Inditex’s quality-driven model has delivered profits that far outweigh Shein’s growth. Photo credit: Highlight ID / Unsplash
INDITEX, which owns popular clothing brands Zara, Pull&Bear, and Stradivarius, has increased the profits of Chinese retailer Shein by five times. Shein maintains strong growth with a net profit margin of 3.3%, while Inditex reached 16.4% in the first nine months of its fiscal year, business news source El Economista said. This data reaffirms Inditex’s highly profitable model for ultra-fast fashion brands like Shein.
Despite the surge in ultra-fast fashion, Inditex dwarfs Shein’s profits
Shein has achieved strong growth during the financial year, with sales expected to be $60 billion (51.2 billion euros) and net profit of $2 billion (1.7 billion euros). If these predictions prove correct by the end of the year, Shein’s results will nearly double from the previous fiscal year. However, Inditex’s profits were much lower, with net income reaching 4,622 million euros, and growth accelerated particularly in the third quarter.
These differences may be explained by significantly different marketing strategies. While Shein focuses on ultra-low-priced products and ultra-fast fashion, Inditex focuses on higher-value clothing and keeps cheap items to a minimum. In particular, the Spanish and Swedish Inditex chains are moving away from low-end products and toward more sustainable, high-quality clothing, also avoiding competition from low-end retailers in China.
Despite this, Shein reaches third place in global online fashion sales, with a global market share of 1.53%. Inditex follows with 1.24%, ranking fourth in the world.
Ultra-fast fashion sweeps Europe, causing concern for major retailers
The rapid growth and popularity of ultra-fast fashion and incredibly cheap online retailers such as Shein, Temu and Aliexpress has caused concern among industry group Anged, which represents Europe’s largest retailers, particularly companies such as El Corte Inglés, Carrefour, Alcampo, IKEA and Fnac, who argue that ultra-low prices, lack of controls and tax loopholes are making it difficult for traditional companies to compete. Angedo called the situation “an uneven playing field and clearly unfair competition.”
The number of shipments under 150 euros coming into the EU has more than tripled in the past two years, with Shein and Temu in particular being the main drivers due to “the prevalence of online advertising, low prices and super-fast shipping”. The EU imported an astonishing 4.6 billion parcels in 2024, of which 91 percent came from China.
But just last month, the European Union announced it would end customs exemptions for small, inexpensive packages, a change that will hit Chinese online retailers hard.
As for Inditex, the numbers indicate a strong strengthening of its financial and strategic capabilities, emphasizing a model based on sustainability and quality rather than ultra-fast fashion, ultra-cheap production, and ultra-low prices.
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