Zara owner built post-Covid retailer before virus came along

Bloomberg

A few weeks after Spain declared a nationwide lockdown in mid-March to fight the growing coronavirus outbreak, clothing retailer Inditex SA began running low on goods.
The world’s largest fashion retailer typically operates a lean warehouse operation, preferring instead to hold the majority of its stock in stores that double as e-commerce fulfillment centres. That way, turnaround is faster, shelves are replenished more regularly and inventory is kept to a minimum.
But with about 3,500 stores worldwide closed, this carefully balanced just-in-time cycle of goods was reaching breaking point.
By April, Inditex sent out an unusual request to employees, seeking volunteers to retrieve clothes and accessories left in stock rooms and on shelves in the hundreds of Zara, Massimo Dutti and other brand stores to fulfill e-commerce orders.
The unorthodox blend of local manufacturing, nimble logistics and aggressive embrace of e-commerce has helped Inditex weather the fallout from the global lockdown better than many other retailers. It’s also helped recalibrate operations for a future of shopping where face masks, limited store access and distancing stand to push consumers online in ever greater numbers.
While the company is set to report its first-ever loss when it unveils quarterly earnings on Wednesday, Inditex managed to rely on its online business to keep operations running, limiting the damage from the shutdown that’s now beginning to ease in Spain and elsewhere.
“Pre-Covid 19, online generated about 14% to 15% of Inditex’s sales, and no doubt that will have accelerated now,” said Richard Chamberlain, managing director of European general retail at RBC Capital Markets.
“The advantage they have is a central pool of inventory, which is shipping out stock to shops a couple of times a week so the idea of shipping directly to people all over the world is pretty easy.”
A relative latecomer to the Internet, Inditex launched its first online apparel business in 2010 and expanded the digital business with a big bet on technology that ties into its unique logistics and distribution system.
When Inditex launched its apparel online business in 2010, it made up for the late entry by harnessing technology that gave it a more robust overview of its product stream.