Fast Fashion And Big Defeat? H&M And ZARA Good Days Are Over?

Discounting, clearing, closing stores and withdrawing from China...

The "fast fashion" brand, once a strong trend, is undergoing a major reshuffle.

At the beginning of May, the flagship store of Forever 21 in Nanjing East Road in Shanghai was cold and clear. There were only a few showrooms on the first floor in the 8000 square meter shops. There were also some old aunts who gathered around to collect the leak. The other three floors had long been emptied.

Although there were no announcements in the shop, the "big sale" and "special price 30 yuan" billboards everywhere were telling the tragic fate of the "fast fashion" brand in China.

Official website notice shows that Forever 21 China official website is temporarily closed.

Its flagship store in Tmall showed that the store will be terminated in May 29th, and the flagship store of Jingdong has been unable to find it.

For a while, the news that "Forever 21 will quit China" quickly mounted on micro-blog hot search, and some netizens could not help exclaiming "no one will always be 21, but there will always be 21."

Forever 21 official customer service said, Forever 21 confirmed that it would withdraw from China. Before May 7th, it was dealing with the remaining refund problem. After May 30th, official website online customer service will also leave.

Forever 21 lost China is just a microcosm of the "fast fashion" brand's bad situation. Before that, brands such as Topshop and New Look have been withdrawn from China one after another, and the speed of opening shops such as H&M and ZARA has obviously slowed down.

The term "fast fashion" originated from Europe in twentieth Century. It is called "Fast Fashion", and the United States called it "Speed to Maket". It is a simple and quick statement of "fast and fashion". It usually describes the fashion products made by fashion enterprises after the quick response of fashion design.

Its fast delivery time, the price is close to the people and the trend of keeping pace with the trend, has greatly stimulated the interest of consumers.

As revealed by its name, "fast fashion" brand update is also very rapid. With the emergence of more and more new brands, the whole industry has been in a state of weakness.

01

Foreign brands fade into China

In 1984, Zhang Dongwen and Zhang Jinshu from Korea founded Forever 21 in the United States. With the characteristics of low price and fast speed, the brand quickly opened up in the US market and developed into one of the largest fashion chain brands in the world.

After accumulating more than 20 years' experience, Forever 21 has set eyes on the huge market in China. At that time, China's "fast fashion" industry is almost a blank.

But practice has proved that Forever 21 has been in the early days of China and caught up with a late episode.

Unlike brands such as UNIQLO, ZARA and other first tier cities from China, Forever 21 chose to enter the sinking market when they first entered China, and opened shop in Changshu, Jiangsu. The store ended in a year.

Two years later, Forever 21 made a comeback. This time it learned the lesson of failure and followed only one strategy: opening up a large store in the core city and core business circle.

In September 2011, Forever 21 opened the 6 floor flagship store in Hongkong Tongluowan JINGWAH center. In the same year, Forever 21 Tmall flagship store opened.

The following year in August, the total area of 2500 square meters of Beijing Wangfujing APM shopping center shop came out; subsequently, 8000 square meters of Shanghai Nanjing East Road flagship store also grand opening.

The "prime location" does not seem to have matched the performance of Forever 21, and even increased its rental cost.

According to the interface news, Forever 21 Hongkong Tongluowan JINGWAH Center store is closed because it can not afford the rent. The monthly rent of the store is HK $11 million, and the monthly sales volume should be at least HK $60 million, which means that we need to sell 4 to 5 clothes per minute, or sell 6667 items of clothing and accessories in 300 HK dollars per day.

Therefore, after several years of horse racing enclosure, "closing shop tide" also followed.

Of course, Forever 21 is not alone in losing China. Many foreign fast fashion brands have been weakening in China in recent years.

In August 2018, the fast fashion brand Topshop, which has been in the UK for 50 years, announced that it had terminated its cooperation with the Chinese franchise partners, and closed its Tmall flagship store in November of the same year.

This means that Topshop has withdrawn from the Chinese market today.

In November 2018, another British fast fashion brand New Look, who had been fighting for four years in the Chinese market, announced its withdrawal because of its overburden and plans to close its remaining more than 120 stores in China within the next year.

According to the financial report, the loss has amounted to 74 million 300 thousand pounds (about 647 million yuan) over the past 2017-2018 years, and the main reason for the decline in performance is the failure of brand pformation and expansion strategy, especially in the Chinese market.

The industry is not surprised that a large number of foreign fast fashion brands are withdrawing.

Cheng Weixiong, general manager of textile and clothing brand management and Shanghai Liang Qi Brand Management Co., Ltd., said that the fast fashion brands currently accepted by domestic users are ZARA and UNIQLO, and other foreign fast fashion brands are neither ZARA nor UNIQLO, nor are they part of an international brand symbol.

Take Forever 21 as an example, its layout in China's first and second tier markets has far failed to achieve the expected business objectives. With the rent, labor, taxes and operating costs kept high, the headquarters will stop the loss as the first choice if its input output is not in direct proportion.

"In fact, as a representative of emerging markets, such fast fashion brands can really develop and match users' scenes if they learn to study the needs of the Chinese market.

Not in the first and second tier market entanglements, putting down the international brand value and sinking to three or four or five tier cities, the market space is bigger.

Cheng Weixiong thinks.

From the perspective of consumers, Ma Gang, an expert in clothing and retail industry, thinks that the delisting of Forever 21 "fast fashion" brand is also closely related to the change of consumers.

When the "fast fashion" rises, the audience is mostly 70 and 80, and now it has been in the past more than 10 years. This is the two different stratum. Consumption has changed from brand marketing drive to consumer drive.

These brands can not survive without knowledge of the market and consumers.

In fact, China's fast fashion market is already saturated, and even the popularity of ZARA is slowing down.

According to the earnings report issued by ZARA parent company Inditex, its sales in 2018 were 26 billion 100 million euros, up 3% over the same period last year, which was further slower than the 9% sales growth in the 2017 fiscal year. Net profit increased by 2.3% to 3 billion 400 million euros, a five year low.

ZARA parent company Inditex financial data, source: Inditex 2018 Annual Report

02

Local brands are mixed.

How are the Chinese disciples living in the "fast fashion" brand of foreign capital?

The American state dress (002269) founded by Zhou Chengjian of Wenzhou is a fast fashion activist who studies ZARA and UNIQLO.

But compared to foreign fast fashion brands, Smith Barney apparel in the Chinese market earlier encountered Waterloo.

As early as 2015, the United States and costumes realized 6 billion 295 million yuan of business revenue, down 4.92% compared to the same period last year, net profit fell 396.57%, a loss of 431 million yuan.

This is also the first huge loss in 8 years, and even triggered the inquiry of the Shenzhen Stock Exchange.

At the same time, the United States experienced a closed shop tide.

According to the results of the report, at the end of 2013, the number of apparel stores in the United States was nearly 5000. By the end of 2015, its stores and franchised stores in the country had shrunk to more than 3700, which means 1300 stores were closed in two years.

By the year 2017, the United States still had a hard time, with a total revenue of 6 billion 473 million yuan, a year-on-year decline of 0.71%, a net loss of 306 million yuan, a decrease of 945.81% over the same period last year.

However, with the efforts made by Smith Barney in the past two years in terms of brand upgrading and channel sinking, in 2018, Smith Barney's revenue was 7 billion 677 million yuan, an increase of 18.62% over the previous year, and net profit attributable to shareholders of listed companies was 40 million 360 thousand yuan, an increase of 113.24% over last year, turning losses into profits.

Local fast fashion women's clothing brand "La Natsu Bell" is also struggling in the loss.

Over the past year, it has closed down a large number of inefficient and inefficient outlets.

According to the financial report, in 2019 Q1, La Natsu Bell's revenue fell 21.11%, to 2 billion 372 million yuan, and the net profit attributable to shareholders of listed companies was 9 million 751 thousand yuan, down 94.40% compared to the same period last year.

At the same time, La Natsu Bell also stepped up the adjustment of the line. At the end of March 2019, the number of outlets was 7653, compared with the 9540 net decrease of 1887 at the end of March 2018, and the number of outlets decreased by 19.78%.

However, some of the local fast fashion brands ushered in a chance. Lining is one of them.

In 2015, Lining, who had been losing money for three consecutive years, launched a series of blue spring spring product series, positioning sports leisure and fast fashion, taking the core business circle and shopping center of the two or three line city as the main offline sales channel, and began to change.

This effort did not bring any immediate change.

Until February 2018, Lining was the first Chinese sports brand to appear in the fashion week of New York. With the theme of "Enlightenment" as the theme, and the image of "Tiger Crane double shape" and "White Crane" in the Chinese traditional culture, the sweater was launched with surprise.

In June 2018, Lining presented the 2019 spring and summer series to Paris fashion week. With the theme of "China Lining", he interpreted the trend of the 90s classic movement from the perspective of future.

Once the "local flavor" rich brand of low-priced goods, after the international fashion week, achieved a great reversal - the same scene after the show and the crowd outside the store, the two tier market investors also showed their enthusiasm in practical action.

Since February 2018, the stock price of Lining has risen rapidly, up to 120% in May 23, 2019, and its market value approximated to HK $30 billion.

According to the results of the report, 2012 - 2014, Lining lost three consecutive years and accumulated a loss of 3 billion yuan. Since 2015, the company's operating income and net profit attributable to the parent company have gradually recovered; in the 2018 fiscal year ended December 31, 2018, the company's revenue for the first time exceeded 10 billion yuan mark, up 18.4% over the same period last year; net profit reached 715 million yuan, up 39% over the same period last year.

There is also a women's clothing brand -- Jiangnan Buyi's "popularity" experience is also commendable: inviting designers to design clothing, launching sports brands and participating in international fashion week in a short time with different themes such as "Sports" and "environmental protection".

According to the 2018-2019 fiscal year interim report released by Jiangnan Buyi, the total income in the first 6 months ended December 31, 2018 was 2 billion 27 million yuan, an increase of 22.6% compared with the same period last year. Net profit was 380 million yuan, an increase of 22.1% over the same period last year.

Under the background of the industry saturation, the two digit net profit growth has also booed Jiangnan cloth.

The popularity of domestic brands represented by Lining and Jiangnan Buyi has increased the confidence of the outside world to Chinese brands. Some people even think that this means that China's "fast fashion" brand has surpassed the "fast fashion" brand abroad.

But in the view of Wang Chong, a partner of Greater China in business management consulting, these Chinese brands are developing rapidly. After all, young people pursue individuality, but they can't arbitrarily think that China's tide brand has surpassed that of foreign brands, but the rise of these brands really gives new opportunities to Chinese brands and niche brands.

She also pointed out that the "fast fashion" industry is facing some challenges. Before everyone expanded too fast, there may be a wave of survival of the fittest.

In the clothing industry for eight years, a senior person close to the Li Ning Co has also revealed that Lining, who was born under the condition of natural drainage, did not think of himself.

In her view, Lining's success had some contingency, but he also made some efforts to "go with the flow".

For example, some of the clothes designed are retro and tidal, which gives everyone a sense of the moment.

In addition, young people have a high sense of national identity, so the integration of Chinese culture into design makes products more and more popular in this circle.

"It's too early to say that the tide is rising."

When Cheng Weixiong talked about the current "fast fashion" shuffle and the popularity of domestic products, he said, "tide is only a phased fashion draught. It can not become the mainstream, but only a delicious dish in the homogenized fast fashion brand."

03

How to hunt after 90 and 00

The white paper on the 2018 clothing consumption crowd released by the Tencent data Lab (hereinafter referred to as the white paper) shows that men and women who live in the first and second tier cities and love the United States and love social work under the age of 30 are the main consumers of fast fashion.

That is to say, the "fast fashion" brand should earn money from the 90s and the Millennials.

Source: Tencent data Lab

Cheng Weixiong analysis shows that this age group is the only child of the consumer group. After 60 and 70, the material wealth created by the parents has made this user group comfortable and comfortable. Their demand for life scenes has changed with the experience scene brought by the new technology, which has the characteristics of consumption uncertainty, brand preference, no persistence and easy to be influenced by the hot spots.

According to Wang Jie, when asked about which channels to understand the brand related knowledge of fashion and luxury trends, more than 50% of the respondents chose social media, which exceeded the official public number, the electronic business platform and the next store under the brand line.

The white paper data show that celebrities like idol stars and KOL have a strong influence on the "fast fashion" consumers. The former has strong ability to carry goods, and the latter recommends that products are more easily trusted.

Although the online consumer is a key consumer channel, but the offline market can not be underestimated.

"New technology brings business mode innovation, and the diversity of traffic has a greater impact on this user group. Online shopping habits prefer offline offline stores to understand the full channel brand thinking of online and offline interoperability."

Cheng Weixiong thinks.

On the way of receiving customers, Wang Chong pointed out that brands need to be interconnected through multiple channels, and customer centric should be used to identify target consumers and fully understand and cater to their preferences.

"Now there is no online consumer or offline consumer concept. Consumers want to be able to get the product whenever they want and wherever they are," she believes, consumers online online shopping experience needs are also different.

For example, in a consumer online luxury consumption research conducted last year, it is found that consumers need "convenience" and "multiple choice" when shopping online, while online shopping needs more experience.

"For brands, how to really provide consumers with a seamless multi-channel shopping experience is also an element of whether the brand can win young consumers."

Wang Chong said.

From the long-term experience of the clothing market, the senior people also believe that offline channels are of great significance, especially in the second tier, three tier cities, and even more remote areas. This part of the consumer demand for physical stores is still very high.

According to her, UNIQLO will see through Tmall store which area sells more densely, then set up shop in that place, thus forming a kind of online and offline closed loop, to achieve full channel marketing.

The "fast fashion" is still in progress. Ultimately, who can dominate martial arts is unpredictable.

But if we seize the consumer preferences, we can go further.

The white paper shows that "fast fashion" has a variety of styles, and it can be a key factor to consider when consumers are shopping.

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