Zara And H&M'S Performance Has Been Declining. Is The Fast Fashion To Be Counterattacked?

The most talked about topic in this year's clothing industry is "fast fashion decline" and "rising tide of the country". The rapid decline in the performance of fast fashion brands, the closing of stores and the release of new vitality by brands such as Lining have formed a strong contrast.

Today, the clothing market is facing a huge change. Consumers are growing and more independent. They are no longer enthusiastic about the fast fashion brands that are low in price. While fast fashion brands still insist on the concept of "fast", they can only be abandoned by them and become more and more atrophy. Especially when the US fast fashion brand Forever 21 announces bankruptcy filing, everyone has an increasingly difficult attitude towards fast fashion industry.

Customs, bankruptcy, bankruptcy and other words frequently appear in the news of fast fashion brands. Are they really going towards the final chapter? Let's first look at the fast fashion two big brands Zara and H&M earnings data.

　 Gradual recovery of performance

Local time December 11th, Zara parent Inditex group released the first three quarters of 2019 earnings, as of the end of October, the first nine months of sales reached 19 billion 800 million euros, an increase of 7.5% over the same period, net profit 2 billion 700 million euros, an increase of 12% over the same period, gross margin of 58.2%.

Among them, the core brand Zara has become the most important driving force for the growth of group performance. Data show that as of October 2019, the number of Zara brand stores was 2139, compared to 2118 in the same period last year, but the number of Zara Kids and Zara Home stores decreased. Zara has been trying to expand its products this year, including make-up and perfume.

16 days after a week, the Swiss fashion giant H&M group also released the fourth quarter earnings report. During the period, H&M sales reached 61 billion 700 million kronor, an increase of 9% over the same period. The annual net sales reached 232 billion 800 million Swedish kronor, a 11% increase compared with the same period last year.

It is worth noting that H&M has achieved growth in the third quarter, which is the first time that the group has realized profit growth after the eight consecutive quarterly decline. H&M said in a statement: "this year's black Friday is a week late last year, that is, before the end of November. Therefore, some large online sales of black Friday will not be recognized until December. The amount involved is expected to be about SEK 500 million. "

Compared with the data, we can see that the performance of the two fast fashion groups is picking up. After nearly a year of sluggish environment, last year's fast fashion performance data can be described as gloomy. Investors have lost much patience. They also sigh. After a year of adjustment and transformation, we have finally seen the growth of counterattack by the two giants of H&M and Zara.

Online business focus

For the recovery of performance, Inditex Group Executive Chairman Pablo Isla said that it mainly benefited from the product innovation of its brand, and the high quality service and experience provided by online and offline stores under the support of digital technology.

It is understood that in order to further upgrade the digital business, the Inditex group has set up a new building Arteixo headquarters for the Zara business department, covering an area of 63 thousand square meters, equipped with photographic and video production facilities, and adopting the latest eco environmental technology in building methods and subsequent waste and energy management.

For Zara's online business, the group began to focus on the rapid development of the global online market. As of November 2018, Zara's global e-commerce website has opened up 106 new markets, and Zara has an online platform in 202 markets worldwide. In September and October this year, Zara launched new online stores in South Africa, Philippines and Ukraine.

In addition, Inditex group began to adjust the offline stores, gradually closed department stores, and integrated the brand store network into "differentiation, optimization and upgrading".

Inditex group announced in August last year that the online shopping service of all brand products of the group will be opened to the world in 2020.

After slowing down its performance, H&M group also began to focus on developing online sales channels to expand customer groups. Not only the H&M brand, H&M group has extended its other brands to the online business.

Last year, H&M entered the Tmall platform of China, and the electricity supplier performance achieved four consecutive quarters of growth. In August this year, its brand &Other Stories officially entered the Chinese market and opened the official flagship store of Tmall brand.

The same is in August, H&M and India fashion e-commerce Myntra cooperation, further enhance its share in the India electricity supplier market, help in the growth of group performance, achieve profitability.

It is noteworthy that H&M group has carried out the "renting clothes" business with its high-end brand COS and the domestic rental brand.

The electricity supplier business is becoming one of the key development businesses of the brand, not only because its huge traffic volume is also wide because of its wide audience, but also has great help for brand development of new customer groups. Nowadays, not only fast fashion brands, but also luxury brands have begun to attach importance to the market of Chinese electricity suppliers. Through this way, we hope to win the millennial generation, a consumer group deeply influenced by the Internet.

The fast fashion that continues to fade is urgently needed by brands to solve the problem of fast fashion, and also need new products and business models to seek new growth momentum. H&M group and Inditex group seem to find their own way out in the new transformation, and have achieved certain results.

Author: Qin Jin Mei