Clothing brands differ a lot in price. For instance, some of them charge nearly $1000 for a shirt, while others only charge $30. Therefore, where you shop is largely dependent on your budget.
However, some stores may be surprisingly expensive, like Zara. While this company notoriously uses low-quality materials, they do charge a bit more than the competition. To find out why, keep reading below!
Why Is Zara So Expensive In 2023?
There are many reasons Zara is expensive in 2023. However, for the most part, it is because many customers perceive it as a luxury brand. Therefore, it can safely charge more for its clothes despite using low-quality materials. In this way, the company keeps its profits very high. Of course, there are other reasons, as well.
For a full explanation of these reasons, take a look at the list below!
1. High Profits
First and foremost, Zara is expensive because its profit margins are extremely high.
Furthermore, Zara’s CEO is the third richest person in Europe, with a net worth of $48.1 billion as of March 2022, and for a brief time, the CEO was even the richest person in the world.
Therefore, the company marks up its prices substantially to increase its profits.
As most of the cost of its clothes goes straight to the company – not to pay for the material or crafting of the clothes.
2. The Allure of Fashion
Zara has worked hard to make its name known to many.
Furthermore, it paints itself as a luxury clothing brand, despite using cheaper materials than other luxury brands.
In fact, you’ll often hear Zara being described in advertisements as a cheaper luxury brand, bringing luxury-style clothes to the masses.
While this is true to some extent, Zara does not have the overhead of many luxury brands.
Therefore, it can afford to be cheaper and still make huge profits.
Zara produces about half of its clothes in Spain and the other half in countries throughout the southern hemisphere and Asia.
Unfortunately, at these latter locations, the company is known for treating its workers poorly.
However, the company still must pay a lot to get its clothes shipped from these locations to the stores and warehouses.
Needless to say, many of the clothes they produce in China don’t stay in China.
Therefore, they have to increase the cost of their clothes to account for this shipping.
Additionally, unlike many companies, they can’t use ocean transport, either.
This is because of its very fast turnaround time, therefore, the company usually moves its clothes by air.
4. Fast Fashion
Zara is a fast fashion brand, so its main marketing technique is to produce new styles very quickly.
For example, as soon as a celebrity is seen with a new style, the company quickly sets out to create it.
From the design sketch to the store floor, it takes Zara only about three weeks to produce a new style – and the company is doing this constantly.
For instance, if you visit Zara once a month, it will likely have new clothes each visit.
Furthermore, fast fashion like this costs the company lots of money to produce.
This company has many factories and warehouses across the country. Plus, it has to hire a fleet of transport units to get clothing where it needs to go.
Furthermore, purchasing and maintaining this infrastructure is not cheap. Therefore, the company has to charge a little bit extra to cover the cost.
Additionally, unlike brands that only sell in-store, Zara has to pay for all the infrastructure that goes along with online shopping, and trucks and warehouses can get expensive.
6. Legal Teams
Sadly, this company has gone through quite a few legal challenges over the years.
For instance, there were claims that it was keeping its workers in “slave conditions” in Brazil – and using child labor.
Furthermore, in Turkey, the company didn’t pay its workers for the last three months of their work at a factory, and it wasn’t until the story grew that they finally settled with the labor union.
Many of these situations led to lawsuits and violations of labor laws, which the company then had to pay.
Zara isn’t the same price everywhere; for instance, the company’s clothes are about 36% more expensive in the United States than they are in Spain.
Therefore, its prices may only be particularly high in your country.
Furthermore, its prices are generally the highest in South Korea, Brazil, USA, and China, which are both very far from the company’s factories.
The main difference between Zara and brands like H&M is in the perception of the brand.
For example, Zara aims to be perceived as a higher-quality brand that offers luxury items at lower prices.
Therefore, if customers think the company is offering luxury clothes for cheaper than luxury brands, they are more likely to pay a bit more for them.
Additionally, while Zara and H&M are very similar, many customers don’t perceive them as such, so customers are much more likely to spend more at Zara because it is perceived as high-end.
9. Expensive Real Estate
As part of its “luxury” vibe, Zara also has stores in areas with expensive retail rent prices.
Furthermore, it places stores in areas that seem high-end to convince people that it is also high-end.
Of course, these expensive rental areas also mean that Zara has to pay more rent.
Based on the company’s past inflation performance, it seems to raise its prices to eliminate the odds of profit decreases.
However, because its raw materials inflate in price as well, this means that Zara has to raise its prices to double the price of inflation.
Furthermore, the company raises it once to keep its profits worth the same amount.
Then, it increases them again to counteract supply chain inflation.
As you’d imagine, this can lead you to spend a lot more at its stores.
Just like any clothing manufacturer, Zara has a lot of overhead. Furthermore, the company has to pay for factories, store rentals, and transportation.
However, the main reason Zara charges more than its competitors is because its profit margins are extremely high. So, Zara simply makes more off of each piece of clothing.