Zara's crowded stores aren't deterring shoppers. Its sales are skyrocketing.
- Zara shoppers flocked to stores in 2022, giving a major sales boost to parent company Inditex.
- Inditex reported a 23% increase in store sales last year despite closing 10% of its stores.
If Zara stores feel more crowded than ever, that's probably because they are — and all that foot traffic has sent sales skyrocketing.
The Spanish retailer's parent company, Inditex, reported a 23% jump in store sales in 2022 across its portfolio of brands, which includes Zara, Bershka, and Massimo Dutti. Inditex's sales soared despite the retailer closing 10% of its stores and shrinking its commercial space by 6% compared to 2021, CEO Óscar García Maceiras said during a call with investors Wednesday.
"A key factor of the year has been that traffic and store sales increased markedly," García Maceiras said. "Inditex sales per square meter are today 16% higher than in 2019."
García Maceiras said that Zara, which is the biggest and most recognizable of Inditex's brands, had "a remarkably strong year," with net sales jumping 21% compared to the year prior.
The company said it plans to invest 1.6 billion euros, about $1.7 billion, in expanding its stores and warehouses, including opening 10 new Zara stores in the US over the next two years and refurbishing or expanding 13 existing locations.
The US is a key market for Inditex, García Maceiras said, and has potential to provide a "significant" boost to the retailer's business long-term.
"We have, at this moment, less than 100 stores there," he said. "This is a market in which for every $100 of fashion sold, we take less than $0.50 of that. So, we see really very strong growth opportunities."
Zara has developed a reputation over the years for long lines at its US stores, but customers began complaining back in 2021 that the situation had escalated. As spending on clothing began ramping up across the board at the same time that the US was experiencing a retail labor crunch, Zara shoppers said they waited in hour-long checkout lines that wrapped around the store. Customers also complained that the brand's decision not to immediately reopen fitting rooms that were shuttered because of the pandemic contributed to the issue, as shoppers crowded into stores to make returns.
Zara began to roll out self-checkout kiosks beginning in 2017, and Inditex said Wednesday that it plans to do away with hard security tags in favor of RFID chips sewn into garments, a change the brand says should reduce checkout times by 50%.
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