(Bloomberg)—At Zara’s new flagship store in London, shoppers can swipe garments along a floor-to-ceiling mirror to see a hologram-style image of what they’d look like as part of a full outfit.
Robot arms get garments into shoppers’ hands at online-order collection points. iPad-wielding assistants also help customers in the store order their sizes online, so they can pick them up later.
“Customers don’t differentiate between ordering online or in a store,” spokesman Jesus Echevarria Hernandez said. “You need to facilitate that as best as you can.”
The store, which opened Thursday, shows how retailers are increasingly blending online and bricks-and-mortar shopping in a bid to keep up with the might of Amazon.com Inc., No. 1 in the Internet Retailer 2018 Top 1000. Inditex SA, the Spanish company that owns Zara and No. 500 in the Top 1000, calls it an example of the technologies it will implement around the world.
Online shopping has been a bright spot for Inditex, with e-commerce sales increasing 41% last year while overall growth slowed. The company has so far outpaced other apparel retailers, such as Hennes & Mauritz AB and Marks & Spencer Group Plc, that were slower to invest in online operations and are scrambling to catch up.
Amazon is moving the other way, building out its physical retail presence. Not only has it acquired grocer Whole Foods Market Inc., it has opened Amazon Go convenience stores, which use artificial intelligence and video cameras in lieu of checkouts, in several U.S. cities. Walmart Inc. (No. 3), meanwhile, has installed pickup “towers,” which let shoppers retrieve online orders, in hundreds of locations.
At the new, 4,500 square-meter (48,000 square-feet) Zara in a shopping mall in Stratford, east London, shoppers can collect orders or buy clothes without talking to anyone. Self-service checkouts on both floors let customers pay with their mobile phones or credit cards.
The order collection points, which can store as many as 2,400 parcels between them at a given time, are fully automated. After the customer swipes a receipt on a sensor at the front, a robotic arm behind the scenes retrieves the appropriate box and deposits it in to a hatch to be retrieved.
The new format offers ways to boost efficiency after Inditex’s industry-leading gross margin, a measure of profitability, fell to its lowest level in a decade.
“Among mass-market retailers, Zara is one of the pioneers in this area,” according to Bloomberg Intelligence analyst Chris Chaviaras. “When they refurbish stores, the sales and profit uplift usually pays off that investment in two years or less.”
Every garment is fitted with a radio-frequency identification tag. The technology lets Zara check a store’s inventory in two hours, a process that used to take about three days, Hernandez said.
The location, a Westfield Corp. shopping center, still draws hordes of shoppers despite the broader malaise in the U.K. retail industry. It was chosen as a testing ground for the new technology because it was already a destination of choice for Zara’s click-and-collect customers.
Online shopping accounts for 22% of non-food retail sales in the U.K., according to the British Retail Consortium. That shift has accelerated, meaning Zara and many other retailers are faced with a stark choice: use your stores more creatively or close them.
“We still want customers to interact with our physical stores,” Hernandez said.