Zara Owners, Inditex, To Close 1200 Fashion Stores Worldwide
Inditex, the parent company of our beloved fashion brand Zara, announced on June 10 that it would shut as many as 1200 stores worldwide, but assured their “headcount will remain stable”. This decision comes in the wake of the coronavirus pandemic, which is prompting the company to shift a large part of its business online.
The company lost €409 million between February 1 and April 30, marking the first quarter of its financial year.
A majority of the store closures are expected to occur in Asia and Europe, The Guardian reports. In lieu of this decision, the company is investing €900 million towards developing online sales for the next three years. Inditex is a loaded Spanish giant that also owns other notable labels like Massimo Dutti and Bershka.
Major Losses Reported
BBC reported that Inditex recorded its first-ever quarterly loss this month, with sales sliding down a steep 44 percent to €3.3 billion. The company lost €409 million between February 1 and April 30, marking the first quarter of its financial year. Almost 90 percent of Zara stores remained shut during this period.
“In markets where stores were already open, sales were down 16 percent during June 2-8, it said. The Spanish company said it expected stores in all key markets to open by the end of June,” Economic Times reported. During the first quarter, however, online sales yielded positive numbers surging 95 percent year-on-year in April. Brand loyalists continue to purchase clothes from their favourite fast-fashion label even amid the pandemic.
The Future of Zara
As world economies begin to ease restriction now after various rounds of lockdown, businesses are taking all possible measures to stand back on their feet again. Inditex is doing so by focusing its energy on going digital. “The Zara owners were already working towards improving their online capabilities but the lockdown has ushered in a new urgency,” BBC quoted expert Sophie Lund-Yates as saying.
Inditex is a loaded Spanish giant that also owns other notable labels like Massimo Dutti and Bershka.
Inditex has ensured that the “headcount will remain stable”, as employees will be given a mix in the online departments. With the declaration that some stores will shut in Asia, the target may well include India. Though malls in the country are slowly opening for business after lockdown 4.0, COVID-19 cases are just beginning to peak. In such a situation, it’s a hard bet that shoppers will begin frequenting malls anytime soon.
E-commerce has become a way of life during the pandemic. Indoor shopping and convenience are now dictating buying trends. In the face of this, Zara’s shift to online business may be the best bet for fans of the label in India.