Adapting its business strategy to the demands and fashions of various audiences has long been a stated objective of Inditex. As a result, it has recently redistributed its resources, closing or opening a number of locations depending on the response of the market. According to this plan, it announced plans to shut down all Bershka, Pull & Bear, and Stradivarius physical stores in China but to keep their online presence. And so it has been, at least up until recently, when the Spanish juggernaut changed its mind and chose to stop all local e-commerce operations as well, thereby removing all three of its brands from the market. Customer complaints about Bershka, Pull & Bear, and Stradivarius’s virtual flagship stores on Tmall were detailed in a series of notifications.
Inditex’s profits rose by 80% in the first quarter of the year, while sales rose by 36%; performance in China, however, was not as strong. Actually. Due to the 67 outlets in the eastern country closing as a result of Covid-19 restrictions, the yield was lower than anticipated, and the country underperformed. In addition to lockdown and pandemic, the emergence of domestic Chinese players, like Peacebird, Urban Revivo, Mo&Co., and, most significantly, the now-powerful Shein, may also have had an impact on this unfavorable statistics.
In order to concentrate on its large flagship stores, the Spanish company had intended to liquidate 1,200 smaller locations the previous year. Inditex will keep growing its retail network in the region despite three of its brands permanently leaving the country. It will concentrate on Massimo Dutti, Oysho, Zara Home, and, of course, Zara, which recently opened two stores in Changsha and Chengdu, each with a space of 3,000 square meters and cutting-edge retail technology. Will this strategy be successful in Europe if it is successful in China? Without a doubt, but closing market doors in China as a result of local fast-fashion rivalry gaining more and more clout through shifting market interests and balances, could be another cause to cease shopping on Shein.