Fewer stores and more online sales. The clothing giant Inditex, owner of Zara and other brands such as Bershka, Pull & Bear, Massimo Dutti and Oysho, seems to have chosen the path for post-coronavirus restart. There are plans to close 1,200 stores around the world, especially small stores located in Asia and Europe, accompanied by investments to improve the online sales platform.
As in other sectors, coronavirus is also in fashion accelerating trends that were already in place. One of these is definitely the move to e-commerce at the expense of physical stores. A way to cut costs related to rent, staff and maintenance of the premises, not counting the costs for sanitation.
FIRST QUARTER IN RED
In the first quarter of this year Inditex reported a loss of 409 million euros with revenues down 44%. It was the first negative quarter since the group founded by Amancio Ortega is listed on the stock exchange. Hence the decision, perhaps already planned, to close 1200 stores to move from the current 7500 to 6.700 / 6.900 stores, thanks to the opening of another 450 stores.
THE CHALLENGE OF E-COMMERCE
In April online sales have almost doubled compared to 2019 and forecasts speak of a constant growth of e-commerce. To make the most of this channel, Inditex it has already planned investments of 2.5 billion euros to improve the e-commerce platform (1 billion) and adapt the stores to become distribution centers for the goods. The goal is to cover 25% of turnover with online sales by 2022 and beat the competition from H&M and Uniqlo.
Content edited by Financialounge.com