Fashion retail giant Inditex, owner of brands like Zara and Massimo Dutti, is emerging from the COVID-19 lockdown in better shape than it might otherwise have done thanks to strong online sales growth; from 14% in 2019, the company is now aiming to generate a quarter of all sales online by 2022.
During the first quarter, global online sales grew 50%, the company revealed in a Q1 earnings call – and by 95% in April – helping to offset some of the sales losses from closed stores.
A high level of integration between physical stores and online was highlighted as a factor. “Without our full stock integration we would have not been able to have this significant online sales growth,” explained chairman Pablo Isla.
“A big part of the product that we have been selling online in the months of April and May was located inside the stores that were closed. So that is why we have been able to have this so-significant online sales growth during these months.”
Stock integration to build a single inventory position forms part of an ongoing program which ultimately aims to accomplish full digitalisation of stores across all Inditex brands around the world.
Other aspects of this include such things as the possibility of using an app to make a reservation for fitting rooms or for garments when they have arrived in store – something which may find greater appeal in the post-lockdown environment.
As part of the program, Inditex will be closing 1,000 or more smaller, older stores in its portfolio over the next two years at the same time as opening new stores at the rate of 150 a year to create what Isla described as “a high-quality digital, eco-efficient store and online platform”.
It’s an approach that he sees as differentiating and strengthening the business while delivering “a unique customer experience” – and the reason why smaller stores have to go.
Stores, he said, “will play a stronger role in the development of online sales due to their digitalisation and capacity to reach customers from the best locations worldwide. It is for this reason that we must focus on those high-quality stores that are best able to deliver on these long-term strategic goals.”
Meantime, he reported that as stores reopen around the world “customer behaviour is completely normal … [they] like to go to the stores, they see the product, they try the product, they pay”.
Sourced from Seeking Alpha