Zara Weathers 2020 with Flexible Omnichannel Fulfillment
With their RAIN RFID solution, Zara gains greater visibility into item locations, changing how they fulfill customer orders and operate their stores.
In December of 2019, Inditex, Zara’s parent company, reported a 14% increase in net profit for their third quarter across their portfolio of stores, forecasting a further 6% growth in same-store sales for the upcoming year. Just months later, COVID-19 shut down much of the world. Retail has suffered in 2020, and fashion in particular has taken a hit...but some retailers are weathering the storm better than others.
Inditex has been known for investing in technology to revolutionize fashion, such as their use of RAIN RFID and the resulting data to enhance customer service, improve supply chains, curate store inventories, build smarter dressing rooms, and transform the in-store experience. Now that investment is paying off, by helping them navigate a rapidly changing and unpredictable retail market.
COVID-19’s Impact on Retail in 2020
Inditex has experienced steady growth across their portfolio of stores for the last several years, only posting their first quarterly loss at the end of April 2020. At one point during this international pandemic, 88%, or about 3,500 of their total stores were shut down around the globe.
What kept their sales from freefalling? In April, Inditex asked some employees of stores like Zara and Massimo Dutti to return to shuttered stores and begin to fulfill online orders with store inventory. This swift change to omnichannel fulfillment using closed stores as ‘dark’ fulfillment centers helped their online sales rise 50% during this period, or 95% year over year. Without their earlier digital transformation initiative and advanced IT platform, this quick transition would not have been possible.
The Open Platform Project
Inditex’s Open Platform (IOP) is a proprietary IT architecture that runs all of the company’s digital operations. Designed to keep Inditex scalable and flexible, this advanced platform layers in inventory, purchasing, distribution, and orders. This architecture provides the foundation for various Inditex brands’ mobile apps and websites to provide real-time store stock for online purchase, BOPIS, or exact location of an item within a specific store.
Twenty-five stores across Spain served as the testing grounds for Zara’s ‘Store Mode’, a new feature that allows customers to access specific stores from an app. The ‘Click & Find’ feature uses RAIN RFID to direct the customer to the exact product location within the store, or even notifies them if it’s available in a stock room, while ‘Click & Go’ enables buy online, pick-up in-store (BOPIS) in 30 minutes. The app is also compatible with mobile payments. RAIN RFID is crucial to this, providing real-time data on inventory availability and location.
Inditex attaches plastic security tags containing RAIN RFID chips to individual items at the point of manufacture. The plastic enclosure protects the RAIN RFID chip and also allows the company to reuse them once removed from an item at checkout.
Employees and online shoppers benefit from enhanced inventory visibility
The RAIN RFID solution gives employees added visibility into store inventory, reduces shrink, and provides the ability to deliver better service to customers using real-time information about items.
Before the RAIN RFID system was deployed at Zara, employees conducted storewide inventories by scanning each item’s barcode, one at a time. Because of this time-consuming method, store inventory was only performed once every six months, and required a team of 40 employees and five hours per store to complete the task. With RAIN RFID handheld readers, a team of 10 can complete the process in half the time.
It gives us great visibility, knowing exactly where each garment is located. It really changes how we operate our stores.Pablo Isla Chairman and CEO of Inditex
However RAIN RFID isn’t just good for fast inventory counts. Item-level data has allowed Inditex to match more products with the right customers, reducing the need for safety stock, which can become an expiring asset in the fast moving world of fashion. This invaluable data also allows physical store locations to transform into fulfillment centers for customers who are moving online.
Digital Transformation After COVID-19
Inditex is continuing to follow consumer preference for a digital experience, and expects online sales to become more than a quarter of their total sales by 2022. After posting their initial loss at the start of the pandemic, Inditex profit reached €214 million in the second quarter, due in part to online sales growth of 74% in the first half of 2020. They also recently hit another milestone: one million online orders in a single day. With their IOP and the data from RAIN RFID, they’ve already proven they can weather the challenge.