Zara refutes rumors of exiting the Chinese market amid recent store closures
Published: Apr 09, 2024 09:13 PM
A Zara store in Beijing Photo: VCG

A Zara store in Beijing Photo: VCG

Spanish fashion powerhouse Zara refuted rumors on Tuesday about its withdrawal from the Chinese market, following speculation sparked by recent store closures in various cities across the country.

Some economic analysts believe that the closures are strategic moves by the company to reduce the number of stores while expanding their sizes, but the legend of fast fashion has been shattered as cost-effectiveness now dominates the mass consumer market.

Recently, the news of Zara's sudden store closures in multiple cities in China has been making rounds on major social media platforms. According to the National Business Daily on Tuesday, it was confirmed by Zara's staff that the brand has shut down stores in Huizhou and Dongguan in South China's Guangdong Province, as well as Baoshan district in Shanghai over the past two months.

In particular, the stores located in Huizhou and Dongguan were the only Zara retail outlets in the region, serving customers for more than a decade. Their closure leaves these two cities devoid of physical Zara storefronts.

Zara operated a peak of 183 stores in the Chinese mainland around 2018, per its financial report. However, its staff revealed that only 87 stores are operating now, which indicates that nearly a hundred stores have been closed in the past six years, the National Business Daily reported.

The closures prompted online discussions with some fans of the brand worrying it is planning to withdraw from the Chinese market.

Zara denied on Tuesday that it plans to withdraw, stating that the brand is constantly optimizing and upgrading its stores by opening larger ones and equipping them with efficient digital technology, according to a report by the Beijing News.

The fashion giant added that it will continue to open new flagship stores in some cities, and that the Chinese market is an important strategic market for Zara and its parent company Inditex group.

According to the 2023 financial report of Inditex group, as of January 31, 2024, Zara has 1,811 stores worldwide and China has the highest number of 118 stores outside of Spain (261).

In 2023, the total area of Zara's offline stores increased by 4.5 percent, and store sales increased by 7.9 percent.

Putting efforts on online sales is also the main reason for Zara's increase in sales despite closing stores, as many purchases are made on online platforms such as Douyin livestreaming.

When some fans of the brand expressed regret and disappointment over its store closures, and hurried to purchase items in a last-minute frenzy, many netizens chimed in with criticism about the poor quality and low cost-effectiveness of the brand.

Industry observers noted that fast fashion brands used to attract a wide range of consumers with relatively low prices and rapid updates of trendy outfits. However, as consumers are now prioritizing value and quality over simply keeping up with the latest trends, the legend of fast fashion is shattered.

"Fast fashion brands like Zara still have significant demand in the global market, but the situation is different in China, where local consumers' reliance on social aesthetics and consumption habits have undergone significant changes," said Pang Rui, a well-known brand expert, according to the National Business Daily.

The outfits of Chinese people, particularly the young generation, are diversifying. And a notable trend is that people wearing fast fashion, more leisure styles such as Uniqlo, and traditional hanfu are mixed in crowds on streets.

Global Times