While the company reported it’s first-ever loss in its quarterly earnings, Inditex managed to limit the damage from shutdown of its operations by relying on its online business. 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.
The system has two key pillars: heavy rotation of products that move quickly from commissioning to sale in stores; and proximity of production, with the bulk of garments made in Spain, Portugal, Morocco and Turkey. Almost all clothes are sent to a handful of centres in Spain and re-distributed from there to outlets worldwide.
During the pandemic, the online business had an opportunity to shine as in most major countries where Inditex operates in Europe e-commerce was allowed to continue operating even as brick-and-mortar temporarily closed down. This occurred in Spain, Inditex’s largest market, where the government declared a national lockdown March 14, causing retail sales to drop by a record 14 percent that month.
The company remains in good shape, thanks to its strong balance sheet boasting €8 billion ($9.04 billion) of cash and cash equivalents, the integrated online business and low inventory compared with rivals.
