Zara to close 1,000 stores and invest €2bn online

Zara owner Inditex has announced plans to close between 1,000 and 1,200 stores - mainly from brands other than Zara - and invest more than €2 billion in online and integrated store platforms, as the Coronavirus pushed sales down 44 per cent.

The Spanish retail giant which - owns a stable of brands including Massimo Dutti, Pull & Bear and Bershka - reported a fall in sales to €3.3 billion during the first quarter of its financial year, between 1 February and 30 April.

The company said that 88 per cent of stores had been closed during the global lockdown, but online sales had doubled - up 95 per cent in April alone - and were expected to account for over a quarter of total sales by 2022, compared to 14 per cent in 2019.

As a result, group chief executive Pablo Isla announced plans to ‘absorb’ between 1,000 and 1,200 smaller stores from its network of 7,412 - with most of the closures focussed on older stores belonging to brands other than Zara.

The closures will not result in significant job losses, the company said, with the group planning to offer all staff in affected stores positions to cover the needs generated by online integration, such as dispatching online customer items from store.

In addition, the company said it will accelerate and broaden its digital transformation strategy, with €1 billion investment in its online businesses around the world, and a further €1.7 billion in upgrading the integrated store platform, which will deploy advanced technology solutions.

Isla also revealed that the group’s proprietary digital platform will be completed by 2022, featuring tailor-made IT architecture for the integrated store and online business model.

He explained: “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."

Starting from the e-commerce platform, it will layer in all the associated processes, including inventories, purchasing, distribution and orders, injecting flexibility and scalability.

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