Inditex accelerates the ‘online’ strategy with the closure of almost 300 stores in one year

The company continues to negotiate with the unions the relocation of employees with the premise of avoiding layoffs.

Inditex managed to return to profits in the third quarter, although it is far from what was achieved in the same period of the previous year. The Covid is the cause of these data, but also that sales online from the textile chain led by Zara soar 75% in this period.

The reason? In addition to the Covid, the company is immersed in its 2020-2022 strategy, accelerating change of its business model, integrating face-to-face sales and online. A plan that includes an investment of 1,000 million euros to strengthen the commitment to online and 1,700 million euros for technologically integrated stores.

This plan includes a larger commercial area although a smaller number of stores, which implies the closure and absorption of between 1,000 and 1,200 profile stores smallest in the world and between 250 and 300 in Spain (approximately 14% of its global network and 17% of its network in Spain).

Comparison of the number of Inditex stores.  Source: Indtex.

Comparison of the number of Inditex stores. Source: Indtex.

And this closure of stores has already started. Until October 31, Inditex has closed a total of 289 stores compared to the same date last year. Thus, it currently has a total of 7,197 establishments around the world., of which 8% are closed and an additional 10% close on weekends due to Covid restrictions.

By number closures, Pull & Bear is the brand that heads the list with 55 fewer stores; followed by Bershka, with 51 fewer; Massimo Dutti, 45 less; Zara (including Zara Home and Zara Kids), 34 less; Stradivarius, 33 fewer; Oysho, 23 less; and Uterqüe, only three less.

Job positions

Of course, when store closures occur, there is also the fear that this will translate into job losses. However, both the company founded by Amancio Ortega and the unions reached an agreement in October that gives priority to maintaining employment during the digital transformation process undertaken by the group.

Company sources assure Invertia that they want to maintain employment in the workforce (formed by 40,000 workers, including office staff) offering alternatives so that there are no layoffs, such as relocation or recycling of jobs. Layoffs will only be undertaken as a last resort.

Unions and Inditex recognize that “some details of the October agreement” still need to be resolved. It should be remembered that in said firm a maximum kilometric limit of 25 kilometers was set for transfers to other establishments, always prioritizing vacancies in nearby stores in the same city or neighboring towns.

‘Ecommerce’

During the first nine months, the sale online continues to grow very prominently (+75%). The visits online They have grown by 44% to 3,427 million, according to company data.

The group has continued to develop its plan to differentiate its commercial space and its online offer, with highly relevant openings in 25 markets, including China, Mexico, Russia, Germany, Spain and Saudi Arabia. Zara expands the markets with integrated online sales to the local network of stores to 85, in addition to the 106 markets with online sales through its global website.

On December 3, it opened online in Panama and Puerto Rico and during the quarter it has accessed 12 new online markets, including Chile, Costa Rica, Honduras and Tunisia. Lefties opened its online store in Spain and Portugal.

With its plan, Inditex forecasts that internet sales will reach more than 25% of the total in 2022, from 14% in 2019.