Sunday, August 25, 2024, 23:15
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Spain is one of the countries where Spanish fashion giant Inditex will introduce the live shopping experience, which the company hopes to lead to a surge in live sales, a business model that the textile company has so far only actively used in China through its Zara chain. A few months ago it was revealed that the company also wants to launch the service in other territories where it operates, such as the United States, Europe and the UK. The question remains as to what will happen in Spain. In the end, it was decided that Spain will be part of the market where consumers can access and buy products while watching this new type of online shopping show.
So what is live shopping? It is a show broadcast on the Internet, usually streamed on social media where it can be broadcast live, but can also be broadcast on its own platform. The aim is to present a collection of clothes and other products, as if on a catwalk. It also showcases activities and lifestyles related to the clothes being sold, promotes all accessories, and generally brings innovation to the content. The aim of all this extra work is to get the viewer to buy the product they are watching, or leave it in their online shopping cart when the broadcast ends. This encourages the “see now, want now” mentality that is rewriting retail as we know it.
So far, Inditex’s live shopping concept has only been implemented in China, through Douyin, the vast Far Eastern country’s equivalent of TikTok. For now, Inditex has not revealed in what format or on which platform it will be broadcast, but expectations are high. It is likely that Inditex will try to stream it on its own digital platform, which would give it more control over the content and avoid agreements with third parties such as social media channels that ultimately look after their own interests.
According to business analysts at investment bank Jefferies, live shopping is expected to become an important commercial tool in the coming years. At least, the positive data from China suggests so. Preparing the report ahead of Inditex’s September quarter results, the investment banking and capital markets firm noted that disposable income growth is accelerating and wage growth is strengthening against a backdrop of inflationary pressures. Against this economic backdrop, the report highlights that it may be a good time to expand live sales.
The concept of buying a product live during a broadcast is actually not that new. For many years in Spain, there have been businesses (though not as many as before) advertising products that can be purchased by calling a dedicated telephone line. These broadcasts are usually aired in the evening. However, social media has completely changed this way of selling. In Spain, for example, Instagram and TikTok have managed to carve out an important niche in the marketing and fashion-related fields, and this is likely to be the driving force behind the change in retail sales.
Various Markets
The key to repeating the success achieved in China will be to adapt to the audiovisual language of each region. More than 70 experts took part in the first project in Shanghai. It is not yet clear how the coverage will be in Spain or whether there will be a common operational center to distribute the signal to the different countries. As for the date, it has been suggested that it could be in the autumn, but how and when it will start has not yet been revealed. Live shopping in the United States and the UK has already been announced and could start before Spain. It is expected that Inditex will reveal more details when it presents its results.
What’s important now is to strengthen the group’s physical presence in selected downtown areas and create connections with different consumer groups. For example, in China, the number of stores in downtown areas has decreased significantly over the past five years. But these live broadcasts have allowed Zara to maintain its presence as before.
Some international analysts, such as JP Morgan, noted that it would be difficult to interpret how this model would work outside of China when it was announced that Inditex would export it to other markets. As already mentioned, each country has its own quirks and different consumption patterns. Nevertheless, analysts at Jefferies praised the textile group’s investment efforts to innovate with new formats.
While the total investment in live shopping experiences has not been disclosed at this time, Inditex has enough cash to innovate across different formats and, most importantly, has the financial muscle to keep experimenting even if its first attempts are not successful.
Inditex’s move marks a strategic milestone for the entire retail clothing industry. The success Zara has achieved in China is not guaranteed to be replicated in other markets, regardless of their size. So far, livestreaming shopping has proven to help increase customer engagement with the brand, but extrapolating to other regions with different shopping habits may remain difficult.
