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EDITORIAL Time retailers turned to the dark side

Going dark: the new face of hybrid retail? (Image: shutterstock)

A look at H&M’s performance and that of rival Inditex offers some interesting insight not only into how the global fashion market is starting to recover, but how managing that recovery requires some new thinking.

H&M continues to see growth worldwide it is true, but while impressive, it is no where near as impressive as that of giant rival Inditex– owner of fashion brands such as Zara, Pull & Bear and Bershka – which has recorded sales and profits above the record year in had in 2019 before the pandemic’s first wave broke.

How it has done this offers some interesting insight into how to manage a retail business through the pandemic and, perhaps, beyond: it offers an object lesson in how to adapt to a changing world and how to be ready for the next changes that are set to come – even if you don’t know what the future holds.

What Inditex has done differently to H&M (and many other retailers, to be fair) is subtle, but potentially important. Where H&M has invested in online and sustainability in its range, it has also perhaps been too wedded still to stores as they were.

Inditex, on the other hand, invested really heavily in online, bringing it bang up to lockdown standards quickly, effectively and globally during the pandemic. It has also looked very closely at its store portfolio, closing many of its smaller outlets and instead focussing on large flagship stores.

The reason? There is more flexibility in how to use these stores. While they are a great exemplar of ‘destination retail’ when they are open, opening a great day out for those that turn up in person, they also offer the ability to repurpose these premises should falling consumer confidence, new restrictions or even lockdowns come to bear down the line.

These large flagship stores can easily be changed into dark stores, acting as ecommerce distribution hubs and click and collect and return points should they need to be shut down as actual physical retail outlets.

This means that Inditex has managed to pull off a coup de gras in hybrid retail; stores that can be part of the digital and physical worlds in any degree that is needed.

This not only future-proofs its stores, but it also ties in with how shoppers are looking at shopping in the weeks, months and years ahead. Research out this week shows that two thirds of shoppers used dark stores in lockdown and 84% plan to continue to do so. This rises to 91% of 13 to 44 year olds.

With warehousing, logistics and delivery all straining under the dual effects of Covid and Brexit, the need for more agile solutions to storage and distribution is increasingly important to retail. Repurposing stores – and other urban developments such as car parks – to store goods and offer a low-contact click and collect or return location is going to be a key element of retail in the coming months.

With Winter looking like it may bring some restrictions and even a new lockdown (worse case scenario), then this agility to use the footprint retailers have in new ways is going to be a vital part of armoury for dealing with how shopping habits may continue to change and evolve over the coming years. It is, perhaps, time to look to the dark side.

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