Zara Closes 1,200 Stores Worldwide and Focuses on E-Commerce

After recording its first negative quarter since its public listing, mostly due to the COVID-19 crisis, Zara (Inditex Group) has decided to close 16% of its current physical stores In order to focus on e-commerce.

Fewer stores and more online sales, the clothing giant Inditex, owner of Zara and other brands such as Bershka, Pull & Bear, Massimo Dutti and Oysho, seem to have chosen the path for its post-coronavirus rebirth. There are plans to close 1,200 stores worldwide, especially small stores located in Asia and Europe, accompanied by investments to improve the online sales platform.

Similar to other industries, the coronavirus is also accelerating trends in fashion that were already in place,  one of which is the move to e-commerce at the expense of physical stores. A way to cut costs related to rent, staff and the maintenance of premises, not to mention sanitation costs.

In the first quarter of this year, Inditex reported a loss of 409 million euros, with revenues down by 44%. It was the first negative quarter since the group founded by Amancio Ortega listed on the stock exchange. Hence the decision, perhaps previously planned, to close 1,200 stores to move from the initial 7,500 to 6,700 / 6,900 stores, thanks to the opening of another 450 stores.

In April, online sales almost doubled compared to 2019 and forecasts project constant growth in e-commerce. To make the most of this channel, Inditex has already planned investments of 2.5 billion euros to improve the e-commerce platform (1 billion) and adapt the existing stores to become distribution centers for the goods. The goal is to cover 25% of the turnover with online sales by 2022 and beat competition from H&M and Uniqlo.