Author：沙拉酱

Source: GPLP

On April 8, Inditex, Zara’s parent company, said it would fulfill the contract with the supplier and pay the full amount for orders that have completed production or are in production.

Zara was established in Spain in 1975 as a subsidiary of the Inditex Group, which focuses on apparel brands and has established more than 2,000 apparel chain stores in 87 countries.

According to reliable sources, Inditex Group, Zara parent company, has temporarily closed all stores in Spain under the influence of public health events. Since then, Remake, a non-profit organization, has publicly accused the Inditex Group and many retailers of owing more than $ 3 billion in order payments to suppliers in Bangladesh, India, Myanmar and Cambodia, resulting in about 5 million workers facing unemployment, no severance payments, and medical insurance, etc.

Although Inditex Group promised to fulfill the contract with the supplier, as far as the current situation is concerned, Zara, distributed in various countries, is “too late to cry”.

Zara is “gritting his teeth”

Under the influence of public safety and public health events, Inditex Group has temporarily closed thousands of stores a month ago. In mid-March, Zara has temporarily closed nearly half of the stores worldwide. As a result, Inditex Group’s sales volume have dropped 24%. At the same time, it also bears the salary of about 175,000 employees employed in the Chinese, Russia and the United States.

Earlier, foreign media reported that if Spain’s emergency continues until April 15, Inditex Group is considering temporarily laying off about 25,000 store employees in Spain.

Now, with Zara’s Spanish store has announced a temporary closure, Zara suffered a severe blow in sales, its “destocking” has become a Inevitable choice currently facing.

Because the apparel industry involves a quarterly nature, if the apparel in this quarter cannot be sold as quickly as possible, it is difficult to sell smoothly in the next quarter, and consumers can only be attracted through low discounts. In this way, sales profits will be “greatly reduced.”

Therefore, with the temporary closure of the store, online “destocking” is a problem that Zara needs to face.

Moreover, according to insiders, Inditex Group’s logistics distribution platform requires workers to “shift twice a week for 4 hours each shift.” in Zaragoza, Spain. Employees said that the current workload of the Zaragoza logistics platform is only 15% of the usual, and now the warehouse is full of goods.

In fact, since 2017, due to the slowdown in performance growth and the stock price plummeted by the performance, Zara has fallen into a trough.

Although certain measures have been taken to make Zara’s sales increase by 8% year-on-year in 2019, the “good prospects will not last long” and they will again fall into crisis in 2020.

The warming Zara China is also “insecure”

Now, Zara said that when all Spanish stores are temporarily closed, the goods will be shipped to China through cargo aircraft for sale to meet online and offline orders in the Chinese market.

However, whether the Zara store in China, which has recovered from a serious illness, has “sequelae” or a problem that has not yet been confirmed. Now, in the face of the goods that is about to ship from Spain, can it be guaranteed to be “sellable”?

After all, although the Chinese market has been slowly “recovering”, Zara has temporarily closed about 40 offline stores in China. Zara, which mainly relies on offline marketing, has fallen into a crisis of decline in performance in China.

Under the influence of public health events, many industries are actively exploring online sales channels to “self-help”, but Zara has not expressed his position.

Moreover, as Zara’s second largest market, in recent years, Chinese market seems to be showing signs of fatigue. The data shows that Zara’s sales price has dropped by an average of 10% -15% in the past two years.

At the same time, in the market of China, the nationalization brand Li Ning has also begun to create a trend line, and after affordable brand’s large-scale expansions such as Semir and Uniqlo, whether Zara can continue to occupy a “place” in the Chinese market is still unknown.

This spring seems to be a bit far fromZara.