Zara is looking to bridge the gap between brick-and-mortar and e-commerce with the help of an updated London flagship heavy on in-store technology.
The store, which reopened earlier this month, features dressing rooms with RFID smart mirror technology. The effort transcends Zara’s previous experiments with smart fitting rooms by allowing shoppers to activate a hologram version of themselves that recommends real-time styling ideas. The hologram builds upon recent virtual reality pushes from Zara, including the launch of the Zara AR app this spring, enabling users in select markets to generate virtual models wearing shoppable looks from their mobile screens.
Further, the London flagship is intended to streamline the point-of-sale process by arming sales associates with iPads in order to assist with online purchases for products that aren’t immediately available. Sales associates also benefit from new tools designed to increase efficiency, such as embedding products with radio-frequency radiation tags that allow employees to get a more accurate inventory count at significantly faster speeds.
For customers that do make online purchases, items are shipped to the flagship and stored in a designated “buy-online-pickup-in-store” area designed to hold more than 2,000 packages. Once a purchase is ready for pickup, the customer will be notified to come scan their receipt, activating a robotic arm that culls through the boxes and distributes packages on-demand. The service is an extension of Zara’s six-month experimental “click-and-collect” pop-up shop, which replaced the flagship while it was closed for renovation while also allowing parent company Inditex to perfect protocols before implementing them into the new store.
“In recent years, we have invested in both the most advanced technology and optimized our stores for this aim,” Inditex CEO Pablo Isla wrote in a statement earlier this month. “Our business model combines stores and digital seamlessly, and we are ready for the opportunities that this brings with current and new customers.”
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Gitit Greenberg, director of digital insights at SimilarWeb, said the effort is part of a larger play to move e-commerce sales in response to Zara’s lackluster mobile performance in the U.K. According to SimilarWeb data, mobile web traffic accounted for 53 percent of online visits in April 2018, up just 1 percent from 52 percent in April 2017. At the same time, Zara shoppers in the U.K. use desktop at a rate higher than industry trends, with 47 percent of Zara.com traffic in the last year coming from desktop, compared to an average of 35 percent across the apparel industry in the U.K..
“Offline e-commerce [efforts] indicate a push to make mobile a centerpiece of their strategy, and this could help Zara drive new online opportunities,” Greenberg said.
While web traffic isn’t always indicative of sales, the fluctuation and stalled growth in the U.K. is particularly telling when e-commerce has continued to grow at a rapid rate across Inditex. Though the retailer — which also operates Massimo Duti, Pull & Bear and Bershka — doesn’t break out online sales by market, online sales grew by a total of 41 percent across the company in 2017. This comprised 10 percent of the company’s $4.2 billion net profit, a 7 percent increase in sales year over year, according to a call with investors in March.
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Now, Zara is hoping to better merge the offline and online experience in the U.K., taking a cue from fellow mass retailers like Nordstrom and JCPenney, as well as luxury brands like Rebecca Minkoff, that have adopted a “store of the future” approach. Like competitor efforts, the flagship revamp is intended to not only drive foot traffic but also boost online sales.
“Among mass-market retailers, Zara are one of the pioneers in this area,” Bloomberg Intelligence analyst Chris Chaviaras wrote. “When they refurbish stores, the sales and profit uplift usually pays off that investment in two years or less.”
