The Zara group closes 1200 physical stores and focuses on the online. Less image and more sales. Amancio Ortega, owner of the listed Spanish giant Inditex, which owns the Zara stores and other brands such as Bershka, Pull & Bearm Oysho and Massimo Dutti, adapts to the post-Covid-19 era. And he no longer wants to bet on the ritual of urban shopping, browsing through shops and uncertain sales. Better the certain sale (first) and customer satisfaction (then).
The Zara group closes 1200 physical stores and focuses on the online
The group’s 1200 stores have closed all over the world for a few days. Small stores located in Asia and Europe, which will lead to the loss of a few million jobs. Ortega, brought to his knees by the rent, the salaries for the staff, the expenses for safety and sanitation, has thrown in the towel. After the first quarter with the accounts in red from the day of the listing.
The economic loss, due to the lockdown, reached the dizzying figure of 409 million euros, revenues fell by 44%. Apparently the decision was not at all suffered, but the result of a profound reflection on how fashion consumption will change, will lead Inditex to retain 6900 points of sale.
Competition from H&M and Uniqlo weighs
In April, during the most violent peak of the pandemic, online sales almost doubled compared to the previous year. Therefore Inditex has decided to focus on the virtual market, investing 2.5 billion euros to improve the platform and transform the stores into simple distribution centers for the goods already sold. Is the jacket not good? It changes. Or you can withdraw a voucher for another purchase. Online sales can cover 25% of turnover perhaps already by 2020. In this way the Zara brand will be able to focus on competition with other low-cost instant fashion brands, such as the giant H&M and Uniqlo.