Zara registered sales of USD 2,059.96 Million in China in 2020
Zara recorded a historical decline (CAGR) of 1.47% between 2017 to 2020
Market Analysis
The COVID-19 pandemic has had severe consequences for the Chinese apparel retail market. China was the first country to feel the effects of the pandemic and the government responded with strict lockdown measures after the first recorded case of the virus. These measures have been in place in varying degrees throughout the year, disrupting the economy and business activity. Apparel retail has been one of the hardest hit retail sectors by the pandemic, with the demand for new clothing being greatly reduced as consumers spend more time at home. Economic growth also slowed in 2019 to 2020, which is likely to have constrained consumer spending somewhat due to greater financial uncertainty.
The apparel retail market includes baby clothing, toddler clothing and casual wear, essentials, formalwear, formalwear-occasion, and outerwear for men, women, boys and girls; excludes sports-specific clothing. All market data and forecasts are represented as a consumer expenditure in retailers which includes sales taxes (e.g., VAT) and figures presented are in nominal terms (i.e., without adjustment for inflation) and all currency conversions used in the creation of this report have been calculated using constant 2020 annual average exchange rates.
China apparel retail industry category segmentation
China apparel retail industry distribution
Clothing, Footwear and Accessories Specialists form the leading distribution channel in the Chinese apparel retail industry, accounting for a significant share of the total industry's value. Online Specialists accounts for a further prominent share in the Industry.
Zara’s stylish reputation leads Inditex close to recovery
Recovery from the impacts of COVID-19 is imminent for Inditex, boosted by Q2 performance where revenue bounced back above pre-pandemic levels. Q2 proved the full potential of the group’s brands as they hugely benefitted from the reopening of retail, with stores still an important part of its offer as their destination appeal was evident during reopening in markets such as the UK with queues outside Zara stores. Though Inditex’s brands will have benefitted from initial pent-up demand, store sales have progressively improved throughout the period as restrictions lifted across its European markets, and this momentum is being carried into Q3, with total revenue between 1 August and 9 September impressively higher percentage than the same period in 2019.
With a significant proportion of stores temporarily closed in Q1, online revenue continued to grow in the financial year. The group has taken innovative steps to integrate its instore and online channels to improve the shopper experience, with the launch of Store Mode on the Zara app that features functions such as Click & Find, which uses geolocation to allow shoppers to find specific items in store; and Click & Try, which allows shoppers to book fitting rooms which are accessed using a QR code. This will help improve the performance of its stores in the long-term, as it replicates key features of purchasing online in the instore environment, such as being able to easily find items, as well as heightening the benefits of purchasing instore, including the ability to try items on.
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