Sweden's Fast Fashion Brand H&M Has 146 Stores In China.

China's fast fashion brand H&M, which has entered China for six years, has reached 146 stores in China, which is in line with its "fast" characteristics.

Along with the massive entry into the two or three tier cities, the overall sales performance has been rising. However, due to the differences between regions and consumption levels, it is not easy to go well in the two or three line market.

Rapid expansion

At 10:00 a.m. on July 20th, H&M new store opened in Changan Wanda Plaza, Dongguan, Guangdong. "Super value surprises": 39.9 yuan for women's tops and 49.9 yuan for men's shorts. The first 50 customers will receive a promotional card worth 50 yuan. This is the preheated slogan of H&M, and similar information often appears on micro-blog's official micro-blog.

This is H&M's 146th store in China, just two days before July 18th, another new store opened in Nanjing's de chi square. This speed seems to coincide with its "fast fashion" logo.

The plan to enter the Chinese market began in 2006. Niels Wenger Vinge, the then H&M investor relations officer, said that the reason why he chose to open the first Asian retail store in China was: "China is developing very fast. This is an exciting market and has great potential." (Nils)

In April 2007, H&M opened its first store in Shanghai.

It is not difficult to understand the choice of H&M. "This is an inevitable trend. China is an emerging market after all, and everyone wants to get a slice of that. It must be part of H&M's international strategy," an unnamed insider told the new financial reporter.

On the other hand, the Spanish ZARA, which is also a fast fashion brand, has entered the Chinese market in 2006. As a competitor, H&M is also unwilling to lag behind. "The entry of ZARA will definitely play a role in H&M, and ZARA will also perform well after entering the market, which may further strengthen the determination of H&M," the industry further pointed out.

From then on, international fast fashion brands gradually entered the Chinese perspective. shoes The independent critic of the clothing industry, Ma Gang, embodies this trend in the road of micro-blog's "shopping malls investment change": "around 2002, the international popular brands, such as Nike, JACK&JONES and BELLE, are the most popular brands in the country. In 2007, fast fashion is popular. In 2012, luxury brands and luxury products are hot."

After entering China in 2007, the number of H&M shops increased year by year. According to the rough data of the annual report of H&M group, the number of shops opened in China has increased by more than 60% per year. In some years, it has even increased by 100%, which is obviously higher than the annual growth rate of H&M stores 10%-15%.

In 2013, H&M increased its global sales plan from 325 to 350, most of which are in China and the United States. According to Peng Bo's report in February this year, H&M CEO Karl-JohanPersson expects China to replace Germany as its largest market, and will open more stores in the Chinese market than any other country in the world.

"Continuous expansion of new stores can improve overall sales performance, which helps to achieve H&M annual sales target," the industry said.

In addition, the fact that consumers are less loyal to fast fashion brands also allows H&M to expand channels and increase market share as far as possible. In the 2013 Chinese shopper report released by Bain management consulting company, shoppers usually tend to try multiple brands, so if they want to build a strong brand, they must buy as many consumers as possible.

Bain's global partner, Lena, believes that brands need to ensure that their brands enter the "list of shoppers" and ensure the perfect store execution. Therefore, it is very important to improve the coverage of retail terminals in various channels. At the same time, the report also pointed out that "in the future, the development of brand in China will also be more dependent on the market share of other countries as it is in other developed countries."

On the choice of market, H&M obviously put more hope on the two or three line city. According to the data provided by H&M group to new financial journalists, as of July 18th, the total number of stores in two or three cities in the mainland was 70%, which is more suitable for people's expectation of the potential of the two or three tier cities.

The magazine predicted that by 2020, 66% of China's middle-income consumers will come from a large number of small and medium-sized cities. Such a huge market is obviously not to be missed.

Du Yanhong, a retail researcher at CIC, also told the new financial reporter that H&M actively layout two or three line cities. On the one hand, its operating cost is lower than that of the first tier cities. On the other hand, the consumption demand of the two or three line cities is constantly being released, so that it can get the cake of two or three line urban residents' consumption promotion.

After the micro-blog shop in Dongguan, there are many similar comments on "when can Huaian have a H&M store?" "when Luoyang has" and "should be opened in Ningxia". This kind of appeal will make H&M layout faster in the two or three tier cities.

On the official micro-blog, "we are looking for you who are passionate about fashion! Jinhua, Fuzhou, Jinan District, Baoding (new urban district), Hohhot (Huimin District), Luoyang (West Industrial Area), Wuxi, Ningbo (Haishu area) are recruiting sales consultants (full time and part-time)" news has been made many times in two months. Perhaps everything is already in preparation.

Same store sales decrease

The growth target of H&M's official website is described as follows: the number of stores grows at 10%-15% per year, while the same store sales (comparable unit sales) are increased.

In recent years, the growth rate of stores has already reached and exceeded the target, and the total sales volume has increased year by year, but the data of same store sales are not so satisfactory.

In the United States Clothes & Accessories Former vice president, Cheng Weixiong, vice president of Bosideng International Holdings Limited, looks like "many stores and commercial squares are open every year in the first tier or two or three tier cities." therefore, the growth of stores and total sales is not difficult, "he told the new financial reporter.

Data show that in the first half of this year, Wanda Group has developed 18 Wanda Plaza, and is expected to open 13 Wanda Plaza in the second half.

Ocean property, as of the end of 2012, in the existing 23 million square meters of land reserve, commercial property land accounts for about 16%, reaching 3 million 760 thousand square meters. It is estimated that 5 years later, there will be nearly 2 million square meters of property with commercial investment, and more than 30 commercial projects will be developed in cities such as Beijing, Tianjin, Shenyang, Dalian, Hangzhou and Zhongshan.

The continuous development of commercial projects obviously brings room for H&M, but the increase in the number of stores and total sales is not the same as the development.

In the industry's view, if the same store sales decrease, even if the total sales increase is not significant, because a new store will definitely increase sales performance. He believes that "same store sales are really persuasive. There are some problems in the same store sales without increasing management."

In the 2013H&M semi annual report, the same store sales fell by 4% in the six months ended May 31st. Subsequently, micro-blog appeared on the "H&M China store average quarterly sales of about 11 million yuan less than the global average" argument, for this, H&M to new financial reporter said that has not released this data.

But if we simply use the total sales volume divided by the number of stores, we can also see the comparison between the single store sales in China and the global average. The industry insiders said that although it is not possible to determine the exact time of opening a shop, it will still be authoritative if the total number of stores is calculated annually.

The reporters found that the proportion of China's sales accounted for the total global sales increased year by year, from 0.52% to 4.36% in the first half of fiscal year 2013, by collating and calculating the earnings data. However, the sales volume of every store in China decreased year by year, from 68 million 860 thousand kronor in 2007 to 40 million 380 thousand kronor in 2012, and the data from 2010 were lower than the average annual sales volume of each store.

In this regard, the industry insiders admitted that the average sales of two or three line cities can not be compared with the first tier cities, so it may lower the overall level.

Nevertheless, it has failed to prevent its rush to the two or three tier cities. Although it is necessary to want to become a favorite brand of Chinese consumers, but in Cheng Weixiong's view, the preferential policies of the two or three line cities have also promoted the expansion of H&M to a certain extent.

He further explained that many commercial channels in China include shopping centers or shopping malls. Most of them hope to introduce some international fast fashion brands to attract popularity and reflect their international atmosphere and upgrade their grades. This is particularly prominent in the two or three tier cities. "For example, low rent, low discount points, and some even have decoration subsidies."

From this point of view, the various preferential conditions given by the two or three line business circle may also be valued by H&M. After all, the threshold for entry is relatively low.

The industry also agreed with this, and pointed out that "such a low cost can occupy the channels of the opportunity, why not? For some international fast fashion brands may not have planned the layout, see the conditions are so good to go." In his view, opening the market at low cost in small and medium-sized cities is also beneficial to the brand itself. "There is a gap between the flow of information between the first line and the two or three line cities, so that the customers can see it with their own eyes, so as to effectively enhance their popularity."

"The two or three line preferential policy makes many international fast market brands enter China, and there will be some aggressive behavior in strategy," he said.

In view of the problems related to the expansion of stores in the Chinese market, H&M said it was not convenient to make any comments.

Two or three line city worries

"I was very excited when I opened my first store in Dongguan. I thought it could be connected with European fashion, but now I don't always buy H&M, which is cheap and practical. I value it more." Li Moting, who stayed in Dongguan for ten years, said to the new financial reporter.

Obviously, it is still difficult for H&M to go deep into the two or three line market and succeed.

In the industry's view, although H&M has now "radiation" to the two or three tier cities, but the future development needs to be observed.

Although the development space of the two or three line cities is very objective, in essence, there is still a gap between the two or three tier cities and the first tier cities. "In the north, Guangzhou, Shenzhen and the international community, people pay attention to the international trend, so pursuing fashion is what the brand must do, but the demand of the two or three tier cities may be more realistic," the source said.

Cheng Weixiong also pointed out that the consumption characteristics of the two or three line cities have obvious characteristics of diversification and regionalization, and consumers are not necessarily looking at the international brand. "After all clothes It's for wear. It's not necessarily fashionable. It's possible to find the right match. "

Li Moting has been more loyal to H&M over the past few years, because she thinks it is fashionable to wear H&M in the city of Dongguan, but "the clothes in the shop are quite large, and I don't wear much, so I often look at other brands." In her view, since it has entered the two or three tier cities, H&M should be appropriately changed according to local consumption needs.

It can be seen that due to the diversification of the demand of the two or three line cities, H&M should also make efforts in the aspects of style and edition, rather than simply copying the storefront of the first tier cities.

Besides, Chinese consumers have brand awareness for a long time and there are differences in choice. "The consumption of this fast fashion brand abroad is like buying bread. Maybe it will not be worn next summer, but consumers in China, especially in the two or three tier cities, may continue to wear them next year. These are fundamental differences," Cheng Weixiong said.

In Cheng's view, although the preferential policies of some two or three line cities have made the international brands occupy the channels and cost opportunities, it is still necessary to see whether the brands can ultimately meet the real needs of consumers in order to really do well.

Even if the entry cost is low, if it can not bring good income and popularity after opening a shop, the overall operating cost will rise and profits will decline. "And as a shopping mall or shopping center, it will not continue to give preferential conditions to face." This is a precedent.

According to public media reports, Mango, the first fast fashion brand to enter Hangzhou, withdrew from Qingchun Yintai, and related officials of Qingchun Yintai said, "the reason for Mango's dismantling is poor performance. We give it the best location on the two floor, but it doesn't seem to be a good achievement." It is reported that the sales performance of Mango counters in recent two years has been declining from 20% to 30%.

For H&M, more challenges come from competitors.

UNIQLO, Japan clothing Fast fashion brands began to attack China after 2011. At present, there are 359 outlets in UNIQLO, of which 182 and more than half of them are in China, accounting for 15% of the total number of stores in China.

In recent years, the development of UNIQLO in the two or three tier cities is mainly targeted at the local mass market which has little demand for fashion trends and attaches importance to the practicality of clothing. Besides, the production line will be added to serve China and realize the local production and sale in China. In contrast, H&M6 has become a production line in Asia, but mostly in low wage countries such as Bangladesh and Kampuchea.

Du Yanhong said, like H&M, other international fast fashion brands and local brands are also accelerating the expansion layout, especially in the two or three tier cities, and the increasingly fierce market competition will bring pressure to H&M. In the expansion, we need to pay more attention to the change of consumer demand.

At the same time, "new stores generally have a incubation period, which will increase capital expenditure and lower overall performance". He pointed out that the high speed expansion and shop opening should pay more attention to whether the development level of the regional economy can be carried and the market competition situation in the future, that is, we should pay attention to applicability and foresight.

"The two or three line market is huge. If we do not respect the market demand and continue to expand, this development will not be sustainable. Further development will not necessarily be as prosperous as it is on the surface, but it may well be the beginning of danger." Cheng Weixiong believes that "international brands want to eat in the 1-4 line of China. It takes a lot of effort. If we do not know clearly, we will expand blindly, and we will probably get bogged down in the mire."