Adapt or die. In the midst of the crisis left by the pandemic, this premise has gained special significance, especially when read from the retail perspective, where large brands such as Zara, Macy’s or Victoria’s Secret have damaged their business in a particularly important way.
The projections could be even higher than those already expected, which since the beginning of the health emergency were complicated.
The bankrupt retail sector
As regards this new health crisis, the impact of the coronavirus is expected to be major for the retail sector. At least that’s how it is exposed in a recent report by GlobalData, which reveals that global spending in the retail industry falls by 3 percent during 2020, equivalent to approximately 549 billion dollars.
In that sense, it is worth quoting data from the US Census Bureau, which warns that the category with the strongest drop in sales has been that of clothing and accessories, with a sales contraction of 78.8 percent; followed by electronics, which has had a sales contraction of 60 percent; while the home furnishings and accessories category has seen a 58 percent contraction.
Given this scenario, various retailers are projected to close more than 9 thousand 300 stores this year only in the United States.
The casual fashion giant and its current situation have been part of these statistics with closings and losses that nobody expected.
The blow for Inditex
The Spanish fashion firm presented its financial report for the first quarter 2020, comprised of (from February 1 to April 30), in which it indicated that it obtained reported a sales drop of 44 percent, which translated into more of 3,300 million euros.
In general, the owner of Zara reported losses from 409 million euros, against a profit that reached 734 million in the referred period.
In this way, Inditex, owner of brands such as Zara, Pull and Bear, Massimo Dutti, Bershka and Stradivarius, among others, will seek to cut expenses to make their investments more efficient. This means that the group plans to lower the curtains of between one thousand and one thousand 200 establishments this the remainder of this year and 2021, globally.
Inditex said it would « absorb » mainly the smaller ones, those with concentrated losses among the oldest stores of its brands, something that according to The Guardian, is expected to affect mainly markets such as Europe and Asia.
But, as well as seeking to adjust resources, it will also grow a business area that is achieving positive results, for which he said that the focus is to accelerate its strategy of digitization and reorganization of the commercial network, a process that, although it has already years working, given the context and the effects of COVID-19, motivate her to point in that direction.
WhatsApp, an exit
In this digitization plan, not only online sales are part of Inditext’s strategy. In recent weeks, Inditex launched a new customer service via WhatsApp, which it has started to test among members of the Massimo Dutti customer loyalty club, one of the group’s premium brands.
The movement, in addition to being a possible expansion for other brands such as Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe, opens the possibility of a new sales and promotion channel for the firm that needs to make up for what has been lost. in their physical stores.
This type of movement has been especially constant in recent months. Recently, in the Mexican market, Burger King enabled a new online ordering system through WhatsApp that will be available, which is in addition to the proposals of Sears and Sanborns that announced a new sales tool to achieve commercial objectives and is the use of Whatsapp, to be able to accompany the consumer through consultancies through this messaging application.
The potential of messaging apps
Although the action of the owner of Zara and other brands responds to a need that was born in the midst of the pandemic, the reality is that it is a step that companies must adopt sooner or later.
The reason is none other than the relevance that these services have gained in consumer habits.
As of April 2016, several research studies pointed to a change in the use of consumers on the internet. The growth of social networks began to lose traction compared to chats. According to The Economist magazine 2.5 billion users they have a chat application installed on their phone and the media estimates that the sum will reach 3.6 billion before 2020. The figure would seem innocent at first glance, but represents just over 59 percent of the world’s population.
In fact, from Business Insider the number of active users per month in chats exceeds 3 billion, a figure 20 percent higher than that registered on social networks.
Although the panorama is easily read, the truth is that we are talking about a field that companies must tread with special care.
We are talking about a field of conversation and now of conversation that plays in the privacy of digital consumers. These applications are closed by nature and brands must understand and delicacies based on this reality so as not to be intuitive before a consumer who now privileges privacy.
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