Inditex^[2] plans 20 US store development projects by the end of 2027

Expert commentary

I view Inditex's plan as a test of how effectively digital demand can be turned into a productive physical network. Online orders provide a basis for choosing a city, but do not themselves determine the right street, floor area or rent. The approach's strength is the ability to start from observed interest in the brand. The main risk is mistaking an area with active online buyers for one with sufficient additional demand for a store. [1 · Reuters]

Research by Bell, Gallino and Moreno offers an explanation for the potential benefit. Using data from Warby Parker^[5] showroom openings, the authors found increased demand and reduced returns. For Inditex, this is a basis for testing a similar mechanism: the ability to assess fit and material may make later purchases through the app easier. However, the study concerned eyewear and a different order-fulfillment model, so transferring the size of the effect to Zara or treating it as guaranteed would be wrong. [2 · Bell, Gallino and Moreno] [1 · Reuters]

For competitors, the threat may lie in the combined appeal of brand, location and digital service. If a new store increases confidence in subsequent online purchases, its influence extends beyond till revenue. A local retailer's response may then be a more precise assortment, advice or convenient returns. In my view, copying the floor area of a large international store without comparable demand and economics would be a particularly expensive mistake. [2 · Bell, Gallino and Moreno] [1 · Reuters]

Physical presence can reduce uncertainty for customers, but convenience will arise only when channels work together. Gallino and Moreno's research shows that providing inventory availability information changes the distribution of purchases between a website and a store. It is therefore more important to check inventory accuracy, collection and return terms than simply to open an impressive space. If an item promised online is regularly unavailable in person, integration itself can make the experience worse. [3 · Gallino and Moreno]

Internationally, this strategy may increase the appeal of particular shopping districts while intensifying pressure on local brands. These are possible consequences, not established results of the announced projects. The environmental effect is also ambiguous: fewer unsuitable purchases may reduce returns, but additional demand and travel can offset the gain. Assessment requires data on travel and returns, not an assumption that either physical or digital channels are automatically greener. [1 · Reuters] [2 · Bell, Gallino and Moreno]

I would begin testing success with total profit in each city, comparing it with similar areas without an opening and accounting for prior trends. Premises costs, returns, the share of repeat customers and sales transferred from neighboring stores are also needed separately. If network profit and retention rise after the initial excitement, the strategy gains support. If only the new location's revenue grows at the expense of other channels, the format or expansion pace will need reconsideration. [3 · Gallino and Moreno] [1 · Reuters]