The Outbreak Is Not Discussed: The Zara Parent Company Will Lay Off 25 Thousand People.

Since March 14th, Spain has declared that the country has entered a 15 day emergency to fight the new coronavirus, bars, restaurants and most shops have been closed and transportation is restricted. This will be a historic blow to the Spanish fashion group Inditex group. According to Reuters, if the Spanish state of emergency continues until April 15th, Zara parent Inditex group is considering temporary layoffs of about 25 thousand stores in Spain, which will be one of the largest such measures taken in Europe due to the outbreak of the new coronavirus.

Spain's epidemic situation is not optimistic. It has become the third most serious epidemic situation in Italy. And there is almost no sign of slowing down. Before the deadline, 20410 cases were reported in Spain.

So far, Inditex has the largest network of stores in the Spanish local market, accounting for about 1/6 of its global sales. The Inditex group released the 2019 performance report as at January 31, 2020, referring to the group's sales growth of 8% to 28 billion 300 million euros, and net profit increased 6% to 3 billion 600 million euros.

However, affected by the epidemic, Inditex group has 7469 stores in the world, 3785 stores temporarily closed, more than half of the stores. Between February 1st and March 16th, Inditex group stores and online sales fell 4.9%, of which sales fell 24.1% from from March 1st to 16th. At the same time, the Inditex group also pays salaries for about 175 thousand employees, including those in China, Russia and the United States. Such embarrassment prompted the Inditex group to quickly adjust its internal structure to cope with the crisis.

Inditex Group executives said that the adjustment of the layoffs, logistics, central services and manufacturing related businesses staff will not be affected. Because most managers work at home, logistical workers have less time to work, so they can observe safety recommendations for workers to keep distance. Coincidentally, H&M and Gap, who are also fashion retailers, are facing similar difficulties.

Affected by the outbreak, H&M will also temporarily close stores in 12 countries such as Spain, France, Austria and some other stores in Greece on the basis of the closure of all stores in Italy last week. H&M's sales fell by 24% in the first quarter of December 2019 to February 2020. Gap is expected to lose about $100 million in its first quarter sales in 2020. At the same time, Gap will close about 170 brand stores worldwide this year.

In the face of the grim epidemic in Europe, LVMH group and L'OREAL group, as the industry leader, made an example of fighting the epidemic: L'OREAL group launched the new crown virus assistance program, including the factory's production of hand sanitizer, to assist the health sector, L'OREAL fund donated 1 million euros and other measures. LVMH group uses its perfume brand Dior, Givenchy and other perfume factories to produce alcohol wash gel and hand sanitizer to help cope with the shortage of products caused by the epidemic.

The restrictive measures adopted by the epidemic currently bring different levels of confusion to different brands. However, the essence of chaos is the order of other directions. It is a way of sorting out ideas for brands and constantly improving and enhancing their ability to deal with crises. Only by breaking up can we have legislation, and this process will involve different stakeholders. This process is called a common challenge.