Strategy spotlight: Five ways Zara owner Inditex will remain at the top of international fashion retail

As its momentum shows no signs of slowing, the Retail Week analyst team examines five ways Inditex can propel its proposition to remain at the top of the global fashion market. 

1. Wide-ranging portfolio 

Inditex’s best-known brand Zara (and its offshoot Zara Home) represented around 73% of group sales in 2022/23.  

Yet its portfolio of brands spans a variety of demographics and budgets – from its younger Pull & Bear, Bershka and Stradivarius banners to its more upmarket Massimo Dutti label – giving the retailer plenty of scope to both expand and experiment in different markets. 

The Retail Week analyst team estimates that Inditex’s sales within the UK market grew to around £1.2bn in 2022/23, representing 4.3% of total group sales.  

With only a handful of stores under most of its fascias in the UK bar Zara, it is a market the Spanish retailer is likely to expand in further. 

It introduced its first Oysho sports and leisurewear store to the UK in March 2023, in a bid to grab share in the growing sports sector. 

The White City store highlights one of Inditex’s key strategy pillars: digital adoption. It is home to features such as self-checkout and digital receipts, with customers able to place click-and-collect orders to the store within an hour of ordering via its app. 

2. Digital adoption 

Somewhat late to the ecommerce party, Inditex’s online sales had only reached around 10% of total sales by 2016/17.  

Yet the pandemic saw its online sales rocket to 32% of total sales in 2020/21 and become a much more significant part of its business.

With stores reopening, online sales stepped back somewhat in 2022/23, reaching €7.8bn (£6.7bn) or 24% of total sales.

Inditex aims to grow its online share of sales to 30% by 2024.   

All Inditex group banners have their own apps and dedicated websites, enabling customers to shop across several formats. 

In 2022/23, Inditex group websites received more than 6 billion visits, equating to more than 16 million daily visitors to its online stores. 

This rise in online sales led to the retailer starting to charge for its UK returns from May 2022 in a bid to tackle the costs associated with online retailing. It has subsequently expanded this charge to other countries, including Spain. 

The retailer also uses augmented reality (AR) in its apps to elevate the customer experience.  

Pull & Bear customers can enter the brand’s virtual fitting room to try on the latest sneakers, while Oysho customers can access an AR virtual trainer, Mia, via its Oysho Training app, enabling them to hone their techniques as they perform exercises. 

3. Seamless customer experience 

A strategic focus for Inditex is on seamless customer experience. This is showcased both through its apps and its in-store technology.  

The Zara app was the first to launch its in-store mode in 2021, with five of the group’s brands now offering this functionality.  

Customers can browse and make a purchase using the catalogue of items available in their selected store and place an order for pick-up in less than two hours. 

Via in-store mode, the app also enables users to locate an item they are looking for on the shopfloor. It will also detect whether an item in the user’s online shopping basket is available in store. 

Selected stores also offer app users the ability to book a slot in the fitting room. The app will allocate a slot and inform users of the estimated waiting time, then notify them when the fitting room is available.  

Zara introduced self-service tills in the UK in 2017, utilising RFID technology to enable users to drop all items simultaneously into the checkout basket, rather than scanning them one by one.  

Presently, customers must remove security tags themselves at the self-checkout, although Inditex is looking to eliminate these later this year by using chips sewn into the garment instead. This will enable the retailer to halve checkout times and create a more frictionless experience.  

However, one element Inditex is lacking thus far is a loyalty offer, which could boost trade further.   

Rival H&M Group has a compelling loyalty offer for its H&M brand and has recently integrated its other portfolio brands into the H&M app. This move enhances the customer journey across its portfolio and is something Inditex should look to mirror. 

4. Design-to-shopfloor agility

The Inditex group has nearly 1,700 active suppliers, as of 31 January, 2023, with a team of more than 700 designers in-house. 

A “significant portion” of Inditex’s garments are manufactured near its headquarters in Arteixo, Spain, in markets such as Spain, Portugal, Morocco and Turkey.  

Having these local supply chains enables the retailer to react quickly to trends, giving it flexibility and control over the design and production process. It can take under a month for an Inditex garment to move from design to its warehouse. 

Producing goods locally allows the fashion retailer to keep its inventory costs relatively low and respond to trends quickly.  

5. Path to sustainability 

Local supply chains are also a key strength when it comes to improving sustainability. 

Inditex is targeting net-zero emissions by 2040. With more than 50% of Inditex’s greenhouse-gas emissions occurring during its production cycle, improving these processes is key to unlocking its targets. 

Inditex is using its Sustainability Innovation Hub as a way “to help drive and scale sustainability initiatives”. Working alongside start-ups, academic institutions and tech centres, the hub aims to generate sustainable and circular solutions.  

In May 2022, Inditex signed a three-year commitment to buy Infinna upcycled textiles fibre for more than €100m (£85m), launching a capsule collection made from clothing waste. 

Chief sustainability officer at Inditex Javier Losada said: “Collaborating with others in new innovative initiatives – such as next-generation fibres like Infinna – is vital to carrying out the transformation our industry needs.” 

Several of its stores have points where customers can drop off used clothing and accessories to be recycled or reused.  

In November 2022, it launched its Zara resale pilot in the UK, allowing customers to book repairs and donate unwanted garments online or at their nearest store. Sellers can take pictures of their items for resale while Zara will provide detailed product information.  

In May this year, it announced plans to extend the service to France, Germany and Spain in the second half of 2023. 

With an acute focus on technological innovation paired with new store formats, the Retail Week analyst team predicts Inditex will continue its global dominance, with sales reaching an estimated £40bn by 2027/28.