As Inditex focuses on its new strategy that’s designed to boost sales and profits via larger, digitally-enabled stores, up to 1,200 of its smaller location could close.
The Zara owner is planning to “absorb” between 1,000 and 1,200 shops, most of the sites that it has operated for some time, with a focus on closures for its smaller brands such as Bershka, Pull & Bear and Massimo Dutti.
Asia and Europe are expected to bear the brunt of the closures at the company that yesterday swung to a quarterly loss for the first time ever as a result of the coronavirus crisis. But this isn’t expected to lead to a jobs cull with store staff being redeployed, not only to other locations but to roles such as fulfilling online orders.
The company currently has 7,412 stores and will have between 6,700 and 6,900 after the closures as it will continue to open new shops in larger, flagship locations.
The news of the closures from one of the largest and most successful fashion retail names underlines both the impact that the pandemic has had but also how it has accelerated trends that were already happening before the outbreak.
Inditex had been moving to a stronger digital focus in recent periods and had also been concentrating on larger stores that could work seamlessly with its digitalization drive.
Inditex, like other giants such as H&M and Next, recognizes that traditional stores aren’t as profitable as they used to be and that to boost sales and profits, they need to evolve. But it also recognizes how important stores are both as a brand showcase and as a way to fulfill online orders while offering shoppers maximum convenience.
The company has allocated €1 billion to boost its online ops and a further €1.7 billion to ensure its stores and website are fully integrated.