Zara China closes giant flagship
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Zara China has shuttered its giant three-story, 3000 sqm Chengdu flagship store in what a retail commentator describes a “fine-tuning” of its retail network.
The store, at Lesen Shopping Center, No.31, Zongfu Road, was previously occupied by luxury brands Louis Vuitton and Dior. It opened at the end of 2011 as Zara China’s single largest store and closed last weekend.
Pascal Martin, partner with OC&C Strategy Consultants in Hong Kong, said the flagship was “probably a lower performing site”.
“Zara recently opened another front nearby, in a trendier part of the city, which seems to be doing well. This move is probably just part of Zara’s ongoing normal fine-tuning of its store network strategy in China.”
Martin said Zara has already built a strong brand in China and is thus now less dependent on large and expensive brick-and-mortar flagship stores to maintain their brand.
“Also, Zara has built a powerful eCommerce capability in China. Therefore they can continue to be successful with fewer retail outlets than competitors H&M and Uniqlo.
“The resulting lower fixed costs should serve them well during the continued retail slowdown and market saturation. We may see them selectively further reduce the size of their 190-store network or relocate some outlets to stronger locations,” he said.
Zara China opened its first store in Hong Kong in 2004, before expanding onto the mainland two years later. It now has more than 190 stores in the country.
Questions & Answers
Q.What is the primary reason Zara China closed its Chengdu flagship store?
What is the primary reason Zara China closed its Chengdu flagship store?
A retail commentator suggested the Chengdu flagship was likely a lower-performing site. This closure is probably part of Zara’s ongoing network fine-tuning in China, especially as they have opened a new, successful store nearby.
Q.How will Zara maintain its brand presence in China without such large flagship stores?
How will Zara maintain its brand presence in China without such large flagship stores?
Zara has already established a strong brand in China and is now less reliant on expensive, large flagship stores. They have also developed a powerful e-commerce capability, allowing them to succeed with fewer physical outlets.
Q.Does this closure indicate a larger reduction in Zara’s physical store presence in China?
Does this closure indicate a larger reduction in Zara’s physical store presence in China?
The move is seen as part of Zara's network fine-tuning, aiming for lower fixed costs during a retail slowdown. They may selectively reduce their 190-store network further or relocate some shops to better locations.
Q.When did Zara China first open its stores, and how many does it currently have?
When did Zara China first open its stores, and how many does it currently have?
Zara China opened its first store in Hong Kong in 2004, then expanded to the mainland two years later. It currently operates more than 190 stores across the country.
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