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Who Will Take Over The Middle End Clothing Market When The International Fast Fashion Brands Are Defeated In China?

2021/6/23 0:06:00 0

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International fast fashion brands are having a hard time in China.

H & M, which is facing serious crisis in China due to its boycott of Xinjiang cotton, recently released its latest financial report from December 2020 to February 2021. The data showed that its after tax loss was 1.07 billion SEK, and its sales volume dropped 21% to 40.06 billion kronor year on year. Helena helmersson, chief executive officer of H & M group, said that it would close 250 stores worldwide this year due to performance problems, while about 20 stores would be closed in China.

According to the data released on H & M's official website in February, as of fiscal year 2020, H & M group has opened 5018 stores in 74 global markets and 445 stores in 146 cities in mainland China, ranking among the group's top four markets in the world. Although the closure of 20 stores is not so large in number, it is enough to prove that the development prospect of H & M in the Chinese market is not clear.

On March 31, H & M issued a new statement saying that its long-term commitment to the Chinese market "remains firm" and is committed to regaining the trust of Chinese consumers. The company hopes to be a "responsible buyer, both in China and elsewhere in the world". However, in the face of the new statement, consumers of china.com are not buying it, believing that H & M is still ignoring the core issues.

After the "H & M boycott of Xinjiang cotton" incident, it has been removed from the shelves in many major e-commerce platforms, including tmall and Jingdong. Search social apps such as public comments and Baidu map can't find H & M store information. Some shopping malls even directly removed the H & M shop's door number. Huang Xuan, the former spokesman for men's clothing in Greater China of H & M, also announced the termination of the contract with the brand. This bottom-up and spontaneous boycott is bound to have a great impact on the future development of H & M in China, making it even worse for H & M, which has been in the predicament of weak growth.

However, H & M is not the first and will not be the last to suffer setbacks in the Chinese market.

Lose China's international fast fashion brands
With Dior, Chanel, Louis Vuitton and herm è It seems that China has become a frustrated place for international fast fashion brands. They may leave the market in dismay or adjust their strategies to save themselves, but the only thing that remains unchanged is that their status in the hearts of Chinese consumers has long been different. From the representative of fashion trends to the fall of the altar, they have become indispensable "flat spare tire". The decline of fast fashion brands in the Chinese market has become an established fact.
The latest example is gap. Gap, a fast fashion brand in the U.S., which has been mired in recession in recent years, is considering selling its business in China, which may lead gap to follow the footsteps of Old Navy, according to the report of Bloomberg. As a sister brand of gap, Old Navy entered the Chinese market in 2014. After that, it expanded rapidly, and opened more than 140 stores successively, and opened the first store in China in Jing'an Temple business district, one of the most prosperous business districts in Shanghai. Unfortunately, Old Navy, which has been in China for nearly six years, announced that it would withdraw from the Chinese market from March 1, 2020, and close its official website and tmall flagship store. Its first Chinese store next to Jing'an Temple has also been replaced by IKEA.

Old Navy's flagship store on Nanjing West Road

In January, INDITEX, the parent company of Zara, a Spanish clothing retail giant, announced that it would close all physical stores of Bershka, pull & Bear and Stradivarius in China in the middle of this year, so as to concentrate all resources on e-commerce channels; Last year, Dutch fast fashion group C & a sold its business in China to Beijing based private equity firm Zhongke Tongrong.

Esprit's parent company, ESPRIT, abruptly terminated its joint venture agreement with Muchang group in 2019 in July last year. The latter proposed a strategic plan to close all stores in mainland China in 2020; Also in 2020, Spanish fast fashion brand mango pressed the pause button on its China store expansion plan proposed in 2019.

Since the outbreak of the epidemic, the survival space of these fast fashion brands in the Chinese market has been compressed to varying degrees. However, as early as last year, China's fast fashion ecology has been fluctuating. In 2016, the British fast fashion e-commerce ASOs lost the Chinese market; Topshop, a brand of the British Arcadia group, which announced that it was going into bankruptcy liquidation procedures last year, announced its withdrawal from the Chinese market in 2018. In the same year, the American brand new look withdrew from the Chinese market; However, Forever 21, which once opened flagship stores on Huaihai Road and Nanjing East Road Pedestrian Street, entered the Chinese market briefly in 2008, and then left the store in 2019, which is still vacant on Huaihai Road.

  Forever 21 was originally located in Shanghai Nanjing East Road Pedestrian Street flagship store

However, H & M and Zara, who survived the first round of shuffling, did not actually do well. Taking H & M as an example, Zara, which was also listed as a boycott by Chinese consumers in the "Xinjiang cotton" incident, has only 151 stores left in the mainland market. Although Zara has significantly slowed down the speed of opening stores in the mainland of China in the past two years, it is accelerating its "escape" from the nearly saturated first tier cities and sinking itself into the third and fourth tier cities in order to obtain more potential consumer groups; Only large stores and flagship stores will be left in the first tier cities to show the brand image. For example, the brand opened its first Asian flagship store in Wangfujing Street in Beijing last year.

Zara's Asian flagship store in Wangfujing, Beijing

But these self-help strategies are pale because of a series of data. In March, Zara's parent company, INDITEX group, released its financial performance report for the year ended January 31, 2021. During the reporting period, Zara, the group's core brand, lost 27.6% of its revenue to 14.1 billion euro, its pre tax profit plummeted by 70% to 971 million euro, while the total number of physical stores in the world decreased by 117 to 2025. Zara's pace of development has slowed down not only in China, but also globally.

Although H & M has more stores than Zara, its performance in mainland China is not optimistic. As of November 30, 2020, H & M's sales in the mainland market fell 17%.

Generally speaking, fast fashion brands are still difficult to reverse their own declining trend in the Chinese market.

What did angry fast fashion brands do wrong?

Although the epidemic situation makes the situation of international fast fashion brands more difficult in China, the mainland, which is the first to recover from the epidemic, has already become the world's largest fashion consumer market. Luxury goods, cosmetics, skin care and outdoor sports brands have gained strong growth here, but "China" has not become the "lifesaving straw" of fast fashion brands.

At first glance, the frustration of these international fast fashion brands in the Chinese market is indeed puzzling, because there are the largest number of generation Z and millennial consumers, whose consumption power is very strong, and the demand for clothing with reasonable prices is increasing; With the continuous growth of national income and national economy, these unique market environment should be the basis for international fast fashion brands to usher in the "second spring" in the Chinese market. However, this is not the case. The differentiation of local demand and the rise of China's fast fashion brands and "Taobao brands" have made international fast fashion brands lose their original advantages, As a result, it has been repeatedly frustrated in the Chinese market.

"I think the primary reason for this phenomenon is the problem of product design, that is, how to localize product design. In this regard, the thinking of the design team is very important. In my opinion, many foreign brands are far from enough in their efforts to localize their products. "He has rich working experience in fast fashion brands such as bestseller, Etam and Beaumanoir   Eddie Lim told WWD.

As we all know, the core competitiveness of fast fashion brands is "fast", which requires them to be able to quickly respond to the trend of the trend, design and manufacture, supply and update quickly, so as to occupy the consumer's wardrobe with low-cost items that can best reflect the current trend.

Therefore, this determines that brands should use their own efficient global supply chain to produce standardized clothing that can face global consumers, without considering the national geographical and cultural traditions, only copy the trend captured at the fastest speed, and then put it into the global market. However, the result of this seemingly efficient but actually "lazy" approach is that some fast fashion brands can't continuously impress local consumers, especially in European and American brands.

For example, H & M and Zara's clothing sizes are too large, which does not match the body standard of Chinese people. Secondly, the color matching and printing on the design are not in line with the skin color characteristics of Asian people, let alone the dressing habits of Chinese women. On the issue of how to localize, fast fashion brands in Europe and the United States seem to have a high "educational mentality" to treat other markets except Europe and the United States.

Eddie Lim explains his view to WWD with the best seller group as an example. As the bestseller group, which owns several fashion brands such as Jack & Jones, Vero Moda, only and selected, its Chinese companies rarely directly introduce products from Denmark to home and abroad. Instead, they will adjust the products based on the needs of Chinese consumers, or train their employees to provide personalized wear suggestions for Chinese consumers.

"For example, if most Chinese women wear long skirts with shoulder straps, they will match them with a shirt or coat. But in Europe, women show their shoulders directly. Because of the company's reasons, I can't add a coat to this Strapless skirt on the publicity poster, but I will add this collocation method to the training of the staff, so that when the customers choose the strapless skirt, the sales staff will bring the coat or other clothes to provide her with styling suggestions. "

In addition to the demand differences caused by national region, cultural tradition and body type standard, social environment is also a major influencing factor. At present, most of the Chinese consumers have returned to their normal life before the epidemic, and people have been able to move and travel freely. Therefore, fashionable clothes with design sense before the epidemic have become their first choice again. However, in the European and American markets which are still in the state of epidemic blockade, home leisure style is more popular with consumers. Therefore, it is one of the keys to decide whether fast fashion brands can survive in the Chinese market.

Secondly, the fast-food mode of fast fashion brand "quantity" and "fast speed" is no longer effective at present. Chinese consumers who have been "fattened" by fast fashion are changing their consumption habits more and more quickly.

The rapid expansion of stores dilutes consumers' expectations for the brand and makes fast fashion cheaper in terms of emotional value. Many consumers even say "no discount, no buy", and behind this is the fact that the profit space of fast fashion brands is increasingly compressed. It is not a sustainable development path to clear inventory by discount. It is a problem for all international fast fashion brands to extend the period of selling clothes at a positive price, how to regain the hearts of consumers, and how to get rid of the cheap labels of products.

Secondly, the waste problem caused by mass production has also been raised to an unprecedented height. With the upgrading of consumer awareness of the new generation of consumers, environmental sustainability is being accepted by more and more people. At the same time, consumers also begin to monitor whether the brand has fulfilled its social responsibility and whether the production process is in line with humanitarianism. Nowadays, the "consumption motivation" of fast fashion brands "Kuai" and "Duo" has begun to fail. Under the trend of rational consumption and environmental protection and sustainable consumption, fast fashion brand has become the target of public criticism.

In addition, since the outbreak of the epidemic last year, the survival space of fast fashion brands in the Chinese market has been compressed to varying degrees, and consumers have left less and less budget for fast fashion brands. Instead, they are more willing to spend their limited budget on more upscale clothing brands or luxury ready-made clothes. At the same time, the quality problems of fast fashion brands that have been criticized for a long time are becoming more and more prominent with the upgrading of consumers' consumption habits after the epidemic. The current consumers no longer blindly pursue low prices and trend trends. For them, personalized design and good quality have become the primary principle for them to buy clothes.

"Consumers in their 30s may buy Zara clothing in their 20s, but as they get older, they will switch to other brands with better quality and higher prices. Now, young people in their 20s don't buy Zara's clothes, because products that lack individuality don't resonate with them. Because they didn't adjust with the market, many brands eventually withdrew from the Chinese market, "Jane Du, general manager of China International Fashion Fair, told WWD.

Rising Chinese brands holding hands with lost land of international brands

The advantages of international fast fashion brands, which have successively lost the market in mainland China, are gradually disintegrating.

The rise of China's local fast fashion brands is mainly due to the disconnection between international brands and the constantly changing and upgrading consumption environment in China, which enables domestic brands represented by ur to "take advantage of the opportunity". With stronger connectivity with local consumers, Chinese brands quickly catch up and take over the lost land of international brands.

Ur store

Urban revvo (UR), which regards Zara as a "teacher", is a representative brand to break the monopoly of international brands. Its rise is just the epitome of the transformation of local fast fashion brands. After 13 years of trial and error and growth, ur has opened more than 250 stores in China and overseas markets. Its largest store in Shanghai is located next to Lane Crawford, an old fashion department store in Hong Kong. The industrial interior design and bright floors make this ur store look much higher than the adjacent Zara store.

Ur stores in Times Square, Huaihai Road, adjacent to Lane Crawford and Zara

"High end" is a new characteristic that ur wants to give itself. Different from the fast fashion brand "emphasizing speed over quality", ur is looking for a balance between light luxury and fast fashion, taking "fast luxury" concept as its operation core. According to Li Mingguang, the founder and CEO of ur, it is to let consumers buy more superior products at a more reasonable price and break the public's impression that "fast fashion equals low quality".

With the integration of rich styles of fast fashion brands, fast updating and high cost performance positioning of light luxury brands, ur has rapidly opened up a situation among young consumers in the past two years. According to data statistics, ur opened 39 stores in 2018, 35 stores in 2019 and 38 stores in 2020, which has been maintaining a relatively stable opening speed.

Secondly, "Taobao brand" has also caused a great impact on international fast fashion brands.

They copy the international fast fashion brand's fast selling mode of "stimulating consumption with continuous innovation", and create their own set of operation logic combined with domestic mature production and supply chain system. The tens of thousands of "Taobao brands" on Taobao occupy an important position in China's fast fashion map. Compared with Zara, H & M and other big brands, their frequency of updating is even more than that.

"Taobao brand" establishes a flexible supply chain with garment manufacturing factories through its accurate grasp of sales demand. "Taobrand", which takes small orders and pursues speed, responds quickly to international trends through "production on demand" of flexible supply chain, designs and manufactures them, and finally presents them in online stores. For example, "Taobao brand" in Guangzhou can make paper patterns in half a day, which is far faster than that of brands in Beijing or Hangzhou.

There are many "small workshops" in the textile city of Zhongda in Guangzhou. They can provide services for many online Red brands and "Taobao brands" with small order demand. Fast and flexible are the capital for them to occupy the market.

Guangzhou Zhongda Textile City

"It's becoming more and more difficult for people to predict future trends due to the online celebrity economy, so brands need to take action near product launch to ensure that there is at least six weeks or less between design and launch," said a source working for a large international fast fashion chain.

"The Chinese market is greatly influenced by the speed of the industry set by Taobao and the brand price set by Taobao," the source added, "customers can choose the cheapest clothing from Taobao without paying attention to sustainability issues. This is part of the reason why international brands are not as successful as local brands in China. The focus of this fast fashion competition is still price. Consumer behavior is slowly changing, and they are increasingly willing to choose sustainable brands and pay higher costs for them. "

Roaringwild concept store on tmall cloud

Roaringwild, which has gradually transformed from "Taobao brand" to "fashion brand", is one of the representative brands that "Taobao brand" has entered the mainstream fashion circle in recent years.

In the overseas market, fast fashion cross-border e-commerce Shein, which has been founded only 13 years ago, has become the only local fast fashion company that can directly compete with international giants and mainly faces the European and American markets.

Although few people know about sheen in China, it is second only to Amazon in the popularity of American teenagers, and lululemon and Nike are left behind. Its overseas growth has exceeded 100% for eight consecutive years, and its annual revenue in 2020 is nearly 10 billion US dollars   Instagram has more than 18 million fans.

Like many "Taobao brands", Shein's popularity abroad is mainly due to China's supply chain advantages. Sheen has put her own production and supply chain in Guangzhou, so she can complete the whole process from design and production of a new product to putting it on the shelf in two weeks. Secondly, although Shein is headquartered in China, she began to use instagram and other foreign social media for marketing and publicity in the early stage of its brand, so as to establish its early foreign user base.


The development history of China's fast fashion is also a process of deepening globalization and upgrading China's consumption.

After the "Xinjiang cotton incident", the spontaneous boycott behavior of Chinese consumers actually reflects the growing sense of national pride and national feelings of consumers. As China's voice in the world structure is gradually strengthened, international brands will need to adapt to the new rules of the Chinese market. And how fast fashion brands can reproduce their glory in China, only by grasping the word "fast" can we capture the ever-changing Chinese consumers more quickly.

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