Zara goes high-tech in race with Amazon
Inditex is benefiting from investments in technology that are boosting efficiency online and in stores, helping the Zara owner contend with Amazon.com ’s foray into the fashion aisle.
Earnings in the three months through April of ^851 million ($999 million) beat analysts’ estimates, and the gross margin widened after reaching the lowest in a decade last year. Sales, however, missed expectations, according to the statement Tuesday.
Inditex has rolled out a wave of new technology at select Zara stores around the globe in recent months, including augmented reality and hologram displays of clothes, as it moves to erase the lines between online and in-store operations. A new concept store in the UK uses robot arms to deliver internet orders to walk-in customers. Swedish rival Hennes & Mauritz has been struggling to revive sales growth as fashion mistakes and increasing competition have lifted inventory levels to a record of more than $4 billion. Inditex plans to start operating a new 90,000square-metre distribution centre near its headquarters in Arteixo this summer, and the company is working on a new logistics hub in the Netherlands. Those investments will exceed ^150 million, the company said.
“The company’s globally scalable business model lends itself well to online expansion,” wrote Alvira Rao and Andrew Ross, analysts at Barclays.
With Zara’s augmented-reality app, a shopper can view moving images of models displaying the latest collection when pointing smartphones at Inditex’s shop windows.