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Zara Closes 1200 Fashion Stores After Covid-19 Crisis



  • Inditex has to deal with a 44% drop in sales due to the global pandemic and have decided to take action
  • Inditex plans to close up to 1,200 Zara stores
  • Inditex has decided to increase the proportion of online sales in order to bridge the gap
    June 11th, 2020: the global Covid-19 crisis has wreaked havoc for many shop owners and businessmen as businesses remain closed. Inditex has faced a 44% sales slump, between February 1st and April 30th, which threatens their economic stability, and they now plan to boost their sales online.
    The prevalent Covid-19 pandemic has convinced the owner of Zara fashion shop to close up to 1,200 Zara shops across the globe and shift their sales to an online platform that has gained popularity in the current situation.
    The Spanish company, Inditex claimed that it aims to “absorb” 1,000 to 1,200 stores that have faced significant losses. The majority of the Store closing is taking place in Asia and Europe as sales in these stores have been affected more seriously. In the UK, on the other hand, the 107 stores owned by Inditex do not face as grave a threat.
    After this massive shift, the number of Zara stores will be reduced from 7,412 to 6,700-6,900. These figures also include 450 new stores that will be opening.
    Inditex assured its many employees that “headcount will remain stable” and there will be no large-scale down-sizing. Employees in stores that are closing will be given alternate tasks like management of online purchases.
    The global crisis has threatened numerous businesses and fashion stores are just as unfortunate. In the first 1/4th of its year, Inditex faced a loss of 409 million pounds and they are successfully trying to recover it through online sales. The fashion brand Monsoon Accessorize and Quiz, in the UK, stated on Wednesday, that they will also be closing some of their branches.
    Inditex now faces a further challenge in the form of competitors like H&M, Fast Retailing, and Asos and Boohoo. Inditex aims to increase the percentage share of online sales from 14% in 2019 to 25% by 2022. The large stores that will remain open will operate as distribution centers for online business.
    Under the new plan, Inditex will be devoting 1 billion pounds for online sales management by the year 2022. In addition to this, it will be spending a further 1.7 billion pounds on the large stores so that they can integrate and make good use of the websites.