The word "fast fashion" originated in Europe in twentieth Century. It was called "Fast Fashion", and the United States called it "Speed to Maket".
The three core characteristics of fast fashion brands are fast delivery, close price and close trend. These motivate consumers' desire to buy. Its representatives include H&M, ZARA, UNIQLO UNIQLO (demand area: 1800-2000 square meters, 406 shopping centers, 80 planned for this year), MJstyle, MUJI Muji, NEW LOOK, UR, C&A, GAP and other brands.
However, it was a typical case that Forever21 filed for bankruptcy protection not long ago. A series of preludes, such as discounts, clearance, and closet shops, did not surprise the outcome.
Fast fashion top brand ZARA has recently closed two stores in Beijing's core business circle: Dongzhimen Raffles shop and new Dongan store in Wangfujing.
Even "China Version ZARA" and La Natsu Bell, the first domestic A+H share listed clothing company, are also selling thunder this summer.
What happened to fast fashion industry?
Forever 21 defeated China
Forever21 is the most popular fashion brand in the United States, which is most popular among teenagers. It is biased towards sweet routes, with simple and light design style and bright colors.
In May 2019, the news of "Forever 21 quit China" went on micro-blog hot search.
Seven years ago, in the summer of 2012, Beijing Wangfujing commercial street, the top four floors, a total of nearly 2500 square meters of Forever21 new shop opened, the crowd surged, young customers queued for shopping.
But the huge opening ceremony did not bring long-term business to Forever21.
In recent years, Forever21 has closed more than 200 stores in 3 years. Since 2016, it has gradually withdrawn from many European markets. The withdrawal of the Chinese market began in March 2019, and stores in Tianjin, Hangzhou, Chongqing and Taipei closed down one after another. Beijing Wangfujing first entered China's first store, and after 5 years of opening, it hurried to the curtain.
More incomprehensible is that it also issued a notice of suspension of operations on flagship stores on Jingdong and Tmall platforms.
In the past 10 years, Forever21 has been grabbing the market in a fast expanding way worldwide. At its height, the company has over 800 stores in nearly 50 countries and regions.
But with the high cost of rent and the impact of e-commerce, Forever21 lost $400 million in 2017.
Forever 21 losing China is just a microcosm of fast fashion's current predicament.
Fast fashion is playing more and more games to the Chinese market?
As the first fast fashion brand to enter China, ZARA closed its largest flagship store in Chengdu in 2017, which is regarded as Fengshui mountain, a fast fashion brand.
The Inditex growth rate of the Zara parent company, which has long dominated the industry, slowed down from the second half of 2016. In the 2018 fiscal year, the group's sales volume was 26 billion 100 million euros, the growth rate slowed to 3%, and net profit increased 12%, setting the worst growth rate in the past 5 years.
Equally difficult is H&M.
H&M once maintained the speed of opening a new store in 4 days, but in 2012-2016 years, the profit rate dropped from 18% to 12.8%. The landmark Beijing Xidan Joy City store was also closed.
In the three quarter of 2018, H&M stock of nearly 39 billion Swedish kronor (27 billion 500 million yuan), accounting for 33.5% of total sales, exceeded the warning line of 30% of the clothing enterprises' health stock rate. H&M had to burn up the stock of days, resulting in the company's profit falling by 41%.
GAP entered China once prosperous, but GAP group's first quarter results in fiscal year 2019 were not as good as expected, and revenue fell 4% year-on-year.
Even the most successful development of UNIQLO growth in China has slowed down. Since last December, UNIQLO did not open new stores.
After the rapid expansion of the world's horse racing enclosure, the fast fashion market has been highly saturated, and performance diving and survival difficulties. These "speed sequelae" foreshadowed that once good days seemed to be gone forever.
The "darkest hour" of Chinese version ZARA
La Natsu Bell, known as the "China Version ZARA" and the first domestic A+H share listed clothing company, "exploded" this summer. In August 6, 2019, La Natsu Bell's major shareholder equity pledge broke out, and La Natsu Bell's intraday price dropped to 4.96 yuan, the lowest in history.
In November 2017 and December, the real controller Xing Jiaxing sent 35 million shares and 40 million mortgages to Haitong Securities, respectively, because of personal capital needs. At that time, La Natsu Bell listed only two months, 10 billion market capitalization, and now only 3 billion 56 million yuan market value.
La Natsu Bell Prospectus has mentioned that the funds raised by IPO are used for the expansion of retail network and the construction of new retail information system. There will be 3000 additional outlets in the next three years, that is to say, it will exceed 1 in 2020.
In 2017, the number of La Natsu Bell's stores reached a peak of 9448.
But radical expansion strategy not only occupied a lot of La Natsu Bell's capital, but also caused a backlog of inventory, which directly affected the company's sales and pricing plan, increased the risk of inventory depreciation and liquidity.
Since the beginning of this year, La Natsu Bell has seen a liquidity crisis.
La Natsu Bell's net profit dropped sharply in the first half of 2019. Revenue fell 9.78% to 3 billion 951 million yuan, a loss of 571 million yuan.
Half a year's report showed that as of the end of 2019 6, the number of retail outlets in La Natsu Bell reached 6799, compared with the number of 9269 outlets at the end of December 2018, which dropped by 26.65%. During the reporting period, there were 2470 retail outlets closed.
Data show that the gross profit of sales decreased by 1 billion 115 million yuan compared with the same period last year. La Natsu Bell mainly adopted direct sales mode. The company said that the first half of the year was a large number of stores, mainly to close inefficient shops.
China's unique fast fashion mode has taken shape.
When the "fast fashion" rises, the audience is mostly 70 and 80. Now, over the past more than 10 years, the 90 and 00 generation are completely different generations. They focus more on product and experience rather than brand effect, hoping to gain unique experience and innovative products.
According to the insiders, fast fashion has not been able to keep pace with the upgrading of consumer spending in the first tier cities, such as the North Guangzhou and Shenzhen.
Because fast fashion brands are mainly self operated stores, the pressure on store rentals and labor costs is relatively large. This also brings heavy burden to the brand, and the competitiveness of product prices is also becoming less obvious.
China's subdivision shopping platform, such as Taobao shopping, shaking the voice goods, and so on, the merchants of e-commerce platform tend to pay more attention to the needs of consumers, respond to consumers' appeals immediately, design shorter time frames to the shelves, update more products, and constantly bring fresh feelings to consumers.
Contrary to China's highly consumptive trend of electricity consumption, fast fashion pays too much attention to offline shops, and long term online vacancies are quickly filled by thousands of sellers.
Keep pace with the trend of the trend - product design display - generation factory production, China's unique fast fashion mode has already taken shape.
In the 2018 China family smart consumption report, Nelson pointed out that the second tier cities tend to be rational consumption, and the 345 line cities began to enjoy the upgrading of consumption. Thanks to the popularity of smart phones and the rapid development of electricity providers, the consumption habits of the three or four line cities are getting closer to a second tier city.
European fast fashion giants may be very aware of the threat posed by e-commerce. Fast fashion brands have to let go of their efforts to adapt to the Chinese market. H&M launched Tmall flagship store last year to win more online traffic.
Source: China Securities Journal