After finding it difficult to meet up to a sudden increase in demand by consumers in the early stages of the novel coronavirus pandemic, an acceleration in growth is being predicted by the German fashion e-tailer Zalando.
These comments were made by the company’s Chief Financial Officer David Schroeder on Thursday.
A large number of shoppers shifted trend and moved towards purchasing online as governments across the region imposed tough lockdowns – with physical stores closed, in order to prevent spread of the pandemic.
Its guidance for growth for the entire of 2020 in terms of gross merchandise value was raised by the Berlin-based Zalando to between 25 per cent and 27 per cent while reporting its results of the third quarter this month which was stronger than the market expected.
“For next year I can promise that we will be prepared for accelerated growth,” Schroeder told the Morgan Stanley European Technology, Media and Telecom Conference.
A transformation in its business model – form being a wholesaler to a platform model, is currently being implemented in the biggest pure-play online fashion retailer of Europe. This transformation will enable the company to sell directly to customers products of a host of brands such as Nike while also creating a niche for itself by supporting that sale with excellent order fulfilment.
Further, Schroeder said, this change of its core business model will also be beneficial for the company to easily scale up deliveries with changes in consumer tastes and trends and demand. Inventory had to be sources by Zalando as much as a year in advance when it operated in the wholesaler mode, Schroeder added.
While Schroeder expects that there will soon be a fading out of the demand tailwinds resulting from the second wave of the pandemic which is currently sweeping through Europe, including Germany, he also believes that there are a number of trends and changes brought about by the pandemic in the industry will persist which include structural changes in the industry such as a shift in consumer trends from offline to online shopping and a more direct sales by brands to customers.
“Our strategy is the right one for the pandemic but also for what comes beyond,” Schroeder said.
The share price of Zalando shares were up by 75 per cent for the year till date as the company was valued at 20.3 billion euros ($24 billion).
(Adapted from Reuters.com)