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Zara parent company closes 1200 stores, economic transformation. Is Hong Kong ready?

2020-06-13T08:19:48.238Z


Inditex, the parent company of multinational fashion brand Zara, has announced that its global sales of several brands will be reduced from 7,412 to 6,700 to 6,900, and it will abandon the 450 that were originally planned to open.


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Written by: Review Editor

2020-06-13 08:00

Date of last update: 2020-06-13 08:00

Inditex, the parent company of multinational fashion brand Zara, has announced that its global sales of several brands will be reduced from 7,412 to 6,700 to 6,900, and it will abandon the 450 new stores originally planned to open. For consumers, this may be a lack of physical shopping opportunities. But for the government, can this news have any inspiration?

The new crown epidemic brought retail cold winter, some jewelry brands withdrew from Hong Kong, and some famous underwear filed for bankruptcy in the UK. However, it is not difficult to know that these enterprises are concerned. The so-called epidemic factors are often just the last straw that crushes camels. Some of them have failed in their transformation, and some have continued to decline in sales for many years. The old saying is, "Frozen three feet is not a cold day."

Zara is a familiar brand to Hong Kong people. Owner Amancio Ortega once surpassed Gates in 2015 and became the richest man in the world. Its parent company Indy Textile Group announced on Wednesday (June 10) that its brands will reduce its stores by 1,200, accounting for more than 10% of the total, and has attracted widespread social attention. Inditex pointed out that the stores that will be closed will be smaller and can be transferred to stores in neighboring stores. The retail market has been hit by the epidemic, and Spain has been hit hard. The decision of Inditex this time is of course related to the epidemic.

The reporter called IFC Mall and Harbour City ZARA for enquiries. The staff all pointed out that the store is currently operating normally and have not received any notice. (Photo by Zhang Haowei)

Inditex to attack e-commerce

But the epidemic is a factor, not all factors. There are two points worth noting about the arrangement of Inditex this time. One is that it will invest US$3 billion in e-retailing, with the goal of increasing online turnover to 25% by the end of 2022; second, Indy Textiles emphasizes that “the number of employees will remain stable”, and store employees are expected to switch to online Work in positions related to retail.

Inditex has this strategy, which is not difficult to understand. According to its report, online turnover accounted for 14% last year, but online retail sales increased by half in the first quarter of this year due to the epidemic, reducing 44% of epidemic losses. It can be seen that this time it seems to be a retail winter, and in nature may be an attempt to accelerate the transformation of Inditex.

In fact, e-commerce has long been the trend. In addition to Amazon and eBay, which are the first in the United States, China also has Alibaba and JD.com, which is the second listed company in Hong Kong. The popularity of these e-commerce platforms not only reflects the changes in consumption and lifestyle in the new technology era, but also illustrates the ability of economic activities to rely less on real estate. This is undoubtedly another reminder to Hong Kong whose economy has relied on the development of the latter for many years.

Many retailers believe that consumers have developed a new shopping habit based on online shopping after this epidemic, and they will never go back. (Getty Images)

Shop rents dominate Hong Kong retail

Explaining Hong Kong's economic model is special, two examples are obvious and easy to understand. When it comes to the richest man, Americans think of technology giants such as Bezos, Gates, and Zuckerberg, but Hong Kong is often just a big real estate developer, and there are almost no technology giants. Another example is that shop rents in Hong Kong often hit record highs. Russell Street in Causeway Bay was once the most expensive in the world, even more so than New York’s Fifth Avenue and New Bond Street in London. This is the characteristic of Hong Kong's economic structure.

In fact, the economic ability of Hong Kong people is not weak. It is just that property prices, rents, and shop rents have greatly increased the cost of living. Many economic achievements are ultimately transferred to property owners. Even those who do business in Hong Kong, some also know the way of investment property. For example, Emperor International has bought multiple shops on Russell Street for rent since 2004. The owner of the famous Prada flagship store on Russell Street is a toy manufacturer. The company Rising Sun International and Sasha's recently abandoned Percival Street shop are owned by Ying Kee Tea House.

Property values ​​should have been up and down, but under distorted market operations, they are often unreasonably speculated and expensive. One of Hong Kong’s real estate-led economic models is contrary to economic justice, and it is easy to form the exploitation of the proletariat by the proletariat, and the second is not necessarily sustainable development. The market is sluggish, many retail companies close their stores at an unreasonable cost, and shops such as Percival Street and Russell Street cut prices to find rent, and even accept a one-month short contract. Coupled with the e-commerce generation, the retail industry's dependence on shops may also be smaller than in the past.

Economic transformation is sometimes forced out, and sometimes it can be actively developed. For the government, it must reflect on whether Hong Kong can and should continue to use the economic model. Facing the challenges of the new era, has the government provided suitable soil to facilitate the transformation of the science and technology economy? If young people want to start a business or if businessmen want to transform their businesses, do they have enough convenience policies at present? The world is moving faster and faster, and the Hong Kong government has no capital to continue to slow things down, or even do nothing.

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Source: hk1

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