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Fast Fashion "Life And Death Bureau"

2020/1/16 16:47:00 0

Fast Fashion

In January of this year, all the stores of fast fashion brand Zara in Wuhan entered a "closed" state. Although the official response was: the store adjustment did not give a specific opening time, and in recent years, because of the poor performance and declining profits of Zara, many of the stores closed in China, so that the market had to raise the question of "Wuhan no longer has Zara".

The unknown fate of Zara in Wuhan is just the epitome of fast fashion in China.

Ten years ago, the international retail giants entered the Chinese market one after another, and quickly occupied the market share of local clothing brands with the advantage of low price and rapid change. In the "golden ten years" known as the fast fashion brand, they are the meat and potatoes of the shopping center. The introduction of several fast fashion brands constitutes the core area, which is the "golden section" of the shopping center.

It thrive and thrive.

In the past two years, the aura of fast fashion brand is no longer, the attitude of consumers has changed greatly.

In April 2019, Forever 21 announced its withdrawal from the Chinese market. In July of the same year, Gap group announced that Old Navy will also be withdrawn from China this year, plus the fate of TOPSHOP and New look, which made it difficult for the industry to call fast fashion brands, and the crisis alarm in China was ringing.

After the fast fashion "golden age" quickly passed away, it also led to the industry's reasons for the fast fashion recession, the change of consumer behavior patterns, and the reconsideration of the shopping center's attitude towards "fast fashion".

1 the fast fashion giant

Three years ago, H&M will be closed at a store in Xidan, Beijing's core business circle. This event is seen as the "hot and cold" Feng Shui ridge of fast fashion brand, releasing the signal of decline in China.

It was also in this year that H&M appeared to decline for the first time in more than 20 years.

According to statistics, during the period from 2012 to 2016, H&M kept its operating profit rate from 18% to 12.8% at the speed of opening a new store for 4 days. Finally, in order to guarantee profit margins, it abandoned the target of adding new 10%-15% stores every year, and the store of Beijing Xidan Joy City was closed at this time.

However, the self-help method of closing stores did not save H&M from fire and water.

By 2018, sales of H&M group increased by only 5% compared with the same period last year, and the bigger trouble after the growth stagnation was the daily inventory. The data showed that the stock size increased by 13% over the first half of last year, reaching 36 billion 333 million kronor (about 25 billion 600 million RMB).

The fate of H&M is not an example. Fast fashion in 2017 has been sluggish and sales of brands have slowed down. The price and valuation of many fast fashion brands have fallen.

Zara's parent company Inditex group's earnings report shows that since 2016, profitability has been shrinking, gross profit margins have fallen for four consecutive years, and the price of clothing has fallen by 10% to 15% on average. This dragged down Inditex group's net profit in 2018 by only 2%, to 3 billion 444 million euros.

Another fast fashion giant Forever21 was defeated in 2019, saying goodbye to consumers who have accumulated in China for 5 years, and have withdrawn from stores in Tianjin, Hangzhou, Chongqing and Taipei. Finally, the landmark shop on Wangfujing street was not spared, even in the flagship store of Jingdong and Tmall platform.

In recent years, the fast fashion brands that have lost the Chinese market in recent years include Topshop, ASOS and Marsha general merchandise. Although GAP and MANGO have not yet given up, they have closed many stores.

It can be said that in the golden period of the past ten years, fast fashion brands have been expanding rapidly, but when the market has reached a high degree of saturation, they are faced with performance diving and survival difficulties.

This is a sign that the good days of foreign fast fashion retailing are gone forever.

2 defeat internal causes

The reason why it is called fast fashion brand is the brand name of foreign retailers.

Take ZARA as an example. Because of the strong capability of supply chain management, it takes only 5 weeks from design to production to produce products from factories in Southeast Asia, which are transported by air and then sent to the world from Barajas airport, Spain.

Consumers usually see the new products in the luxury shopwindow in the first 1 months. After 1 months, the "similarity" appears in the stores of fast fashion brands, while the traditional retailers' reactions and production chains take 6-9 months.

The fast fashion brand's response and high turnover can quickly respond to the back end and fully grasp the pricing power. This is the key to fast fashion's global stability. This breakthroughs business mode, with fast response and high turnover built moat, firmly occupy the minds of consumers in the fast fashion golden age.

At that time, the local clothing brand was highly fragmented because of the market, and each fought against itself, and was beaten by foreign retail brands.

It's hard to say where the fast fashion brand's decline node is, but in the past decade, China's demographic dividend has made the fast fashion brand in the global position. In recent two years, the adjustment of Chinese consumers' consumption consciousness and consumption structure has frequently blocked fast fashion.

In the "big failure" of the fast fashion brand, pushing it first to the cliff is also a factor of "fast", because it is labelled "cheap" and "quality is not up to standard".

As the saying goes, "radish is fast and not washed", the quality problems of fast fashion brands are frequently exposed.

Relevant information shows that the Forever 21 brand has been punished repeatedly for "adulteration, adulteration, adulteration, or improperly qualified products". H&M also has frequent quality problems in China. Since last year, it has been punished 5 times for quality problems.

For a time, the interest and confidence of young consumers in the 1990s after 00 rising to ZARA, H&M and other international fast fashion brands gradually diminished.

Sensible Chinese consumers no longer blindly pursue western fashion, and the demand for quality is gradually improving, and the market influence brought by consumption upgrading is being released.

Consumers no longer pay the bills, and the burden of physical shops is heavier. Because these foreign fast retailing fashion brands are mostly self owned stores in China, the pressure of store rentals, labor costs and so on are all the straw that crush camels, which has brought a heavy burden to the brand.

However, the brand side is aware of the fact that it is still changing products at a faster speed, resulting in backlog of inventory, and ultimately has no choice but to discount and clear up.

Recently, a number of fast fashion brand stores have been visited in recent years. There are not many shops selling short sleeves in the cold winter months. The clutter shopping experience makes consumers stop staying longer, and the brand image has also become a "low end" positioning.

In 2018, it was further reported that over the years, H&M has been recycling the clothing of consumers in the name of public welfare, and has burned the unsalable clothes simply and roughly, and has destroyed 60 tonnes since 2012.

The good days of fast fashion are over, but the bigger crisis comes from outside.

3 defeat external causes

Once the commercial real estate "beloved" is becoming a hot potato.

A number of business executives said that in 2017, fashion was coming into the "exhaustion period", and its demand for shopping centers had not been as popular as ever. In addition, as a commercial complex, it is hoped that the brand can play a role in the drainage of its shopping malls, rather than the other way round.

In the era of competition, commercial complexes rely on foreign fast fashion retailing brands to drain them and help them develop faster in China.

The responsible person of Joy City revealed that when the fast fashion brands first entered China, the cooperation conditions were very harsh. They not only had to have the best pavement, but the rent was almost zero, even the sales discount point was less than 10%, almost equal to the luxury goods. And in the department store, the brand name will be 20%.

But nowadays, fast fashion brands have encountered problems through the rapid development of these years. In the current commercial complex overdraft the commercial value of itself, all kinds of formats are homogenized.

On the one hand, the fast fashion brand is being abandoned by the real estate developers. Because it can no longer drain the commercial complex, the drawbacks of the business mode are also revealed, and its brand can not become the core. On the other hand, the fast rising of Chinese local fast fashion brand is gradually causing the impact.

According to China clothing net report, from 2016 -2017 new well-known fast fashion brand stores new situation, domestic fast fashion brand hot wind and MJStyle in 2016, respectively, with 160, 101 expansion speed ahead of other major brands.

By 2017, MJStyle had expanded its 200 stores faster than H&M, UNIQLO, ZARA and other international brands, occupying a certain market share.

In addition, by the deep influence of the electricity supplier, the domestic clothing brand has been gradually recognized by consumers. At the same time, a number of Internet brands have been promoted gradually, and are widely touted by consumers.

E-commerce platform vendors, because they know more about consumer demand, respond to consumer appeals immediately, design shorter time frames to the shelves, update more products, and constantly bring fresh feelings to consumers, do more quickly than fast fashion brands.

At this point, fast fashion is fast and unable to get up.

From the internal causes, the weakening of supply chain advantages, the backlog of inventory and the huge cost of rent and labor, to the external cause, the rise of local clothing brands and electricity providers is gradually dragging down the foreign fast fashion retail giants.

4 fast fashion "save yourself"

The fast fashion brands that have experienced the "wave crest" are naturally unwilling to degenerate, and transformation has become their most urgent topic.

Industry analysts predict that the fast fashion brand will continue to accelerate the pace of adjustment in the future including joining the electronic business platform, launching new high-end brands and playing joint name cards. The brand side needs more innovations and changes to meet the needs of the market to the greatest extent.

In November 2018, Zara built a 90 thousand square meter logistics center in Spain and opened a new retail store with Tmall in China. H&M, which had never contacted the electricity supplier, began to cooperate with Tmall. UNIQLO announced that it was transforming to the "digital consumer retail companies", and from the design, production, manufacture, sales to the whole staff work mode into digitalization.

Whether to go online or digitalized, fast fashion brands eventually want to drain through the offline stores to the Internet for full channel linkage. However, such online and offline channels do not significantly slow down the overall industry's decline.

The electricity supplier is not the only way to respect the times. Insiders also pointed out that although the e-commerce platform helped to solve the inventory problems to some extent, the new logistics cost brought by the new e-commerce business will also test the integration power of the supply chain.

At the same time, the fast fashion brand will also aim at the sinking market.

Because of the difference between the first tier urban consumers who care about the quality, the consumers of the three or four tier cities are more sensitive to the price, and more suitable for the fast fashion brand users' group match, which is bound to have larger space. But the other risk of the sinking strategy comes from products and pricing. After all, the new frequency of fast fashion in the three or four line cities is not high, resulting in its "quick updating, high performance price ratio" characteristics have not been fully realized.

Besides, many fast fashion brands have launched their own secondary line products on the road to self-help.

ZARA set up an independent retail store for children's clothing in Britain, mainly selling household goods and interior decorations. GAP's first independent children's clothing store in mainland China opened its doors in Yintai, West Lake; H&M launched a more expensive high-end clothing brand; Forever21 went to the beauty industry and set up a beauty store.

In addition, in order to further publicize the opening of new stores, C&A has opened a flash store in its store area to attract more young people's attention.

After this tossing, the trend of fast fashion brand "rout" has been warmer.

According to the financial report, in the first half of 2019, the sales of ZARA parent Inditex group increased 7% to 12 billion 820 million euros, and the net profit of operating profit increased 10% to 1 billion 550 million euros. The two index growth broke the record of Inditex group's semiannual growth rate.

H&M in the third quarter, group sales rose 12% over the same period last year, about 6 billion 520 million US dollars, net profit rose 25%, or about 3 billion 180 million US dollars, gross profit increased 13% US $3 billion 180 million, gross profit margin also increased, from 50.3% to 50.8%.

Nowadays, the fast fashion brand collectively falls into crisis. Under the changing market, who can firmly grasp the current taste of consumers and continue to bring forth new ideas in order to win the hearts of consumers for a long time?

The market will not lip sync, but enterprises will really fall. Whether these fast fashion brands that are "self saving" can return to the peak will need time to test.

Perhaps, short "labor pains" may also be the start of the next round of outbreak.

Source: Soul beast ID/lingshouke Author: ten li

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