Inditex to fold Zara Home into Zara
Changes are underway for Zara Home. The chain, dedicated to homeware and loungewear, has existed as an independent brand within Inditex since 2003, but the company revealed at the presentation of its full-year results on Wednesday 13 March its plans to progressively incorporate Zara Home into the Zara brand.
“The long-term goal is to consider Zara Home as a fourth section of Zara,” announced Inditex chairman Pablo Isla after submitting the company’s annual results with the Spanish National Securities Market Commission (CNMV) on Wednesday morning. The report detailed the financial performance of the group’s chains during the year ended 31 January, with Zara’s results including those of Zara Home for the first time. The strategic decision to integrate the reporting of Zara Home operations into Zara was motivated by the brands’ “increasing synergies”, according to the group’s chairman. Zara Home will continue to operate with an online shop and 603 standalone stores (of which 524 are directly operated and 79 are franchises), but a selection of its products will also roll out across selected Zara stores as part of a new section, dedicated to homeware and home decor, joining the existing ‘Woman’, ‘Man’, ‘TRF’, and ‘Kids’.
The formula has already rolled out in a number of Zara stores, Inditex said, citing the brand’s stores in London, St. Petersburg and Alberto Aguilera,Madrid, where the chains have already started to collaborate. The model is similar to that of H&M, the Swedish retail giant whose H&M Home brand continues to grow. Low cost retailer Primark and design-led upmarket American chains Urban Outfitters and Anthropologie, both part of American retail group URBN, have also created homeware destinations inside their fashion stores. As a result, Zara Home will become an extension of its sister brand, following in the footsteps of Zara Kids, which is featured as an section within Zara stores and also operates as a standalone brand with 128 stores worldwide, according to the financial report.
Additionally, the company has announced plans to progressively incorporate Zara Home products on the Zara website in some markets starting from next Autumn/Winter onwards. This will make Zara Home available in many more countries, and allow Inditex to run countless of trials to test the demand for its products, as well as customer behaviour, in new markets. Pablo Isla said that the online store will see the brands take advantage of their operational and management synergies. “The goal is to leverage operational and brand management of the store and online platform in a combined manner,” the group said, in line with its omnichannel integration strategy - one of its main priorities for 2020.
In 2018, Inditex’s net profit rose 2% to €3.44 billion, while its net sales grew to an all-time high of €26.14 billion, up by 3% on the previous year. Zara and Zara Home, whose results were integrated for the first time in the report, generated a total of €18 billion in net sales, compared with sales of €17.44 billion a year earlier. In 2017, Zara reported net sales of €16.6 billion, while Zara Home made €830 billion in revenues. Pablo Isla declined to reveal specific numbers for the chains, but reassured investors that their performance was coherent with their previous progress.
“In line with the global evolution of the company, it is a logical step in the life of the chain,” the chairman concluded about Zara Home’s integration into Zara.
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