H & M Announced That Its Subsidiary Brand Monki Completely Withdrew From The Hong Kong Market

Recently, H & M announced that its subsidiary brand, Monki, would close its stores in Tsuen Wan at the end of December and withdraw completely from the Hong Kong market. As of August 31, 2021, the number of Monki's stores decreased by more than 12% compared with the same period last year, with only 108 stores left in the world. Since the plan to adjust offline stores was proposed last year, H & M's brand stores have continued to shrink. According to its financial report, H & m lost 162 stores as of August 31 this year, including 108 in Europe and Africa, 29 in Asia and Oceania, and 25 in North and South America.

Changes in the number of H & M group stores

Source: H & M Q3 financial report time: 2021.6 1-2021.8. thirty-one

Similarly, Spain's fast fashion giant INDITEX is also downsizing its offline stores. According to its plan, it will close 1000-1200 stores in 2021, accounting for 13% - 16% of the total number of stores. In terms of the Chinese market, fast fashion brands are more likely to retreat offline. Not only H & M and Zara close stores in large areas, but also American fast fashion brands Urban Outfitters and everlane successively withdraw from the Chinese market in 2021. After Old Navy, a subsidiary of gap, withdrew from the Chinese market in 2019, it is looking for buyers in the main brand business this year

The sudden epidemic seems to be the cause of the closure of H & M and Zara stores, but behind the tide is the pain of the fast fashion industry reform. Some critics believe that the era of fast fashion brand leading has passed, and the industry is facing the critical moment of change. In the new industry trend, H & M and Zara seem to be more and more difficult to meet the needs of the younger generation who pursue personalization.

According to the survey data of sina Weibo and prospective research institute, the top five fashion brands of generation Z are fashion brand, light luxury brand, fast fashion, national brand and sports brand, and fast fashion only accounts for 17.9%.

Not only the emergence of new fashion brands and the transformation of national brands have brought pressure to H & M and Zara, but the rise of fast fashion DTC brands such as Sheen has also seized the market originally owned by H & M and Zara. According to the "voice of the Z generation shopper" report jointly released by IBM Business Value Research Institute and the American Retail Federation (NRF), generation Z will first consider the diversity, availability and convenience of product selection, while the emerging fast fashion DTC brands outperform H & M and Zara in many aspects.

Through big data, sheen, the leader of the fast fashion DTC brand, can quickly capture fashion trends, design and produce rapidly. Relying on China's high-quality supply chain, she can launch thousands of new products covering clothing, shoes, cosmetics, pets, home furnishings and other categories every day. According to the latepost report, sheen shortened the process from proofing to production from 7 days to the fastest, 7 days less than Zara's fastest time. The speed and quantity of new products are far higher than H & M and Zara. Compared with the offline stores which were almost stopped by the epidemic, the purchase of sheen is not limited by time and space. More importantly, the price of sheen is half cheaper than H & M and Zara.

In the past, the advantages of H & M and Zara in medium and low-end prices and imitating high street fashion elements have been snatched by DTC fast fashion brands represented by sheen. In the face of changing generation Z, traditional fast fashion brands need to find the next growth curve, and online and high-end are their key directions.

At present, Zara has put more efforts into e-commerce planning. After announcing the plan of closing 1200 stores in 2020, INDITEX, the parent company of Zara, began to promote the growth plan of "2022horizon", which invested 2.7 billion euro (about 19.472 billion yuan) for strategic support, including 1 billion euro (about 7.12 billion yuan) dedicated to digital channel, and 1.7 billion euro (about 12.25 billion yuan) for channel integration technology investment.

In terms of China's market, INDITEX has retained the physical stores of Zara, Zara home, Massimo dutti and oysho, while transforming affordable fast fashion brands such as Bershka, pull & Bear and stradivirus into pure e-commerce business.

It is not only more in line with their shopping habits, but also can greatly reduce operating costs and improve the company's earning power. According to the latest sales data released by INDITEX, its adjustment of store strategy has been effective. In the nine months up to October 31, this year, INDITEX's sales rose 37% to 19.33 billion euro (about 123.1 billion yuan), a 10% increase compared with the same period in 2019, a record high. Among them, the e-commerce business recorded a strong growth of 28%.

At the moment of business adjustment, INDITEX will also usher in Marta Ortega, the younger daughter of amancio Ortega, the "second generation" helmsman in April next year. Under her guidance, Zara has promoted her fashion by cooperating with people in the fashion industry. Some people in the industry speculate that Marta Ortega may accelerate Zara's transformation to high-end after taking over INDITEX. According to a report released by fashion agency thredUP, 54% of consumers in generation Z want to buy higher quality products. The transformation to high-end is also likely to become another way for fast fashion to go through the industrial pain. H & M is in the process of business transformation and layout of high-end.

In recent years, although the number of outlets of H & M's affordable brands in China is decreasing, its medium and high-end brands cos, arket and & other stories are accelerating the layout of the Chinese market.

Cos entering the Chinese market in 2018 is mainly for the medium and high-end market, and the price of women's down jacket is between 1500-3500 yuan. Compared with the main H & M brands, cos has abandoned many elements of fast fashion. It no longer pursues the speed of pushing new products and opening stores. There are only new products in spring, summer and autumn and winter in a year, and the fastest speed of opening stores is only 22 stores in the world every year. At the same time, cos is no longer an imitator of high street fashion, but emphasizes classic and simple design and high-quality fabrics. Its brand marketing also pays more attention to the contemporary culture. The semi annual magazine cos magazine is launched to convey the brand's design philosophy and life aesthetics, which brings higher product premium to Cos.

Also for the medium and high-end market, arket and & other stories are younger and have popularization potential than cos. They also emphasize the concept of sustainable development and lifestyle. This year, arket and & other stories have opened new physical stores in the Chinese market, focusing on "life collection stores". The former includes men's and women's clothing, children's clothing, home line and coffee shop, while the latter mainly faces the female market. Besides women's clothing, shoes, bags, jewelry and beauty products are also sold.

On December 15, H & M announced the annual sales performance of 2021. As of November 30, the annual sales of H & M reached nearly 90 billion SEK (about 139.7 billion RMB), an increase of 6% over the same period of last year, basically returning to the level before the epidemic.

With H & m out of the haze of the epidemic, the problem of how to grow in the next step is also in front of it. For a long time, fast fashion brands have been regarded as fashion followers rather than leaders. Their high-end turn shows that this role is changing. However, whether H & M's high-end transformation can work still needs to be tested by time.