Retail and Digital Transformation

Considerable investments in the digitalization of operations, the closure of small stores and the expansion of the commercial area of the best located sales points, is part of the strategy that companies are beginning to implement in the new context of business transformation.

Friday, June 12, 2020

Managers of large corporations agree that several companies were already making progress in digitizing sales and operations, but the pandemic ended up persuading decision makers of the need to focus on online sales, and simultaneously accompany it with a plan to transform physical stores.

Inditex, a well-known Spanish clothing retailer, is a clear example of what is happening in the current scenario of change in ways of selling. The company recently announced a business transformation plan, with which it intends, by the end of 2022, that its online sales will represent 25% of total sales.

The strategy consists of investing 1,000 million euros over the next two years in strengthening its digital business and closing between 1,000 and 1,200 physical stores in 2020 alone.

See: "E-Commerce is Gaining Ground in the Region"

Regarding the closure of the stores, Elpais.com reports that it is expected that "... Zara will be the brand with the highest number of takeovers, between 250 and 300, followed by Oysho (145-175), Pull & Bear (140-165), Bershka (135-160) and Massimo Dutti (110-135). Stradivarius will close between 110 and 130, Zara Home between 100 and 120, and Uterqüe between 10 and 15."

Although the strategy is focused on a gradual migration to the digital sales channel, Inditex will also invest in the expansion of the commercial area of its best located physical salesrooms.

The article details that the company will invest in "... a very significant number of high quality store extensions, those with the best locations. Despite the smaller stores, gross space will grow at a 2.5% rate by having larger stores, which are expected to generate long-term comparable sales growth of between 4% and 6% per year, these being more profitable."

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