Increasing store size and improving store locations: the Inditex and ECI strategy for trade leadership in Spain.

Pandemic and severe economic turmoil have led to a new strategy for El Corte Inglés: fewer stores, but bigger and, above all, better located. And based on these three principles, which have become fundamental to the company's strategy in the physical space, the Marta Alvarez-led firm has closed one of its most important deals in recent times. The Spanish retailer today acquired a building at 9 Puerta del Sol Street in Madrid. This agreement makes it the largest owner in Spain's capital of ideally located sites, as they already own a store on Preciados Street, 3, and also on Puerta del Sol, 10, confirming their bid to win favored locations. And, although at first it may seem that''This acquisition contradicts the disinvestment strategy the company has been pursuing recently, the deal is fully in line with the line the firm wants to pursue.

El Corte Inglés has acquired one of the best-located buildings in the whole of Spain. This was supposedly bought at a more affordable price than in another situation, as the seller, the American Kennedy Wilson Foundation, had been looking for a buyer for it for a long time. In addition, the company gets 3,400 square meters of commercial space to which is added almost 6,000 already available in the area. This strategy of reorganizing physical space, especially in the context of fierce online competition and paying off inefficient stores, is not unique. The reallocation of space is also''has been one of Inditex's core strategies.

The Spanish textile giant, parent company of brands such as Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe, has also long relied on fewer stores, but located in more upscale areas, larger and better suited to online shopping. The company, founded by Amancio Ortega, has announced an investment of 1.6 billion euros to renovate and open new stores by 2023, and to optimize them, expand logistical capabilities, and improve the shopping and user experience. One example is the store opened on April 8, 2022 in Madrid. Inditex has placed a space of 8,000 square meters in the heart of the city (Plaza de España), created for''tourists and regular customers. The store, the largest the company has ever owned, is equipped with the latest advancements in consumer experience. Part of the store is automated, allowing the customer to make purchases from their cell phone and physically receive them literally without waiting in line. Within seconds, a robot is able to identify an item and give it away.

As a result, all of the group's brands except Uterqüe have 5,815 stores in January 2023. In January 2022, there were 6,477, an 11% increase, according to the 2022 Integrated Management Report.

According to the company's annual report, in-store sales grew 23% in 2022, thanks to a post-pandemic increase in shopping traffic, as well as the "growing productivity" of these locations. In parallel, Inditex's online sales continue to grow: in 2022, they grew by 18% on average for the whole group, while Zara's grew by 21%. All the store improvements are contributing to this growth. Before the pandemic hit us with full force, El''Corte Inglés is thinking about getting liquidity and is going to get 1 billion euros from the sale of 95 assets in Madrid, Barcelona, Málaga and Seville. That portfolio consisted of 14 shopping centers, 16 land plots and 65 different assets, over 1.2 million square meters. El Corte Inglés has one of the largest real estate portfolios among Spanish businesses, and this is not the first time the company has shown a thirst for more benefits from it. The group has a real estate division to carry out more efficient use of its assets and help reduce debt, which is one of its main operational goals. The idea from the company, which is run by Marta Alvarez, is to find places where everything fits. Centers where the customer can use the full''the range of products offered by the company. Both strategies clearly show that the Spanish retail market is not going to abandon physical trade, even though the online business seems to be more profitable. As both companies have confirmed in recent years, the strategy will continue with an asset review that does not seem to end in the near future.