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Navigating the retail revolution

Oscar Garcia Maceiras heads Inditex, the Spanish fashion conglomerate famous for Zara. After the economic havoc wrought by COVID-19, like many retailers Inditex has seen “a significant rebound in traffic to stores,” he reported in June 2022, noting that net income had increased 80% to 760 million euros during Q1 2022 compared to the same period of the previous year.

Here he discusses the success factors of retail at a time when customers and the global outlook are more demanding than ever.

How are you adapting to the changing needs and buying habits of customers? And what’s the role of technology in this?

This is a moment of profound transformation, which demands creative thinking from retailers as a whole. At Inditex, we’ve always tried to put the latest technologies at the service of the business model. Technology is key to understanding our customers in order to offer them the products they need and want at just the right moment. And technology has enabled online sales, which now account for 25% of our total sales and are forecast to reach 30% by 2024.

Technology doesn’t mean abandoning the physical store, however, which is a technological space just as much as our online sales channels. We’re committed to integrating physical and online channels, which are two sides of the same coin. Put simply, physical and online spaces shouldn’t be in competition with each other, they should be generating synergies.

A good example is the flagship Zara store that we inaugurated in April 2022 in Madrid. It incorporates the latest technologies available to improve the shopping experience. For example, customers can use the Zara app to geolocate products or book a fitting room. There are self-checkouts and automatic collection for purchases made online. Technology facilitates an integrated inventory management system so that online orders are expedited with maximum efficiency.

Which factors are fundamental to success in retail?

In the case of Inditex, I would say four: the quality of the offer, which is born from a combination of creativity and listening to customer needs; a continuous effort to make the shopping experience unique; sustainability, which should be present throughout the value chain and in the worldview of the company; and, most of all, people.

At Inditex, that means 165,000 people of 177 nationalities, 76% of which are women who in 2021 held 81% of our management positions. We try to make sure that all these people, who are so different from each other, can develop their passions and keep improving themselves.

Equally important to attracting talent through specific recruitment programmes is retaining that talent by providing opportunities for continuous learning and growth within the company, and with training in our corporate culture and values. Through our Changemakers programme, for example, we develop and equip certain employees to become ambassadors for our corporate strategy of sustainability within every one of our more than 6,400 stores worldwide.

Where does sustainability fit?

Sustainability affects all processes, decisions and projects. We’re following a very rigourous roadmap to reach 100% renewable energy in operations, as well as sustainable fibres and materials. The goal is to reach net zero by 2040.

To get to net zero, it’s essential to invest in innovation and research. For us, this includes our Sustainability Innovation Hub, an open platform to develop new materials and industrial processes. We’ve also made significant agreements to acquire recycled textile fibres, including an agreement of over 100 million euros with the Infinited Fiber Company. In terms of research, we collaborate with leading universities such as MIT. And we have recently invested, for the first time, in a startup, Circ, which has technology to enable large-scale textile recycling.

How can retailers encourage more social and environmental responsibility in their operations?

Speaking from the perspective of Inditex, by becoming an agent of change. We are very demanding of our suppliers and try to bring them along with us as we seek to raise environmental and social standards. We want to lead the transformation of the industry through responsible management in collaboration with a good number of organisations, including IndustriALL, the international trade union federation with which we have a pioneering Global Framework Agreement to put the worker at the centre, promote continuous social dialogue and ensure optimal labour standards.

What’s the key to keep reaching customers who are more informed and demanding than ever before?

There’s no infallible formula but it helps to have a model that prioritises listening to customer needs, along with a top-level design team (of 700 professionals, in our case). Our brands all pursue the same goal: to offer the best products to our customers. Creativity, emotion and surprise underpin everything we do – from the shopping experience, to the strategy of sustainability, to our community relationships, to the workplace environment that we provide.

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