Now, Zara-owner Inditex has taken a step ahead in the digital space by launching online sales for its budget brand, Lefties, in Spain and Portugal. This strategic move gives Lefties an advantage over its competitor, Primark, in one of its largest markets. Lefties is known for its affordable clothing options for women, men, and children and currently has a presence in six countries with more than 100 stores. Established in 1999 as a means to clear out Zara’s previous seasons’ clothing, Lefties has grown over the years, developing its own designers and product ranges. However, it has struggled to gain visibility compared to Inditex’s flagship brands like Zara, Massimo Dutti, and Bershka, and notably, it is not even listed on the company’s website.

Looking closer at Lefties’ offerings, its store on Madrid’s Gran Vía shopping street showcases attractive items like short printed dresses for €12.99 and cotton candy-striped shirts for €8.99 – similar price points to those found in the flagship Primark store located next door. While Primark maintains an active presence on social media, it has not yet ventured into the realm of online sales. The parent company of Primark, Associated British Foods, has made it clear that they currently have no plans to introduce online shopping. However, the ongoing COVID-19 pandemic has accelerated the shift towards online sales, with physical stores remaining closed and consumers being cautious about visiting crowded areas. This development presents an opportunity for Lefties to tap into the growing digital market.

However, fulfilling online orders for low-cost items can pose challenges and impact profit margins, particularly when considering the cost of returns. This is an aspect Inditex must carefully consider. Analysts from Societe Generale caution that online sales may not be as profitable for Primark, especially if they were to offer free delivery and returns. Their estimates suggest a potential 5% drop in profit margins if Primark were to implement a click-and-collect online sales model. On the other hand, Inditex already possesses the necessary infrastructure and IT capabilities from its other brands to support online sales for a budget brand like Lefties. It remains unclear whether Inditex has plans to expand online sales to other countries where Lefties operates.

For now, the Lefties website is limited to delivering within Spain and Portugal, with a standard delivery fee of €3.99. In comparison, Zara offers deliveries for €3.95 or free for purchases over €30 within Spain.

Sources:
1. For more information on Lefties’ online sales launch in Spain and Portugal, visit Reuters.
2. To explore the challenges of online sales for low-cost brands, read this article by Societe Generale here.