Zara Sets Goal to Sell Everywhere as Amazon Encroaches
(Bloomberg) -- Spain’s Inditex SA plans to make clothes from its Zara label and other brands available online anywhere in the world within two years, aiming to become one of the first truly global clothiers as Amazon.com Inc. encroaches into fashion.
“We want to make our fashion collections available to all our customers, wherever they are in the world, even in those markets which do not currently have our bricks-and-mortar stores,” Chairman Pablo Isla said at a Milan store reopening Tuesday.
The goal implies doubling Inditex’s global footprint, as it now has stores in 96 countries and e-commerce in about half of those. The retailer is setting the goal amid growing investor concern about stronger competition from upstart rivals and as web sales threaten to erode profit margins. Morgan Stanley analysts warned last week that the company has gone from great to good and Credit Suisse this week said the growing shift to online sales isn’t as beneficial for Inditex as traditional store expansion.
Inditex shares have dropped 14 percent this year and were down 0.8 percent to 25.06 euros at 9:59 a.m. in Madrid trading Wednesday.
Isla’s comments are a rare statement for Inditex, which avoids setting big goals or making detailed comments on its outlook. Still, the announcement does fit with the retailer’s increased focus on web operations and its investments in technology, ranging from applications to track stock to virtual reality in dressing rooms.
“This is a positive announcement, since it implies a clear step forward regarding competition from other online platforms," Banco de Sabadell analysts led by Nicolas Fernandez said in a note to clients. “However, it’s difficult to measure without details on how the plan will be put in place and the possible costs.”
E-commerce is the source of 10 percent of Inditex’s sales, having grown more than 40 percent last year, the analysts wrote.
Hennes & Mauritz AB, Inditex’s ailing rival, has said it aims to add online sales in all its brick-and-mortar markets eventually, and expand in other countries as well. The H&M chain has e-commerce in about 50 markets and stores in about 70.
The company also plans to start serving web customers orders with store inventory in all markets where it operates, up from the 25 countries where it currently does so.
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