Some stores seem able to weather the pain of uncertainty and disruption more than others. Image: Shutterstock

Decrease in footfall, competition from online retailers, disrupted supply chains — and now tariffs. In many places, the problems faced by brick-and-mortar retailers are visible for all to see, with main-street stores now shadows of their former selves.

Yet some stores seem able to weather the pain of uncertainty and disruption more than others. What sets them apart?

A study published in Production and Operations Management by IESE’s Victor Martinez de Albeniz and Diego Aparicio, along with Jordi Balsach, examined which Zara and Bershka stores fared best during the COVID-19 pandemic. Their insights offer valuable lessons that extend beyond crisis periods, shedding light on what it takes to survive and thrive in an evolving retail landscape.

Rethinking retail resilience

The study shows a severe aggregate decline in offline retail sales during COVID. Specifically, units sold by Zara and Bershka declined 43% in 2020 and declined 53% in the six months from March 2020.Read More

Analyzing store inventory management, government policies and store characteristics across 20 countries, the authors found that the impact was most pronounced in cosmopolitan cities like Madrid and London, as well as in smaller but tourist-heavy destinations like the Algarve in Portugal or the Balearic Islands in Spain.

Meanwhile, stores in non-urban spots experienced a modest decline in sales, possibly linked to population inflows that fled cities or to the redirection of shopping expenditure toward local stores instead of shopping while traveling.

So, when it comes to uncertainty, bigger is not always better. In this way, Zara and Bershka’s larger stores — especially those in tourist areas or shopping malls — proved less resilient than their small local stores during the pandemic due to rigid inventory management and high overhead costs. In uncertain times, these factors can amplify sales declines.

Conversely, smaller stores in rural areas — which better understand local customer needs and maintain a customized, flexible inventory — are more resilient. These businesses prioritize practicality over prestige, operating in modest spaces with street access rather than prime urban locations. As a........

© Forbes India