Inditex goes on the digital rampage
Zara-owner Inditex, the word’s largest fashion retailer by sales, is pushing to own the digital space. It’s using augmented reality to blend its offline and online presences: just open your Zara app and point your phone at an empty store window, and you’ll be greeted by models wearing the brand’s latest styles. You can then click through and purchase these clothes online. It’s just one example of a wide-ranging approach to digital innovation that Inditex is banking on. The technology will launch in 120 stores later this month.
Inditex is considered best in class when it comes to its physical presence, but brick-and-mortar retailing is under pressure from powerful Ecommerce solutions. Innovations like the one mentioned above offer a canny way for the company to keep its industry-leading offline infrastructure relevant in way that H&M has dramatically failed to do so.
Anne Critchlow, a retail analyst with Societe Generale, said: “Inditex has been pushing hard into online and with a lot of success. It has quickly launched free returns as well as next day delivery, and is powering ahead.”
Inditex’s CEO, Pablo Isla, concurs. Revealing last month that a full 10% of its €25.34 billion in sales is now coming from online channels (a year-on-year growth rate of 41%), he said: “online sales are becoming an element that is contributing significantly to the company’s growth.”
Inditex operates in 96 markets worldwide, but only has dedicated Ecommerce platforms in 49 of them. The company plans to change that, and wants to operate such platforms in all of its markets – it’s dedicated 19 warehouses globally solely to fulfill online orders.
According to Andreas Inderst, an analyst with Macquarie Capital: “The industry is all about ‘see now and buy now’. With the internet and social media fashions are changing so fast, and Inditex is one of the few retailers that can keep up with the speed of changing trends.”
Dominion holds Inditex in its Global Trends Luxury Fund.
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