There was a time when a flagship store—perhaps in Mumbai’s Fort area or Kala Ghoda—was the ultimate symbol of retail success. Earlier this month, after eight years, the iconic five-story Zara store in South Bombay shut its doors, unable to sustain the staggering ₹3 crore monthly rent. Housed in the 119-year-old Ismail Building at Flora Fountain, this space once marked one of the largest overseas transactions for a high-street brand.
Yet, as one Zara store exits–its parent company, Inditex, which also owns Bershka expanded its first outlet at Mumbai’s Phoenix Palladium Mall alongside the brand’s online debut in India. While one store exits, another comes along!
However, Zara’s flagship store closure is not an isolated case. There are bigger challenges that mid-tier international brands face to sustain themselves in India. The answer, like all compelling business stories, lies in a mix of shifting consumer behaviour, supply chain disruptions, economic headwinds, and strategic missteps.
The rental trap
Walk into any of India’s premium shopping malls—Select Citywalk in Delhi, Palladium in Mumbai, Phoenix Marketcity in Bangalore—and you’ll see a similar pattern: mid-tier international brands seem to struggle.
"High-quality retail spaces in India are limited, driving rentals for prime locations sky-high. Ultimately, it all comes down to the numbers—whether to operate or shut a store in such a location is purely a business decision,” reasons Ishita Choudhary, a brand strategist and luxury consultant.
Most experts agree that soaring rental costs pose a growing challenge. Somdutta Singh, Founder & CEO of Assiduus Global—an e-commerce partner and accelerator that has worked with brands like Unilever, Cipla, and Juicy Chemistry—notes how Forever 21 has downsized stores to minimize losses. GAP, after exiting its franchise agreement with Arvind Fashions due to poor performance, re-entered the market through Reliance. Meanwhile, brands like Benetton and Splash have faced store closures. “High-street retail leasing in major Indian cities surged in 2024 with Delhi-NCR and Bengaluru seeing growth of up to 15%, while Mumbai recorded an increase of up to 7%, putting pressure on profitability,” she adds.
These brands may struggle to attract the same footfall or match the deep discounts of fast fashion, often leading to store closures or downsizing. “For mid-level brands, investing in customer and product experience can be highly effective. India’s aspirational market, with its GenZ and millennials, is highly aware of global luxury culture. Making non-luxury buyers feel valued—much like luxury customers—can drive brand loyalty and retention,” remarks Choudhary. “Simplifying the store experience is key. If integrations can’t be optimized for a seamless journey, complexity only frustrates consumers—leading to abandoned carts.”
Supply chains
On the surface, it might seem that India, with its vast population and rising disposable incomes, should be a dream market for any global brand. But retail is a fragile ecosystem–deeply dependent on logistics, pricing, and product availability. “Supply chain issues have worsened things. Shipping costs increased sharply in early 2024 due to global disruptions, delaying shipments and increasing prices,” highlights Somdutta. One of the biggest challenges that international brands have faced in the last two years is the global supply chain crisis.
Remember the Red Sea crisis, which threw global trade routes into chaos? With freight carriers avoiding the Red Sea due to attacks on commercial vessels, shipments had to be rerouted around the Cape of Good Hope—a significantly longer and more expensive journey. “This leads to higher costs for imported fabrics, accessories, and finished goods. Shipping rates on key routes from Asia to Europe and the Middle East jumped by roughly 30-50% in early 2024,” she adds.
India has long supplied raw materials and fabrics to global brands. Some brands are shifting production closer to India to reduce import dependence, but local sourcing isn’t always cheaper or faster. “Importing everything is no longer an option. With rising costs and delivery delays, brands must rethink pricing, supply strategies, and speed to market—or risk losing sales to faster-moving local competitors,” says Singh. Rethinking supply chains and distribution to survive is viable, especially in the fast-growing e-commerce space. “Uniqlo has increased local sourcing in India, with about 15.5% of its products for Indian stores now made domestically, while H&M has been exploring similar options to comply with FDI norms and reduce import costs,” she adds.
Although brands face significant challenges in India, high taxes, regulations, and government policies add further hurdles. “While the government did make some policy changes a few years ago, it continues to be a big problem. But as more and more international brands turn to India as a potential growth market and manufacturing hub in Asia, I expect the government to make more changes to ease business challenges for these brands,” highlights Ishita who’s also the founder of a customer and brand experience design firm, The Brand Digest.
For brands, one of the biggest obstacles to profitability is regulatory requirements. “High taxes on income, imports, and regional levies pose major challenges. While FDI rules have eased, local sourcing requirements make resource optimization difficult. Finding the right partner with regional consumer insights adds to costs, often requiring hefty revenue-sharing contracts.”
Rise of disruptors
So, who’s able to crack India’s retail market? Both experts agree that local brands and D2C labels are growing fast, offering stylish and affordable alternatives. These Indian brands are faster, more affordable, and deeply connected to local shoppers. By 2027, India’s D2C fashion market is expected to reach $61 billion aggressively marketing through Instagram and content creators, building strong followings.
Another big shift is how people shop. “E-commerce platforms like Myntra, Ajio, and Nykaa Fashion now push their private labels, competing directly with global brands. In 2017, Myntra’s in-house brands like Roadster and HRX contributed nearly 25% of its total fashion sales. While recent figures are not publicly available, Myntra continues to focus on its private labels, restructuring its in-house brand strategy in 2023 to strengthen its key labels,” Somdutta points out.
Online shopping seems to be the great equalizer for struggling brands. If high rentals were bleeding them dry, e-commerce could give them a lifeline. “Brands need a strong presence across marketplaces like Myntra, Ajio, and Amazon Fashion, while also focusing on their own D2C websites for better margins. Mango, for example, partnered with Myntra to scale its digital reach in India,” she highlights.
Perhaps, Indian brands understand their consumers better. Over the past decade, we have seen the rise of homegrown fashion and lifestyle brands that are rewriting the rules of retail. They have figured out what global brands may have failed to crack: cultural relevance. Rare Rabbit, an Indian menswear brand offers European-inspired fashion at accessible prices. It has built a loyal customer base, something that mid-level international brands like Superdry or GAP may have failed to do.
“Many mid-level international brands create India-centric collections but struggle to adapt because they risk diverting too much from a global brand image. A smart approach could be launching festive lines blending Western silhouettes with Indian elements, adjusting sizing and
fabrics to local needs, optimizing omnichannel retail, and collaborating with the right collaborators to ensure strategic product placement,” suggests Ishita.
Ironically, even as some global brands struggle, new international players continue to enter India. Uniqlo has positioned itself as an affordable basics brand with a sustainability angle. Owndays, a Japanese eyewear brand, has teamed up with Lenskart, rather than going solo. Shein, after being banned, is making a comeback via Reliance Retail. “E-commerce is no longer just an additional channel, it’s a core strategy for growth. Foreign brands still see India as a key market,” Somdutta emphasises.
In today’s India, being global isn’t enough. It is no longer a plug-and-play market. The ones that don’t survive? They’ll have a hard time keeping up in a market that’s moving faster than ever.
