Inditex Targets US Market with New Flagship Stores and Brand Launches
Inditex’s Strategic Expansion in the United States and Global Market
By Helen Reid
Inditex’s Investment Focus and Store Openings
LONDON, Sept 11 (Reuters) - Fast fashion giant Inditex is investing in the United States as a key growth market, CEO Oscar Garcia Maceiras told Reuters, as the Zara owner opens new stores and revamps existing outlets to woo more aspirational shoppers.
Zara store openings are planned in Denver, Phoenix, and Pittsburgh, and Inditex will also bring its upscale Massimo Dutti brand and Gen Z-focused Bershka brand to New York, having launched both in Miami.
Gradual Expansion Strategy
Inditex's expansion in the U.S., its second-largest market by sales after Spain, has been gradual as the retailer gauges demand in each city through online orders before opening stores.
"The U.S., due to the population, due to the level of relevance, is attracting a lot of interest," Garcia Maceiras said in an interview in London, adding that Inditex is focused on "selective growth" and ensuring each store is profitable.
Transformation and Store Portfolio Optimization
The €170 billion ($197 billion) Spanish company has transformed since the pandemic, growing sales while reducing its global store count as it prioritises larger flagship locations.
Inditex has about 2,000 fewer stores than it did in January 2019. While the number of stores has fallen 27% from their peak, total selling space in square metres is only 7% lower.
Prime Locations and Store Quality
"As the business has scaled they've been able to access more prime locations, so that has enabled them to reduce the store count but actually improve the quality of where they're selling and attract more footfall," said Edward Kevis, global equity fund manager at Aviva Investors in London, an Inditex shareholder.
Garcia Maceiras said refurbished stores such as Zara's Oxford Street outlet in London, which reopened in June after a five-month renovation, have delivered a "significant improvement" in conversion rates, the percentage of browsing customers who make a purchase.
Future Expansion Plans
By the end of 2027 Inditex plans 20 expansion projects in the U.S., including new stores, expansions and refurbishments across Zara, Bershka and Massimo Dutti. The company also recently opened new stores in Brazil and South Korea, and has numerous projects in Europe, which accounts for 67% of total sales.
Bigger Than Hermes
Inditex's market value has recently overtaken that of luxury group Hermes, partly reflecting investor concerns about growth prospects in luxury. Hermes shares are down 34% this year and luxury market leader LVMH has fallen 37%, while Inditex remains close to a record high reached in August.
Changing Consumer Preferences
After price hikes by many fashion labels, middle-income shoppers who might previously have splurged on a luxury handbag or shoes may now be drawn to Zara or Massimo Dutti, which sells $320 dresses and $400 leather boots.
Wardrobe Diversification Trends
"Many customers are mixing in their wardrobes different types of products, from different segments of the market (with) maybe some degree of trading down from luxury," said Garcia Maceiras. "The wardrobe does not belong to one single brand anymore."
'Level Playing Field'
As Inditex expands its budget brand Lefties, often viewed as a rival to Shein, its competitive position has benefited from the European Union's decision to end duty-free access for e-commerce parcels in July, prompting Shein to raise prices.
Garcia Maceiras, who had previously called for the policy change, played down its impact on Inditex.
Market Share and Competitive Outlook
"Our global market share is around 2%, so we remain focused on our own business," he said. "If it's something that provides the different players a level playing field, the same rules for everybody, for us, it's fine."
($1 = 0.8613 euros)
(Reporting by Helen Reid. Editing by Mark Potter)