the development have told ET.

What prompted Trent to jump into the mass-priced beauty segment is the runaway success of Zudio which sells trendy clothes below Rs 1,500. It hopes to repeat the same success in the beauty segment.

Zudio's runaway success
Tatas created India's first beauty brand, Lakme, a few years after Independence. Lakme became a household name for beauty products and was eventually sold to Hindustan Unilever in 1996 when the Tatas started Trent to widen their retail business beyond beauty products.


Noel Tata-led Trent opened first independent Zudio store in FY18 and it has been a runaway success. It is now among the biggest apparel brands in the country. Since its inception in FY17 within Star stores, Zudio has seen considerable expansion.

Carved out as a separate format from Star Bazaar in FY18, the Zudio format now accounts for more than a third of Trent's total revenue, compared with 8% a few years ago. And it has been the fastest growing format for Trent, surpassing Westside in terms of store count in FY22 and in terms of revenue in FY24. As of June this year, the company had 228 Westside stores, 559 Zudio stores and 36 stores across other lifestyle concepts. Despite multiple retailers operating in the value retailing segment for more than a decade, Zudio surpassed most of the existing players in terms of revenue as well as stores.

Trent reported a 50% surge in sales for 2023-24 to Rs 12,375 crore and a nearly fourfold jump in net profit to Rs 1,477 crore. Trent's consolidated revenue has increased at a five-year compound annual growth rate of 45%, most of it contributed by Zudio, which has surpassed revenue of Rs 7,000 crore in FY24 in yet another year of substantial growth. Shares of Trent have grown nearly 150% year to date and 260% in past 12 months.

Trent ranks No. 3 on the Bloomberg World Retail Index due to a winning strategy in affordable apparel sold by Zudio.

Last month, Trent launched Zudio in Dubai's Silicon Oasis Mall, the retailer's maiden attempt to enter the overseas market to cash in on the large Indian diaspora. According to industry watchers, Trent has cracked a sustainable and profitable business model and has now gained the confidence to scale up abroad.

Why Zudio clicked
Experts say India's consumption structure was skewed in the past over a narrow base of rich consumers accounting for a large chunk of the market. However, as the economy is broadening across many more cities and the impact is reaching further down the income ladder, the opportunity for value formats and value brands is expanding. Zudio has rode to success on this expanding consumer market in India's small towns where people have now grown fashion conscious too. Marrying style with low price for the small-town buyer is the secret behind Zudio's success which is also backed by Tata, the name that has spelt quality for decades for a lot of Indians.

Zudio's success has been aided by an exclusive design portfolio and a low gross margin of 35-40%. This enables the company to achieve high store productivity, with a revenue per sq ft of Rs 16,300, which is twice the industry average. Zudio's ability to refresh its inventory every few weeks has also helped it attract more buyers just as its franchisee model lowers capital costs. End-to-end control of supply chain and product development give it an added advantage.

Before others apparel retailers could, Zudio was able to crack the code of India's new consumer class which has come up in small towns. While growing disposable incomes have given it an appetite to spend, spread of internet and social media has made it fashion conscious.

According to a report by Motilal Oswal Financial Services, the value fashion segment is one of the largest and fastest-growing segments within the apparel market. Following the success of Trent's Zudio, the segment has seen the entry of other national retailers such as Yousta (Reliance Retail), Style-Up (ABFRL) and InTune (Shoppers Stop).