Zara's China Drop Headed for Very Successful Weekly 5 Hr Show on Douyin

As Zara engages in a ferocious battle with low-price competitors Shein and Temu and is delivering heroic results, it wasn’t enough for the money guys on Wall Street. After a tiny miss against the projections of analysts, Zara lost 5% of its value in hours in early December. And it could have worse, with 5% a recovery number against an earlier 7-7.8% selloff.

Jeffries analysts told WSJ that the results were impressive and the miss was fractional, but investors are demanding results. Seriously! Meanwhile Shein is taking a beating these days and it could again delay their IPO [initial public offering].

Zara’s Footprint in China

As to Zara in China, the company has downsized from 570 stores in 2019 to just 192 as of Jan. 31, 2024. Zara argues that the post-pandemic sales channels have changed in significant ways — largely driven by technology and China’s passion for live shopping shows.

Notably, Zara’s five-hour long, weekly live-broadcasts on Douyin, TikTok's Chinese sister site, have helped boost Zara's sales since they launched in November, according to retail analytics firm EDITED.

"Zara's livestream approach built significant brand awareness in China," EDITED analyst Krista Corrigan advises.

Zara sold out of most sizes in 50% more products in China in the first three months of this year than in the same period of 2023, according to EDITED. Based on these statistics, Zara was correct in shrinking its store footprint to move in more tech-friendly directions, driven by young Zara shoppers.