Inditex sees online sales skyrocket by $ 7.8 billion

Spain’s Inditex continues to grow during the pandemic, posting a profit of 1.1 billion euros ($ 1.2 billion) in 2020

Throughout 2020, online visits to Inditex brands reached 5.3 billion, a 50% increase over the previous year, and online now accounts for 77% of sales. However, sales fell 28% from € 28.2 billion (€ 33.5 billion) to € 20.4 billion (€ 24.2 billion), but sales growth online enabled the company to post a profit of 1.1 billion euros (1.2 billion euros).

All of its divisions recorded strong sales despite the fact that at some point in 2020, each of Inditex’s 6,829 stores were closed at some point during the year.

Inditex has an adaptable and fast supply chain, which reduces its need for large discounts. Fast fashion and disposable clothing have taken the fashion world by storm, changing the buying habits of consumers. Consumers now expect new trends to enter stores or be available online quickly and this is an area in which Inditex has flourished.

In contrast, UK retailers have started 2020 under difficult conditions, with customers increasingly turning to online competitors. Brick and mortar stores such as Mothercare and Debenhams could not keep up with online retail channels. As a result, businesses fell under administration as the UK government announced store closures to reduce the spread of the virus.

Inditex continued to expand its global platform in 2020

According to the company’s annual report, Inditex continued its global online sales launches throughout the pandemic, with Zara launching online in 25 markets in 2020. This is expected to continue into 2021, with total annual capital expenditure. from 2020 to 2022 set to be around 900 million euros ($ 1,070 million) in a plan that includes digital investments of 1 billion euros ($ 1.19 billion) over three years.

This is a strategic approach. Even with vaccination programs deployed around the world, it will take a long time for the customer to move freely around a store. Some frightened shoppers may be definitively reluctant to enter stores due to fear of further epidemics.

Therefore, consumers who adjust to online shopping during this time may choose to stick with it. Data from McKinsey (MCk) shows that consumers are likely to retain behaviors they have adopted when ordering from home, such as more online shopping and fewer visits to malls.

Inditex’s SINT Project Enabled Retailer To Fulfill 46 Million Online Orders In 2020

Additionally, Inditex attributed its success during the pandemic to its rapid deployment of the Integrated Inventory Management System (SINT), which is already available in 5,777 stores in 89 markets. Concretely, SINT enabled the processing of 46 million online orders worth 1.16 billion euros ($ 1.38 billion) in the group’s stores during the year.

The company also opened 29 new stores and donated resources including face masks to various governments, charities and health departments in an effort to help fight the pandemic. Inditex has also activated a global emergency relief program as part of its community investment effort, for which the company has committed more than 40.4 million euros ($ 48.1 million).

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David A. Albanese