Zara China closes giant flagship

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.