Inditex offers glimpses of its omnichannel future

RetailME Bureau

Spanish retail group Inditex has revealed glimpses of its future strategy involving further development of its omnichannel capabilities over the next couple of years.

As part of the plan, Inditex will accelerate and broaden its forward-looking digital transformation strategy. Executive chairman, Pablo Isla has committed that the group will invest €1 billion to boost its online business and a further €1.7 billion to upgrade the integrated store platform, deploying advanced technology solutions.

“This strategy is a culmination of the project the company has been investing in steadily and significantly since 2012, a project that will transform its profile notably. The overriding goal between now and 2022 is to speed up full implementation of our integrated store concept, driven by the notion of being able to offer our customers uninterrupted service no matter where they find themselves, on any device and at any time of the day,” Isla stated.

Inditex expects online to account for over 25% of the total sales by 2022, underpinned by an integrated online-store network that is structurally nimble, sustainable and smart. It will have larger, higher quality stores, higher levels of profitability, helping to generate 4-6% like-for-like growth annually.

Inditex plans to have a total network of between 6,700 and 6,900 stores, from 7,412 currently. This will involve opening 450 new stores fitted with all the latest sales integration technology and absorbing between 1,000 and 1,200 smaller-sized stores, which account for 5-6% of total sales and are less well-positioned to offer the new customer experiences.

An important development in the pipeline is the ‘Store mode’ concept through which the Inditex brand’ mobile apps and websites will provide customers with new services. These include the ability to consult store stocks in real-time for online purchase and immediate collection, and pinpoint the precise location of a specific item within a given store.

Each store will act as a fashion distribution hub in the heart of the most strategic shopping districts of the world’s leading cities, forging an interconnected global distribution network that is responsive to emerging shopping habits. In order to achieve this, Inditex plans to reinforce e-commerce capabilities of all its brands. In addition, the implementation of the RFID system, which enables garment tracking and integrated inventory management, will be fully deployed across all the brands by the end of 2020.

For instance, one of the upcoming highlights is the opening of Zara’s new store at WangFujing in Beijing, China. This is slated to be the most advanced Zara store globally, featuring the latest technology and services to offer a seamlessly integrated shopping experience.

Meanwhile, Inditex has reported a 44% year-on-year sales decline, to €3.3 billion, during the first quarter of 2020 – between 1 February 1 and April 30 – as 88% of its stores were closed at some point during the COVID-19 lockdown. On the other hand, its online sales recorded strong growth of 50% during the same period, specifically increasing by 95% year-on-year in April.

The start of the second quarter has been marked by the gradual reopening of stores in a number of markets and growth in online sales. With 52% of its stores open in May with capacity restrictions in most markets, store and online sales in local currencies were -51% compared to last year’s revenues.

 

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