Fast Fashion Brands Up To 40%-60% Gross Margins, High Profits Comparable To Apple Corp

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"The trend is pulling" luxury "down the haughty stand, so that the general public can enjoy the feast of fashion.

Against the backdrop of global demand, some of the old brands are weak in stamina, while fashion fast food products are still on the upswing.

One of the most prosperous shopping centers in Beijing, Xidan business district, has gathered the world's major fashion brands, but the largest and the largest number of shoppers are probably ZARA.

These two fast fashion brands, first of all, have to be patient in shopping here, because queuing in front of the fitting room and the cash desk is often the case.

Fast fashion, in

The boundaries are generally regarded as "cheap fashion", mainly for white-collar workers and young people.

In the view of Wang Wei, President of the new department store chain, the so-called "fast fashion" has two core elements besides "fashion": fast speed and friendly price.

Wang Wei: we will find that many goods may not be available in two weeks, and a new wave of goods will come up. This is very difficult for many traditional Chinese department store clothing brands.

Another feature is that its price is firmly controlled in the middle or even slightly lower range, which makes it easy for people to buy.

Ortega, the boss of ZARA, often says that "fashion business is like selling fish, and a jacket that is fashionable and fashionable is like a fresh fish. It sells fast and costs a lot."

So how fast is fast fashion?

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The idea that products can be sold to consumers can be sold for more than 6 months, but fast fashion brands usually only need two weeks. The difference between them is 12 times. The latest trend of fashion can quickly catch up and rush to the market.

In a sense, fast fashion is not the creator of the trend, but the quick responder. Their designers are flying trapeze, and get inspiration from various fashion conferences, so that they can design enough styles every year.

Take ZARA as an example. At least 12000 types of styles are to be launched in a year. Often the latest Dior new clothes have just appeared on the Paris T stage. After two weeks, the fashionable men and women in other cities can be in.

The window shows that fashion elements have become ready-made clothes.

Economist Lang Xianping summed up this business model as "abandoning innovation and maintaining fashion".

Lang Xianping: they don't have famous designer. The designers team of hundreds of people are all more than 20 year old young people, because they don't need to rely on designers at all, that is, the idea of giving up innovation and being a quick responder to the market, so the products are particularly fashionable.

Rapid response, on the one hand, can lead the trend, and on the other hand, it ensures that the cost control is very low.

The turnover period of fast fashion clothing has been reduced from 6 months to two weeks, and the storage cost has been reduced by more than 90%.

Therefore, although it belongs to the labor intensive clothing industry, fast fashion is not dependent on cheap labor force.

ZARA now has 80% of its capacity in Spain and only 20% in Asia.

Lang Xianping analysis, in fact, the proportion of labor costs in the fast fashion industry chain is only 2.5%.

Lang Xianping: when we shout

When the industry is in pition, the highest strategic guiding ideology is to compress time, fast and fast, and greatly reduce the industrial chain. Only when controlling the whole industry chain will the product become cheaper and the product will be fashionable. When you reduce the 6+1 industry chain extremely compressed, the labor cost is not important at all.

One extreme example of this is ZARA's 20 mile production base in the 200 mile radius of Spain.

Cutting and printing center, 500 sewing factories.

ZARA has spent billions of euros digging underground pportation pipelines and pporting cloth with high pressure air, which has greatly improved the efficiency of logistics between factories.

It is with these elements that fast fashion brands have maintained a trend of upturn in the global demand slump caused by the current financial crisis.

In addition, the fast fashion brand's gross margin of up to 40%-60% is even better than that of high-tech companies such as apple.

In this regard, China has become an important link.

In 2006, Spain's fast fashion brand ZARA entered China. Now it has opened more than 150 chain stores in more than 40 cities across the country. In 2007, Sweden's H&M came to China, and now there are more than 70 stores. The GAP of the United States is late, and it will enter China in 2010, but by the end of this year, the number of stores will reach 35.

Wang Wei said that they are speeding up the pace of deployment in China.

Wang Wei: two or three years ago, they were mainly in the first tier cities of Shanghai and Beijing and good second tier cities. Now the speed is much faster, and they even begin to enter the three line cities.

At the same time, the popularity of fast fashion has also led to the prosperity of many business circles. Fast fashion brands often come together.

Therefore, Wang Wei said that the number of houses attracted, in a sense, has become a successful logo of a commercial real estate.

Wang Wei: this very obvious, fast fashion brand is one of the most popular main properties of commercial real estate in China. From Wanda Plaza to local commercial facilities, we strive to welcome the fast selling brand as the main business. Their successful settlement has a good help and interaction effect on driving the age passenger flow.

The international fast fashion brand has swept China, and it has also affected the market share of the local clothing brands. However, Ma Gang, an apparel industry observer, said that the more significance of fast fashion entering China is the subversive inspiration from the business mode and business philosophy.

Ma Gang: People's understanding of consumption has also been improved. Domestic garment enterprises learn from the management and marketing experience of some foreign garment enterprises, and from the former few styles to many styles in the planning of goods, the single brand extends to many brands before, covering more age groups and consumer groups.