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Zara owner Inditex reports on how it has put online centrestage

Zara owner Inditex reports on how it has put online centrestage
Zara owner Inditex reports on how it has put online centrestage
Zara owner Inditex, which this week reported rising sales and profits, showed in its figures how it has worked to put online commerce centrestage in its business over the last year.

The retail group, where IRUK Top150 retailer Zara sits alongside brands including Bershka and Oysho, reported net sales of €25.3bn in its 2017 financial year. That's 9% up on the previous year. On a like-for-like basis, which strips out the effect of store – and business – openings and closures, sales rose by 5%. Net profits of €3.4bn were 7% up on last time. Online sales grew by 41%, with 10% of total sales now online. In markets where it has an online presence, 12% of sales are made via ecommerce.

Chairman and chief executive Pablo Isla said it was a year of "solid growth". "The unique strength of our integrated stores and online model and its significant growth potential," was key, he said, while "the prescient investments made in technology and logistics in recent years, coupled with space optimisation, mean the company is well placed for continued growth across all its markets".

Here's our round up of what Inditex has said about its multichannel strategy, both in its results this week and more widely in 2018.

Online in-store
Zara chose London to open its first store designed foremost around ordering and collecting online orders. It opened at pop-up store (pictured) at London's Westfield shopping centre while work to extend its flagship store at the centre continues. When that store reopens in May it will feature what Inditex says is a "radical new store concept with technology at its heart", that is "designed to transform the customer shopping experience".

The 200 sq m pop-up store features a selection of women's and men's clothing that they can buy online in the store, while also browsing and buying from the retailer's full range online. Store staff have mobile devices to help customers who can order for same or next-day delivery or collection. Store features include a product recommendation system based on information screens embedded in mirrors. When customers scan an item they are interesting in using RFID technology, the system brings up other items that would go with the item they have, in order to create an outfit.

When the pop-up store opened, in January, Inditex chairman and chief executive Pablo Isla said both concepts marked "another milestone in our strategy of integrating our stores with the online world, which defines our identity as a business."

The new 4,500 flagship store that is due to replace the pop-up store in May will include a section dedicated to online order collection, which, says Inditex, is part of the brand's strategy of online integration. It will feature an automated online collection point, served by two small warehouses equipped with robotic handler capable of dealing with up to 2,400 items at once, where shoppers can pick up their online orders by showing the QR code or typing in a PIN code they receive with their order notification. The order is then delivered to a mailbox from where customers can collect it. In-store, customers will be able to pay using their mobile phones, either through the Zara or the Inditex Group app.There will also be a self-checkout area to speed up the payment process, with a system that automatically identifies the clothes being bought. Customers need then only confirm items on a screen before using their card or phone to pay. They can print out their receipt or store it digitally.

Such development comes at a price: in 2017 the group invested €1.8bn in capital expenditure, focused, it said, "on significantly boosting the development of its integrated and sustainable model of stores and online."

Online expansion
Inditex expanded Zara's online sales to India, Vietnam, Singapore, Thailand and Malaysia over the year. Its online store went live in Australia and New Zealand this week. Online sales rose by 41% over the year, accounting for 12% of sales in markets where it sells online.

Bershka launched its ecommerce platform in the US, Japan and South Korea, while Oysho has also launched online for the first time in South Korea

Store expansion
Inditex opened a net 183 new stores during the year. In total, 524 stores opened in 58 markets – including its first in Belarus. These stores replaced or absorbed 341 smaller outlets. The strategy, said Inditex, was to focus on larger stores in prime locations. Between February 1 and March 11 2018, store sales increased by 9% in local currencies.

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