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Fast Fashion Giants UNIQLO And Zara Close Stores Frequently. Where Is The Future Market Trend

2020/12/9 10:56:00 0

China Service

In the field of fast fashion, brilliance begins with insight into big data, while failure comes from indifference to digitalization. In this process, UNIQLO has broken the ceiling of fast fashion with scientific and technological innovation, while Zara has reexamined the survival law on this track, and the rise of local fast fashion has drawn a little unclear flash But it is certain that in the digital age, the "fast" of fast fashion is being redefined.

First look at the essence:

1. From the perspective of the long tail theory, fast fashion is very similar to pop music in the 1980s and 1990s. Therefore, we can't unilaterally say that the era of fast fashion is gone, just as we can't say that pop music is dead.

2. An architect once described the relationship between technology and Design: good products need to present new materials and technologies in a form consistent with their characteristics. This requires two factors: one is the designer's creative exploration, the other is based on the development of science and technology for the application of new materials. This relationship is particularly evident in the field of fast fashion.

3. For consumer insight, an important implication of the long tail theory lies in consumers' participation in commodity production. This changes the definition of fast fashion and the rules of the game.

When we focus on the conclusion that the age of fast fashion is over, we ignore the new heights created by technology for clothing retail innovation.

This new highland is the first to think of UNIQLO. Although UNIQLO has been flaunting its technology positioning, its spa business model still makes it difficult to get rid of fast fashion track, and is often compared with Zara and H & M. It is undeniable that UNIQLO's focus and breakthrough in technology has broken its ceiling in fast fashion design, products and sales. More basic clothes, guaranteed quality, low price "Small amount and more" which is good at cost performance makes it unique in the field of fast fashion.

But UNIQLO seems to be just one exception to the fast fashion industry. With the withdrawal of fast fashion brands from the Chinese market in recent years and the help of this year's epidemic situation, the development of fast fashion in China seems to have entered the embarrassing situation of "no entry". After digital transformation has become a well-known effective strategy for retailers, how to enter the game will push fast fashion brands into another "swamp" that is hard to get out of.

Before lamenting that the golden age of fast fashion is no longer around, let's review how fast fashion created the golden age in the Chinese market?

Why does fast fashion slow down

For a long time, the fast fashion industry has been an attractive "golden land" for Chinese retail. With the import of foreign popular culture and the rise of fashion trend, its economic scale has set up the wind vane of Chinese fashion trend. The fast fashion brands such as Zara, H & M and UNIQLO have also become the enlighteners of Chinese clothing industry to make quick response to fashion.

But from an economic point of view, fast fashion brand subverts the fashion industry, first of all, it reduces the transaction cost of this industry. If today's development of e-commerce forces fast fashion brands into a dead corner, then fast fashion brands' rapid response to big data in those years was to send them to the top of the pyramid of the clothing industry.

Zara from the design, production, to the finished products appear in Paris, Tokyo and other exclusive stores, the time is not more than a month. The typical characteristics of Zara's fast fashion mode are more design, less shipment and rapid product iteration.

In economics, "cost-benefit analysis" is one of the most common and basic analysis methods. The profit of any enterprise is the income minus the cost, so if an enterprise wants to increase the profit, there are only two ways: increase the income or reduce the cost. Zara's model tells us that the effective way to combine the two is to compress the supply chain and let the products arrive in the store quickly.

With the rise of fast fashion, there is also the transformation of China's retail formats. Department stores are gradually eliminated by shopping centers, and new forms of commercial real estate are gradually occupying C position in China's real commerce. As long as there are new shopping centers in the city, Zara must be introduced into the city before the initial success of investment promotion. (although this "status" was later replaced by UNIQLO.)

Subsequently, Zara attracted a large number of fast fashion "younger generation", such as rachabel, SEMAR, ESPRIT, urban revvo Unfortunately, with the exception of urban revvo, the first three failed to escape the curse of fast fashion. In 2019, La chapel lost 2.166 billion yuan and closed 4391 stores; ESPRIT also closed 56 stores in July this year, fully withdrawing from the Asian market. Before that, fast fashion brands such as Forever 21, Topshop and new look have also withdrawn from the Chinese market.

When clothing is called fashion, its retail concept as a necessity of life has been weakened. Since it is not a necessity, when the external environment suddenly changes, it will be subject to a natural impact.

There is no doubt that the epidemic situation is not the most direct thrust for the end of fast fashion in China, but e-commerce. With the low price attacks of e-commerce in the field of clothing, the fast fashion mode created by Zara, the originator of fast fashion, can no longer leverage the industry leverage based on digital technology.

How technology affects design

An architectural designer once said that only new materials and technologies can catalyze large-scale design progress, relying only on the designer's own aesthetics and creativity, many of which are just attempts and explorations of stylization.

From this point of view, Liujing is very original in defining UNIQLO as a technology company rather than a traditional clothing retailer. In September, UNIQLO's parent company, FMCG, issued a statement saying it had become the controlling party of innovation factory, a joint venture, with a 51% stake in the latter.

Innovation factory is an innovative factory focusing on the research and development of knitting technology. Its parent company used to be Shimei Manufacturing Institute, a Japanese knitting equipment company. The latter occupies the first place in the field of computerized horizontal knitting machine in the world. In 2016, FMCG and Shimaji jointly invested 400 million yen (about 26 million yuan * *), respectively holding 49% and 51% equity of innovation factory. In the same year, UNIQLO opened its R & D center in Paris. In the following year, fast retailing group launched 3D u-knit seamless three-dimensional knitting technology. The knitted garments produced have good fit and comfort, which has attracted the attention of the industry. Classic technology products, such as HEATTECH series, uld advanced light down jacket, airism underwear and so on, have been continuously upgraded and become UNIQLO's competitive products.

In this year's fair, UNIQLO set up the scene of "on-site production of knitwear" in the exhibition hall, which stems from the mastery of wholegarment seamless knitting technology. As a clothing brand entering the Expo, UNIQLO has demonstrated its great efforts in technology enabled products in the past few years.

Technological innovation and upgrading is the key to UNIQLO's continuous growth. A well-known principle in the design field is that good products need to present new material technology in a form that conforms to its characteristics. This requires two factors: one is the designer's creative exploration, the other is based on the development of science and technology for the application of new materials. Obviously, UNIQLO's co branding with designers in recent years is an explanation of how design is grafted into technology.

Zara is stepping up the design bottleneck of the industry. In 2016, the sales volume of INDITEX, Zara's parent company, increased by 12% to 23.31 billion euro (about 172.9 billion yuan * *), and its net profit increased by 10% to 3.16 billion euro (about 23.4 billion yuan * *), both of which reached new highs. In this year, Zara's market share in China is also expanding at the same time.

Fast fashion, similar to the "long tail" of pop music

From the perspective of science and technology development, the development track of fast fashion is very similar to pop music in 1980s and 1990s. Thanks to the role of record sales and the pop music rankings created by it, the era of pop music records is not only a hot trend, but also has to go down with the rise of digital music technology in the new century after more than 20 years of glory. In 2001, iPod came out, and then the story is familiar to everyone.

In 2004, a CEO of a digital music website asked a media person who is familiar with Internet technology: "how many of the 10000 albums included on our website can be on demand at least once a quarter?" According to the "two eight rule" of traditional economic logic, the answer should be 20%, that is, 20% of the hot products bring 80% of the sales. But the truth is, 98% of the albums on the site are on demand once a quarter. This answer triggered the deep thinking and research of this media man.

After examining all the data of Internet e-commerce, the media man found a big rule of Internet Economy: since the Internet has greatly reduced the cost of attention, it is likely that people will pay attention to the "tail" of the normal distribution curve, and the overall benefits will even exceed the "head".

This is the "long tail theory" put forward by the media man, Chris Anderson, the former editor in chief of Wired magazine.

In the "long tail theory", a point of view in line with the current economic law is: in the Internet era, if enough non popular products are combined together, a large market comparable to the popular market can be formed.

Using Anderson's "long tail theory", Google has built an advertising model for small and medium-sized business owners; Microsoft has extended the long tail of video games to small and cheap game fields "Long tail theory" has become an iron law of commercial operation in the Internet era.

When Anderson proposed the "long tail theory", Taobao had just been established for a year. Five years later, Taobao has become a comprehensive sales platform for China's * * with an annual trading volume of 2083 billion yuan. It was also in this year that UNIQLO opened an official store in tmall (then called Taobao Mall) for online marketing.

There is no doubt that UNIQLO is one of the enterprises that started digital marketing earlier in the retail industry. This early adaptability makes it more resistant to the impact of this year's epidemic than other fast fashion brands. UNIQLO's online channel is still performing well despite a 12.3% year-on-year decline in total comprehensive income this year. For the whole year (from September 1, 2019 to August 31, 2020), online sales reached 107.6 billion yen (about 6.88 billion * *), a year-on-year increase of 29.3%, and its proportion of revenue rose to 13.3% from 9.5% of the previous year.

Compared with UNIQLO, Zara's adaptability in this respect is slightly slower. In theory, Zara always does not like to use the business of a third party, and joining tmall was also a matter of 2014. Moreover, it did not deeply bind with tmall, that is, it did not participate in joint marketing activities such as "double 11" and "super brand day". Until 2018, Zara and tmall cooperated to open new retail stores to strengthen online channels.

The change of Zara high cold marketing is particularly obvious this year. Not long ago, the parent company of Zara, INDITEX group, announced the launch of digital transformation strategy. It plans to invest 1 billion euro in digital channel construction and 1.7 billion euro in technology investment for channel integration. It is planned that by 2022, online sales will account for more than 25% of total sales (compared with 14% last year).

New definition of "fast" by local fast fashion

Another is the significance of consumer's market segmentation. In the era of scale economy, producers hold the initiative from product production to consumption, and consumers are only one part of "providing financial support". Now, when the digital economy makes information asymmetry smaller and smaller, consumers are no longer a single information receiver, and their intervention in the production of products is also becoming a new way of product circulation.

A typical fast fashion "long tail" product is the peak state extreme slippers that caught fire last year. As a sports brand, peak will produce slippers because in the interaction with consumers, it is found that consumers have a great demand for the waterproof function of sports slippers. As a result, peak first applied it to slippers after developing a new scientific and technological material, state pole, and became a big fire item in 2019.

Domestic brands with similar experience with peak include Taobao shop "Lady Qian Xueli customization" and "ASM Anna". On the day of "double 11", the sales volume of women's wear in the flagship store of UNIQLO tmall exceeded that of women's clothing in UNIQLO's tmall flagship store, and became the top two women's clothing turnover on Taobao's tmall platform.

One of the important inspirations of the rapid rise of China's small and medium-sized fast fashion brands is that they are "very close" to the target consumer groups, and they are more likely to obtain the preferences and needs of the minority groups, and reflect their preferences in their product design and planning.

In Anderson's long tail, there will be a new theory of supply and demand

Therefore, for today's fast fashion, "fast to the store" and "quick response to fashion trends" are no longer the main "fast mode". Today's new definition of "fast" of "fast fashion" is to let new products quickly face consumers and get quick feedback from consumers.

This also means that the market segment will usher in a new outbreak period. The supply chain supply of rhino factory for small and medium-sized fast fashion enterprises is another rapid response to "long tail" products and niche markets. Taobao IFashion's direct role is to let small and medium-sized fast fashion stores form brand awareness among consumers as soon as possible.

In terms of brand awareness, UNIQLO has been deeply engaged in the brand concept of "lifewear suits life" for five years. By holding exhibitions, publishing magazines, discussing designers' thinking about life and consumption upgrading, UNIQLO is making up for the shortcomings of "lack of sense of design" which has been criticized all the year round with the help of CO branded products. At the same time, UNIQLO is sending a signal to consumers: clothing is not a patent of fast fashion, but a necessity of life.

In 2018, Zara launched the "super brand day" on tmall. For the first time, Zara signed a star as the spokesperson to try to connect new young consumer groups. Although Zara has always emphasized "not relying on third-party platforms", with the rapid rise of China's digital economy and the ubiquity of competitors, Zara has to change its survival rules after a large number of shop closures.

INDITEX group, Zara's parent company, announced this year that it would launch a new "2022 horizon" growth plan, with an investment of 2.7 billion euro to reshape Zara, especially in strengthening the consumer experience. It is reported that INDITEX will develop a proprietary digital operation system, INDITEX open platform, to ensure the accuracy and immediacy of the business model. While strengthening the interaction with consumers, it will improve the functions of online store inventory inquiry, online purchase to store pickup, and direct payment purchase of APP in retail stores, so as to complete the omni channel business model.

Focusing on the individual needs of consumers and allowing consumers to participate in the production of products is another implication of Anderson's interpretation of "long tail market". This will usher in the era of active acceptance of people. Or, as Anderson said, Marx was the prophet in this respect: "in this extremely rich era, anyone can achieve in any field he likes Hunting in the morning, fishing in the afternoon, raising livestock at night, and talking about current affairs after dinner... " Of course, buying your favorite clothes and creating your favorite fashion is no exception.


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