All of the stores in Venezuela of brands such as Zara, Bershka and Pull & Bear, will be closed in the coming weeks by the owner of the brands Inditex following reviewing of a deal between the retailer and its local partner Phoenix World Trade, said a spokesperson for Phoenix World Trade.
The operations of Inditex stores in the South American country were taken over in 2007 by Phoenix World Trade. The Panama based company is controlled by the Venezuelan businessman Camilo Ibrahim.
“Phoenix World Trade is re-evaluating the commercial presence of its franchised brands Zara, Bershka and Pull&Bear in Venezuela, to make it consistent with the new model of integration and digital transformation announced by Inditex,” the company said in response to comments from the media. “The five stores which remain open… will cease to operate in coming weeks”.
There were also no comments on the closing measures available from the Spanish group Inditex.
According to analysts, this closure of stores of the largest clothing retail group of the world in Venezuela is a part of the strategy of the company of scaling back smaller outlets worldwide while expansion of the flagship stores of the different brands of the group. It is expected that the company will be closing down 1,200 such stores by the end of 2021.
The company is slated to close down about 700 stores in Europe and about 100 stores in the America’s while 400 stores would be closed down elsewhere in the world.
According to reports quoting two local retail executives, the store spaces formerly occupied by Zara and Pull & Bear – another Inditex brand, in at least three large Venezuelan malls are currently empty. The local sources were not named in the reports.
According to the reports, three stores have closed in May in the capital of the country itself. Items from its spring collection are being offered by the Zara stores that were still open until last week in Caracas.
In 2007, Inditex made Ibrahim its local partner to help the Spanish company with issues related to changing local regulations and keeping the shelved of the stores stocked with socialist former President Hugo Chavez’ government exerting tight control over the foreign-exchange market and companies were required to get clearances from the government for purchasing dollars required for importing clothes.
That sometimes resulted in stocks not being filled up at the stores because of issues of obtaining hard currency for importing.
Businesses in Venezuela are currently allowed to import goods and sell them at hard-currency prices even though the Zara stores will be shut down which is a welcome break for local businessmen from years of price controls on many key items.
A chaotic economic liberalization in the country has resulted in surge in the number of luxury stores in the country, known as bodegones, as well as coffee shops that advertise prices in dollars.
(Adapted from Investing.com)