Spanish fashion giant to launch livestream shopping in more markets following Zara's success in China: this is what it is and how it works

Inditex now plans to expand this service in other regions where it operates - such as the USA, Europe and the United Kingdom

Raúl Masa

Madrid

Sunday, 25 August 2024, 23:15

Spain will be one of the countries where Spanish fashion giant Inditex will introduce a live shopping experience that it hopes will lead to bumper live sales. This is a business model that, until now, the textile company has only actively used in China, through the Zara chain. A few months ago it emerged that the company wanted to launch this service in other regions where it operates, such as the United States of America, Europe and the United Kingdom. The question remained as to what would happen in Spain. Finally it was decided the country will be one of the markets where consumers will be able to access, and buy, products while watching this new type of online shopping show.

But what is live shopping? It's a programme broadcast over the internet, generally streamed on social media where it can be broadcast live, although another option is to do it via your own platform. The aim is to present collections of garments and other products as though on a kind of catwalk. It also shows the activities and lifestyle connected to the clothes on sale, it plugs all the accessories, and generally gets innovative with the content. The intention with all this extra work is that the viewers purchase the products they are watching, or that they leave them in the online shopping cart for when the broadcast is over. It feeds the see-now-want-now mentality that is rewriting retail as we know it.

Until now, this live shopping concept for Inditex has only been operating in China. It does so through Douyin, the equivalent of TikTok in this vast nation in the Far East. For the time being Inditex has not revealed in what formats it will run or on which platforms it will be broadcast, although expectations are very high. It is likely that Inditex will try streaming with its own digital platform. This offers greater control over content and avoids having to reach agreements with third parties, in this case social media channels that ultimately have their own interests at heart.

According to the business analysts at investment bank Jefferies, live shopping is expected to become an important commercial lever in the coming years . At least that is what the good data obtained in China are indicating. This investment banking and capital markets firm, which is producing a report prior to the presentation of Inditex's September quarterly results, points out that growth in disposable income is accelerating and wage growth is intensifying in the context of inflationary pressures. Against this economic backdrop, the report highlights that it may be a good time for the expansion of these live sales.

The concept of live shopping for products announced during some kind of broadcast is not actually that new. For many years in Spain there have been those businesses - not as many as before - that advertised items that could then be bought by calling a dedicated phoneline. These broadcasts are televised in evening time slots as a general rule. However, social media have turned this way of selling on its head. In Spain, for example, Instagram and TikTok have managed to carve out an essential niche in areas related to marketing and fashion, and that looks set to be the driving force for changes in retail sales.

Different markets

The key to replicating the success achieved in China is to adapt to the audiovisual languages of each region. This first project in Shanghai had a team of more than 70 professionals. It remains to be seen how it will be scoped in Spain, or whether there will be a common operational centre to distribute the signal to the different countries. As for the date, the company has not yet specified how or when it will launch, although it has been suggested that it will be in the autumn . Live shopping in the USA and the UK has already been announced and so may happen before Spain. It is expected that Inditex will offer more details when its results are presented.

The important thing now will be to strengthen the group's physical presence on selected high streets to generate the connection with the different consumer profiles. In China, for example, there has been a significant reduction in the number of high street shops in the last five years. However, with these live broadcasts they have managed to ensure that Zara is just as present.

Some international analysts, such as JP Morgan, pointed out when it was announced that Inditex would export this model to other markets, that it would prove hard to interpret how this model would work outside China. As already mentioned, each country has its own quirks and different patterns of consumption. Nevertheless, Jefferies' analysts applauded the textile group's investment effort with the aim of innovating with new formats.

For the moment it has not been revealed what the total volume of investment will be for the live shopping experiences, although Inditex has sufficient cash to innovate with different formats and, most importantly, it has plenty of financial muscle to continue experimenting in the event that it does not succeed at first attempt.

This move by Inditex represents a strategic milestone for the entire retail clothing sector. The success achieved by Zara in China does not guarantee that it will be replicated in other markets, whatever their size. So far it is known that livestream shopping has served to increase customer engagement with the brand, but extrapolation to other geographical locations with different shopping habits could still prove a challenge.

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