Five features of Inditex’s 2020-2022 digital transformation strategy

Inditex, the owners of fashion brand Zara, has unveiled its 2020-2020 plan to boost its digital and technology capabilities during the release of its financial results for Q1 of 2020. Covering the period 1 February and 30 April 2020, overall sales for the group fell by 44%, caused by the closure of 88% of its stores during the Covid-19 pandemic. But online sales increased by 50% for the period, and by 95% in April alone. This offers some indication as to the future approach of the group, with eCommerce set to play a key part in Inditex’s €2.7 billion digital transformation strategy. Here are five major focuses of the 2020-2022 plan:

1. IT infrastructure

The group is developing proprietary IT architecture upon which the company’s digital operations will run, improving its flexibility and scalability. This starts from its eCommerce platform, combining it with associated processes, including inventories, purchasing, distribution and orders. Inditex believes this will enable it to provide efficient services to online shoppers even during times of peak traffic such as sales seasons. The configuration of the proprietary platform dates back to 2018, and will be fully deployed between 2020-2022.

2. eCommerce scale-up

Heavily linked to the scaling up of its IT infrastructure, is Inditex’s plans to ramp up its online business. The Spanish-based group wants online sales to make up 25% of its total revenue by 2022, which compares to 14% in FY19. To do so, it is growing the eCommerce capabilities across all its brands, which include Bershka, Pull & Bear and Massimo Dutti in addition to Zara. Inditex gave the example of the new studios in Arteixo, Spain, which will span 64,000 square metres. Other initiatives include growing its online customer service teams and deploying a RFID system across all its brands by the end of 2020.

3. Integrated physical stores

Inditex plans to reduce the number of its stores to between 6,700 and 6,900 from the current number of 7,412, with a focus on larger stores fitted with the latest sales integration technology. This includes removing 1,000-1,200 smaller-sized stores and opening 450 new larger ones. The primary purpose of this move is to integrate its online and physical businesses, including dispatching online customer items from store. This integration is made possible by the aforementioned IT platform.

4. Introducing the ‘store mode’

Customers will also be able to access services via Inditex’s mobile apps and website, made possible by its integrated IT system. This includes the ability to consult store stocks in real time for online purchase and immediate collection, and pinpoint the precise location of a specific item within a given store.

5. Promoting environmental sustainability

There will also be a major emphasis on sustainability as part of the digital transformation strategy. The proprietary Inergy environmental control platform will be installed in all Inditex’s stores, while only renewable sources of energy will be used. Additionally, Inditex aims to recycle or reuse all surplus incoming materials such as cardboard, plastic and packaging as well as eliminate all single-use plastic from its in-store customer interface.

Inditex’s group chairman, Pablo Isla commented: “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.”

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