Recently, Zara suddenly shut down 4 stores in Wuhan, and the official website was unable to find information about Wuhan stores. In December 30th, the Changjiang Commercial Daily telephoned the official service telephone of Zara. The staff said that the Wuhan Zara store was closed down for upgrading, and the specific opening hours had not yet been notified. As for other provinces Zara stores, the staff said normal business.
According to the pictures taken by netizens, Wuhan Zara Han Street Wanda Plaza, central department store and clustered Center store have been closed and affixed with seals. At the beginning of December, Zara, a flagship store in central department store in Wuhan, also issued a discount publicity. It originally planned to launch the biggest "window period" every year from December 28th. The reporter called the above branch offices, but no one answered.
In fact, in terms of performance data, Zara has been slowing down its expansion in recent years. As early as last year, Zara revealed that it would slow down store expansion and put more attention on online channels.
Zara's parent company Inditex group's three quarterly report shows that as of September 30, 2019, the first three quarters of the Inditex group's sales rose 7.5% to 19 billion 800 million euros, and net profit rose 12% to 2 billion 720 million euros, of which third quarter profits rose 14% to 1 billion 200 million euros. The Inditex group's profit increased by 12% to 2 billion 720 million euros. Up to now, Inditex group's all brands of e-commerce services have been promoted in more than 200 markets worldwide, with a total of 7486 offline stores, including 2139 Zara stores.
However, compared with past achievements, Inditex group has already bid farewell to the golden age and began to slow down in 2016. Earnings data show that in fiscal year 2016, Inditex sales growth 6%-8%, less than expected 8%-10%; sales in fiscal year 2017 increased by only 9%; sales in fiscal 2018 slowed further to 3%, while net profit rose 12% over the same period last year, the worst growth rate in nearly 5 years.
Meanwhile, according to fashion headline statistics, the price of clothes sold by Zara in the Chinese market has decreased by 10% to 15% since 2016.
Inditex chief executive PabloIsla said earlier that slowing the expansion of the stores does not mean that the company will not pay attention to physical retail business, but that the company will give priority to those flagship stores that cover a large area and are in prime locations and in major cities. As Zara expands more and more in stores, it is also reasonable to shut down shops with poor performance.
But closing all the stores in one area is also very sudden.
Wang Yuan, a retail analyst, thinks that Zara has been known as "fast, small and diversified" as a fast fading brand, which means high inventory and high cost. China's rapid expansion in 2006 was partly due to the rapid development of commercial real estate in China. But with the rise of China's electricity providers, the decline in performance of department stores and shopping centers, and the rising rents, fast selling brand performance is bound to be dragged down by large physical stores, and it is also a strategy to shut down or reduce the cost of stores.
Source: Changjiang Daily: Wu Ting