Zara owner eyes digital opportunities in China

Spanish fashion retail giant Inditex, owner of brands such as Zara, said it will further adapt its business strategies to consumer needs and adjust store opening plan in China, renovate existing ones, exploit the power of the digital medium and remain upbeat about the local market where consumption upgrade and consumption recovery now form the backdrop.

Eugenio Bregolat Lukashov, president of Inditex Greater China, said: "In the past few years, consumers have been focusing more and more on health, quality and sustainability. We are also evolving with market demand. For us, China is a strategic market, and it will continue to be a strategic market."

With that, the company sought to scotch rumors Zara is gradually moving out of China, clarifying it is only adjusting its store-opening strategies and increasing emphasis on opening more high-quality stores.

Part of Inditex's China strategy is to woo younger consumers using social media. A livestream of Zara on Douyin on Nov 17 created waves as its fashion show featured supermodel You Tianyi on the runway. The slick production, complete with product promotions and fashion and beauty tips, created an immersive experience for both the on-site audience and viewers.

Data from Douyin data tracker Douchacha showed the five-hour livestream attracted accumulative views of nearly 1.22 million, with 13,000 peak-time views.

Praise erupted on social media. "Tonight's livestream of Zara was amazing! The overall set and color scheme was funky. This is the best livestream I have ever seen," wrote Tami Sun on Weibo.

Market insiders said a high-quality production like Zara's would cost a fortune, but Inditex is undeterred. The company plans to livestream such shows once a week to burnish its brand image and meet local consumer demand.

"We are always constantly adjusting our business model ... Zara today is very different from Zara 10 years ago," Lukashov said.

On Aug 17, Zara renovated and upgraded its outlet in the Joy City shopping mall in Shenyang, Liaoning province, giving it a digital edge. Its mobile app can detect the number of available clothes, reserve an on-site fitting room, and pre-order and pick up goods.

"We also opened a new image store in Shanghai Sun Plaza and renovated Han Street store in Wuhan, Hubei province, last year. Next, we will keep investing in new digital functionalities and high-quality stores in the Chinese market, and continue to open more stores in top commercial areas or renovate existing ones so they reflect Zara's latest brand image and meet the needs of local consumers," Lukashov said.

Pei Liang, head of the China Chain Store and Franchise Association, said multinational corporations in China are adjusting their business strategies in the wake of consumption upgrade. MNCs in the consumer space are optimizing store-opening plans, enhancing digitalization and working with local partners, to enhance consumer experience, he said.

According to Inditex's first-half financial report, the group's global sales revenue surged 13.5 percent year-on-year to 16.9 billion euros ($18.6 billion), with net profit growing 40 percent to 2.5 billion euros. Sales of all brands have shown positive growth. Specifically, sales in "Asia and other markets", including China, accounted for more than 18 percent of its total sales.