Zara’s owner set to close 1,200 stores and invest in E-commerce

The world’s largest fashion retailer Inditex, will be permanently closing as many as 1,200 stores worldwide. The parent company of Zara and Massimo Dutti among others, posted its first-ever loss due to the recent Covid-19 pandemic. It moves to boost online sales by investing $1 billion into its online shopping platforms in the coming years. 

The closures will effect 16 per cent of its outlets worldwide, mainly concentrated in Asia and Europe. The Spanish company said other than Zara, smaller stores and other brands such as Pull&Bear, Oysho and Stradivarius will be affected. The aim is to transfer their profit contributions to bigger shops or online.

Larger stores will then become distribution hubs for online sales, as well as places that customers can browse and buy products.

Inditex total store count will fall from 7,412 to between 6,700 and 6,900 after the reorganisation, which will also include the opening of 450 new shops. The company said that the headcount will remain stable with staffs offered other jobs such as dispatching online purchases.

Inditex has been hit hard during the pandemic, booking a net loss of 409 million euros for February through April compared to a net profit of 734 million euros for the same period last year.

Online sales surged 95 per cent during the global lockdown in April. The company said it expects online sales to account for a quarter of its business by 2022, up from 14 per cent in 2019.

Coresight Research predicts that as many as 25,000 stores are expected to shut this year compared to about 8,000-9,300 stores closed in the U.S. in 2018 and 2019, respectively. Other major retailers are also on track to downsize their physical operations with announcement of permanent store closures over the past month.

Guess will be closing 100 stores in the U.S. and China while the Children’s Place is closing 300 of its 920 stores in the U.S., Canada, and Puerto Rico. Signet Jewelers, which owns Kay Jewelers, Zales, Jared, and H. Samuel, will close 380 stores by the end of the year. All 89 G.H. Bass and 110 Wilsons Leather stores will be closed while Tuesday Morning will close 230 of its 700 stores and recently filed for bankruptcy.