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Managing Fast Fashion During COVID-19

Last month the Guardian published an article about the owner of the Spanish company Zara saying that the company  will “absorb” between 1,000 and 1,200 of the mainly smaller stores, those with losses concentrated among older shops from brands other than Zara. The Spanish company’s other brands include Bershka, Pull & Bear and Massimo Dutti.

Amancio Ortega Gaona

Amancio Ortega Gaona (born 28 March 1936) is a Spanish billionaire businessman. He is the founder and former chairman of Inditex fashion group, best known for its chain of Zara clothing and accessories shops. As of December 2019, Ortega had a net worth of $68.3 billion, making him the second-wealthiest person in Europe after Bernard Arnault, and the sixth wealthiest in the world. For a brief period in 2015, he was the richest man in the world, bypassing Bill Gates when his net worth peaked to $80 billion as Zara’s parent company, Inditex’s, stock peaked.

He is the head of the Ortega family and the second wealthiest retailer in the world.

It is all about profitability

Ortega has considered closing down 1000 to 1200 stores around the world as result of covid-19 chaos, with sales dropped down by 44% to €3.3bn (£2.9bn) between February 1st and April, 30th 2020. The company has reported a net loss of €409m during that quarter. Almost a quarter of its shops remained closed by June 8th.

Amancio Ortega Gaona

The Company also announced that online sales’ growth made up for some of the sales weakness, Inditex said. Online sales rose by 50% year-on-year during the quarter and went up by 95% year-on-year in April.

The brilliant move from Amancio is that there is no job loss reported as staff offered roles in other jobs such as dispatching online purchases.

A great example set by Zara group and considered to be one of the best ways in handling this Pandemic economy’s negative effect.

So, let us bring the debate about fast fashion industry getting back to business after the lockdown and its survival strategies. The financial note published by H&M in early May 2020 testified to the crisis of a business model based on physical distribution. But the boom of Zara’s reopening in France tells us that the most important battle still needs to be fought in the public opinion and consumer behavior. Because up until now, during Coronavirus time, the arrows against fast fashion have come from the top of the range players.

The appeals of Giorgio Armani and the others express, in fact, that of luxury that who wants to free himself from the frenetic rhythms of production and delivery of collections. If you want to bring the fast fashion industry within the boundaries of sustainability, both environmental and social, the mass market must first rethink about its schemes.

Zara Reopening

On May 11 in France, quarantine measures were eased. Despite the necessary prudence, retail brands were able to reopen their doors. And, surprisingly, in the main cities, people have lined up since the morning to be able to access Zara’s stores. Queue images bounced from the web to the media, sparking some debate.

Zara reopening

The debunkers got to work because, as often happens on social networks, not all videos are reliable. However, the fact that similar scenes were seen in different countries supports the idea that the issue of fast fashion is global.

For the people concerned about the virus and being contagious or getting sick the priority is to shop at Zara. The appeal of fast fashion to the public, thanks to the possibility of giving variety to their wardrobe with small investments, does not diminish in a phase of economic crisis. Shopping at the store is still appealing.

Conclusion...

Despite all that, Inditex, the parent company of Zara, decided to close the shop and not reducing salaries or losing jobs. Inditex took the following measures. 

  • Closing loss-making and small branches with high fixed cost.
  • Investing in digital marketing and online website shopping.
  • No job losses were made, instead all employees were offered roles in other shops related to the online shopping trend.

In Pinnacle we understand the challenges businesses face with the current dynamics, we have been helping organizations big and small to be able to face the storm of economic effect of Coronavirus by being able to assess the situation based on Lean Six Sigma methodology, then define the best strategy of moving forward.

Please use contact us and one of our business development managers will be calling you to support

Despite all that, Inditex, the parent company of Zara, decided to close the shop and not reducing salaries or losing jobs

Pinnacle® is a multi-country consultancy firm. Our consultants are spread around the world; with 70% of our consultants are women. We have built our organization on modern business model with agility, diversity, and resilience to the business dynamics. We have chosen our technology platform to support our modern mindset thus we work from anywhere …. As work is not a place anymore. We implement Lean Six Sigma in everything we do whether internally or externally at our client sites. 

This article is written by:
Sherine Sherif
Pinnacle UAE, Country Representative
Pinnacle Ltd.

Pinnacle Ltd. is a multi-countries modern consultancy firm, with offices around 11 countries in 4 continents, and 28 consultants working remotely and virtually managed.

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