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Inditex permanently closing 1200 stores and planning for online push

Figure: Zara owner Inditex will close up to 1200 stores worldwide.

Inditex, the owner of Zara said it is permanently closing its 1,000 to 1,200 retail stores, 16% of its total outlet around the world. The brand is planning to reinforce all of its brands to boost online sales after posting its first-ever loss due to the Covid-19 pandemic.

Inditex has been hit hard due this pandemic and its sales down by 44% between 1 February and 30 April this year and reported a net loss of 409mn euros. However, online sales rose by 50% during this time and were up 95% in April. It expects, online sales will account for a quarter of its business by 2022, up from 14 % in 2019.

Inditex, world’s largest fashion retailer network, operates 7142 stores worldwide, owns brands including Zara, Zara Home, Massimo Dutti, Bershka, Pull and Bear and Oysho.

It will be between 6700 and 6900 stores which involves opening 450 new stores fitted with all the latest sales integration technology and absorbing between 1000 and 1200 smaller-sized stores mainly concentrated in Asia and Europe among older shops from brand other than Zara, according to Inditex.

As per the plan, Inditex has already been closing smaller outlet and opening few larger stores and also investing 1 billion euros on its online platform over the next three years to accelerate its e-commerce.

Inditex also explained that the smaller-sized stores accounts 5% to 6% of total sales and are less well positioned to meet new customer demands and also these are the older stores belongs to brands other than Zara.

The company plans on giving a definitive boost to certain brands’ online sales platforms, in particular, the Bershka, Pull and Bear and Stradivarius shops located in China and Japan.

Inditex will make a provision of €308 million related to the execution of the Plan to boost online and further integrate the store platform.

In Spain, larger stores will be opened as smaller shops are absorbed, while in the Americas and Europe, the priority will be driving full integration of physical and online sales.

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