Castro, which is in league with German mail order giant Otto, opened its first German shop in Cologne in September directly across from Spanish competitor Zara and a few meters away from several branches of Sweden's H&M. Esprit and Benetton are close-by.

"Germany is a super test field for Castro because it's the biggest market, but also a very intensively competitive market," according to Castro Deutschland's managing director, Carsten Lehnen. "There's that nice slogan: 'If you make it there, you make it anywhere,' and that goes for the textile business in Germany for sure."

Castro sells clothing, shoes, accessories and underwear for men and women between the ages of 20 and 30 from its 84 stores in Israel. Company turnover in 2002 was around 350 million Israeli shekels (€61 million, $79 million). For years its clothes have been available to German shoppers in the Otto Group's mail order catalogue. In Cologne, the fashion house has started off with a two-story shop.

Quick off the catwalk

"We're smaller, we're more focused," Lehnen said. "We don't have 1,800 square meters but only 400. That means we must concentrate on certain segments."

Like the competition at Zara and H&M, Castro concentrates on being quick at getting catwalk fashion into high street shops. New designs are rotated into the collection every week, and Germans seem to be receptive to them.

"Many, many customers are thrilled by what we offer here and how we offer it," said Cologne store manager Ludger van den Boom. "We already have quite a few regular customers, we have customer files that are growing bigger and bigger."

Castro plans to open 40 to 50 stores in Germany over the next five years in big cities such as Berlin, Frankfurt, Hamburg and Munich. But shops in Oberhausen and Munster are already set to open in February and May respectively. The long-term goal is to also establish the brand in Austria, Switzerland and the Benelux countries.