Inditex Group’s Executive Chairman Pablo Isla has unveiled the group’s plan for 2020-2022, providing a glimpse into the future at Inditex, shaped by capital expenditure of €1bn to boost online and an additional €1.7bn to further integrate the store platform. He sought, first and foremost, to transmit a message of solidarity with all of the people whose lives or families were touched by Covid-19. He also expressed his gratitude to Inditex professionals worldwide for their engagement and sense of responsibility.
“Our priority through the crisis has been and continues to be the health and safety of our people and our customers. I would like to publicly thank all of our people for their tremendous commitment throughout the global health crisis and during the gradual return to our stores and operating facilities. I would like to highlight how they have consistently followed the appropriate protocols, which has delivered a consistent message of responsibility. As we have always said, people is what really matters for Inditex, beyond any other consideration, and I believe that the current situation we are living, prove it so“, Pablo Isla stated.
Under the group’s plan for the next two years, the company will accelerate and broaden its forward-looking digital transformation strategy. Isla today committed that the Group will invest €1 billion in bolstering the online business and a further €1.7 billion in upgrading the integrated store platform, deploying advanced technology solutions.
Going into further details Pablo Isla mentioned: “This strategy is a culmination of the project the company has been investing in steadily and significantly since 2012, a project that will transform its profile notably. The overriding goal between now and 2022 is to speed up full implementation of our integrated store concept, driven by the notion of being able to offer our customers uninterrupted service no matter where they find themselves, on any device and at any time of the day”.
An important aspect of the plan is Inditex’s Open Platform (IOP) project, which has involved creating the proprietary IT architecture over which all of the company’s digital operations run; it has been designed with a configuration to provide the quality, accuracy and immediacy the company’s business model requires.
Starting from the e-commerce platform, it layers in all the associated processes, including inventories, purchasing, distribution and orders, injecting flexibility and, vitally, scalability.
Scalability is crucial in the ability to maintain excellent service during periods of peak traffic such as sales seasons and is key to readying the company for the anticipated ramp-up in online sales.
The platform, the configuration of which dates back to 2018, has proved its efficiency in a staggered implementation. It is currently 60% operational and will be fully deployed between 2020 and 2022. It is one of the most technologically advanced platforms in its field and it is implemented through microservices to help the specific needs of every department or area involved in the process without changing the whole system.
Online, over 25% of total sales
Inditex expects online sales to account for over 25% of the total by 2022, compared with 14% in FY19, underpinned by an integrated online-store network that is structurally nimble, sustainable and smart. It will have larger, higher quality stores, higher levels of profitability, and helping generate 4-6% like-for-like growth annually.
Each store will act as a fashion distribution hub in the heart of the most strategic shopping districts of the world’s leading cities, forging an interconnected global distribution network that is responsive to emerging shopping habits.
To that end, Inditex plans to reinforce all of its brands’ e-commerce capabilities. One example is the new www. zara.com studios in Arteixo which will span 64,000 square metres. It will also increase the online customer service teams and the dedicated packaging both from the specific online stockrooms and from the stores. Also, the implementation of the RFID system, which enables garment tracking and integrated inventory management, will be fully deployed across all the brands by the end of 2020.
In parallel, Inditex plans to continue with the store upgrade plan underway since 2012 under which it has opened a gross 3,671 stores that are larger, in more high-profile locations and already integrated with online. From that date, the Group, enlarged a further 1,106 stores, refurbished 2,556 with the latest technology and absorbed 1,729 units, 1,024 of which during the last three years.
Ultimately, Inditex plans to have a total network of between 6,700 and 6,900 stores, from 7,412 today, which will involve opening 450 new stores fitted with all the latest sales integration technology and absorbing between 1,000 and 1,200 smaller-sized stores, which account for 5% to 6% of total sales and are less well positioned to offer the new customer experiences. Most of these smaller stores are older stores belonging to brands other than Zara.
By region, the plan envisages giving a definitive boost to certain brands’ online sales platforms, specifically those of Bershka, Pull&Bear and Stradivarius in China and Japan; in Spain, the Group will continue the process underway for the last three years of opening larger stores while absorbing smaller ones, as observed in cities such as Bilbao and Pamplona; in the Americas and the rest of Europe, the priority will be to consolidate the strategy driving full integration of the physical and digital worlds.
Sustainability
In keeping with the group’s unwavering commitment to sustainability, the brands made further progress on their commitment to using more sustainable and recycled raw materials, many under the Join Life label which distinguishes those garments made using more sustainable processes in terms of water and energy consumption.
The group’s stores also continued to roll out the used clothing collection programme: customers can now find collection containers in 2,299 of its stores in 46 markets; the scheme is run in conjunction with 45 organizations which receive the clothing and sort it for reuse or recycling.
As part of the evolution of the eco-efficient store plan, the group continues to increase the number of stores connected to its centralized energy and water control and management system. Thanks to the technology already fitted and the high rate of connectivity with the centralized platform, a total of 3,587 stores are now operating under this energy platform.
Inditex has worked closely with suppliers to ensure they are following official guidance to protect the health of workers in factories during the pandemic. The Group has also ensured that all orders produced or in production during this period were completely paid for according to the original payment terms.
In addition, Inditex publicly endorsed the call for action under the International Labour Organization in collaboration with The International Organisation of Employers (IOE), the International Trade Union Confederation (ITUC), IndustriALL Global Union and other brands to mobilise support for manufacturers and workers through the economic disruption caused by Covid-19.