Inditex reaps rewards from €11bn digital drive

Technology is playing a critical role in helping many businesses navigate their way through the current crisis. And details of one of the most interesting stories to play out in the retail sector have emerged with Inditex revealing how some of its big technology investments have really paid off.

The Spanish fashion retail giant, which owns the Zara and Bershka brands, reported its full-year figures recently, and provided an update on the impact of the €11bn that it has invested in technological integration, digitalisation, transformation and store modernization since 2012.

One key project was the rollout of an integrated stock management system (SINT) which provides the company with a single pane of glass view on stock across its warehouses and in its stores. This means that during lockdown, it has been able to sell inventory in its stores through its online channels, and also enabled faster delivery times. 

Inditex stated that SINT made it possible to fulfil 46 million online orders worth a total of €1.16bn from its stores during the year. This represents a sizeable chunk of the company’s total sales of €6.3bn.

The SINT initiative represents just one part of a wider project called the Inditex Open Platform (IOP), which incorporates the development of proprietary cloud-based IT architecture that underpins the company’s end-to-end digital operations. The architecture uses microservices to enable different departments to adapt process elements in areas such as purchasing or order management, without having to change the whole system. The platform is expected to be fully deployed by the end of the year.

Inditex was forced to manage a 50% rise in the number of online visits last year, and a 57% increase in the number of orders per hour, peaking at over 400,000. The company was well-prepared for this surge, having implemented high-capacity RFID readers designed to count inventories in warehouses with large traffic volumes. It also benefited from investing in its internally developed “XWMS” system, which automatically selects the optimum location for sourcing each order for delivery, be it a store or a warehouse.

Inditex is one of the survivors of the high street retail storm. While profitability has been impacted by the pandemic, the company’s clear focus on its digital strategy – led from the top by CEO Carlos Crespo, and backed by massive investment – means that it has a strong platform on which to build, when many of its rivals are floundering.

The company, which traces its roots back to the 1960s, is a great example of the benefits of having a flexible core, which has enabled it to rapidly adapt its channel strategy in response to market disruption. It has broken down the silos with which many retailers continue to wrestle, between their digital and bricks-and-mortar channels. And with further capital and technology investment of €2.7bn planned for the next couple of years, Inditex is set to continue as one of the sector’s best examples of a traditional organization that has evolved into a genuinely data-centric business