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Fast Fashion Brand H&M Enters China'S Two Or Three Tier Cities

2013/7/22 18:19:00 19

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Less than P, as of July 20th, the number of H&M, a fast fashion brand in Sweden, has reached 146 in China for six years, which is in line with its "fast" characteristics.

with the large scale entry into the two or three tier cities, the overall sales performance has been continuously improved. However, due to the differences in geographical and consumption levels, it is not easy to go well in the two or three line market.

rapid expansion

July 20th at 10:00 a.m., Wanda Plaza, Changan, Dongguan, Guangdong, H&M new store opens.

"Super value surprise": designated women's blouse 39.9 yuan, designated men's < a href= "http://www.91se91.com/news/index_f.asp" > shorts < /a > 49.9 yuan.

The first 50 customers will receive a promotional card worth 50 yuan.

This is the preheated slogan of H&M, and similar information often appears on micro-blog's official micro-blog.

This is H&M's 146th store in China. In July 18th, two days ago, another new store opened in Nanjing's P square.

This speed seems to coincide with its "fast fashion" logo.

The plan to enter the Chinese market began in 2006.

Niels Wenger Vinge, the then H&M investor relations officer, said that the reason why he chose to open the first Asian retail store in China was: "China is developing very fast. This is an exciting market and has great potential." (Nils)

In April 2007, H&M opened its first store in Shanghai in P.

it is not difficult to understand the choice of H&M. "This is an inevitable trend. China is an emerging market after all, and everyone wants to get a slice of this. It must be part of H&M's international strategy," an anonymous industry insider told reporters.

on the other hand, Spanish ZARA, which is also a fast fashion brand, has entered the Chinese market in 2006. As a competitor, H&M is also unwilling to lag behind. "The entry of ZARA will definitely play a role in H&M, and ZARA will also perform well after entering the market, which may further strengthen H&M's determination," the industry further pointed out.

"P" is also from then on, the international fast fashion brand has gradually entered the Chinese perspective.

A href= "http://www.91se91.com/news/index_c.asp" > shoes and clothing industry < /a > independent commentator Ma Gang in her "shopping malls merchants change road" reflects this trend: "around 2002, the international popular brands, domestic products, such as Nike, JACK&JONES, BELLE, 2007, fast fashion is popular; 2012 or so, luxury, light luxury hot."

When p entered China in 2007, the number of H&M shops increased year by year.

According to the rough data of the annual report of H&M group, the number of shops opened in China has increased by more than 60% per year. In some years, it has even increased by 100%, which is obviously higher than the annual growth rate of H&M stores 10%-15%.

In 2013, H&M increased its global store opening plan from 325 to 350, most of which are in China and the United States. P

According to Peng Bo's report in February this year, H&M CEO Karl-JohanPersson expects China to replace Germany as its largest market, and will open more stores in the Chinese market than any other country in the world.

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"continuously expanding new stores can improve overall sales performance. Such a move will help to achieve the annual sales target of H&M," the industry said.

in addition, the fact that consumers are less loyal to fast fashion brands also allows H&M to expand channels and increase market share as far as possible.

In the 2013 Chinese shopper report released by Bain management consulting company, shoppers usually tend to try multiple brands, so if they want to build a strong brand, they must buy as many consumers as possible.

P Bain global partners, Lena believes that brands need to ensure that their brands enter the "list of shoppers" and ensure the perfect store execution. Therefore, it is very important to improve the coverage of retail terminals in various channels.

At the same time, the report also pointed out that "in the future, the development of brand in China will also be more dependent on the market share of other countries as it is in other developed countries."

in the choice of market, H&M obviously put more hope in the two or three line city.

According to the data provided by H&M group to new financial journalists, as of July 18th, the total number of stores in two or three cities in the mainland was 70%, which is more suitable for people's expectation of the potential of the two or three tier cities.

a magazine has predicted that by 2020, 66% of China's middle-income consumers will come from a large number of small and medium-sized cities.

Such a huge market is obviously not to be missed.

Du Yanhong, a researcher in the retail industry of CIC, also told the new financial reporter that H&M actively layout two or three line cities. On the one hand, its operating cost is lower than that of the first tier cities. On the other hand, the consumption demand of the two or three line cities is constantly being released, so that the cake of two or three line urban residents' consumption upgrading can be divided.

after the micro-blog shop in Dongguan, there are many reviews like "when can Huaian have H&M stores?" "when Luoyang has" and "should be opened in Ningxia", such a request will make H&M layout faster for two or three line cities.

official micro-blog: "we are looking for you who are passionate about fashion! Jinhua, Fuzhou, Jinan District, Baoding (new urban district), Hohhot (Huimin District), Luoyang (West Industrial Area), Wuxi, Ningbo (Haishu area) are recruiting sales consultants (full time and part-time). The news has been made many times in two months.

Perhaps everything is already in preparation.

store sales decrease /p >

The "growth target" on the official website of P > H&M is described as follows: the number of stores grows at 10%-15% per year and increases the same store sales (comparable unit sales).

in recent years, the growth rate of stores has already reached and exceeded the target, accompanied by the increase of total sales year by year, but the data of same store sales are not so satisfactory.

Cheng Weixiong, vice president of P, is now vice president of Bosideng International Holdings Limited. It seems that there are many department stores and commercial squares open every year in the first tier or two or three tier cities. Therefore, the growth of stores and total sales is not difficult, "he told the new financial reporter." 8.59,0.00,0.00%

data show that in the first half of this year, Wanda Group has developed 18 Wanda Plaza, and is expected to open 13 Wanda Plaza in the second half.

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By the end of 2012, in the existing 23 million square meters of land reserve, the commercial property occupied 16% of the land, and 3 million 760 thousand square meters. After 5 years, it is estimated that there will be nearly 2 million square meters of property with commercial investment, and more than 30 commercial projects will be developed in Beijing, Tianjin, Shenyang, Dalian, Hangzhou and Zhongshan.

Less than P, the continuous development of commercial projects obviously brings room for H&M, but the increase in the number of stores and total sales is not the same as the development.

in the above industry insiders, if the same store sale is reduced, even if the total sales increase is not significant, because a new store will definitely increase sales performance.

He believes that "same store sales are really persuasive. There are some problems in the same store sales without increasing management."

in the 2013H&M semi annual report, the same store sales fell by 4% in the six months ended May 31st.

Subsequently, micro-blog appeared on the "H&M China store average quarterly sales of about 11 million yuan less than the global average" argument, for this, H&M to new financial reporter said that has not released this data.

but if we simply divide the total sales volume into the number of stores, we can also see the comparison between the single store sales in China and the global average.

The industry insiders said that although it is not possible to determine the exact time of opening a shop, it will still be authoritative if the total number of stores is calculated annually.

reporter found that from 2007 to now, the proportion of Chinese market sales in global sales increased year by year, from 0.52% to 4.36% in the first half of fiscal year 2013.

However, the sales volume of every store in China decreased year by year, from 68 million 860 thousand kronor in 2007 to 40 million 380 thousand kronor in 2012, and the data from 2010 were lower than the average annual sales volume of each store.

above, the industry insiders admit that the average sales of single stores in the two or three tier cities can not be compared with those of the first tier cities, so they may lower the overall level.

P, however, failed to prevent it from going to the two or three line city.

Although it is necessary to want to become a favorite brand of Chinese consumers, but in Cheng Weixiong's view, the preferential policies of the two or three line cities have also promoted the expansion of H&M to a certain extent.

he further explained that many commercial channels in China include shopping centers or shopping malls. Most of them hope to introduce some international fast fashion brands to attract popularity and reflect their international atmosphere and upgrade their grades.

This is particularly prominent in the two or three tier cities.

"For example, low rent, low discount points, and some even have decoration subsidies."

from this point of view, the various preferential conditions given by the two or three line business circle may also be valued by H&M. After all, the threshold for entry is relatively low.

People in the industry also agree with P, pointing out that "such a low cost can occupy the first opportunity of the channel. Why not? Some of the international fast fashion brands may not have planned the layout, and see that the conditions are so good."

In his view, opening the market at low cost in small and medium-sized cities is also beneficial to the brand itself.

"There is a gap between the flow of information between the first line and the two or three line cities, so that the customers can see it with their own eyes, so as to effectively enhance their popularity."

"the preferential policy of the two or three line has made many international fast market brands enter China, and there will be some aggressive behavior in strategy," he said.

aiming at the problems related to the expansion of stores in the Chinese market, H&M said it was inconvenient to make any comments.

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two or three line city hidden trouble

"I was very excited when I opened the first store at < a href=" http://www.91se91.com/news/index_p.asp > Dongguan < /a >. I think it can be connected with European fashion without time difference, but now it doesn't always buy her family's H&M. It's cheap and practical, and I value it more, "Li Moting told reporters in Dongguan for ten years.

obviously, it is still difficult for H&M to go deep into the two or three line market and succeed.

in the above industry insiders, although H&M has now "radiated" to the two or three tier cities, the future development needs to be observed.

although the development space of the two or three line cities is very objective, in essence, there is still a gap between the two or three line cities and the first tier cities.

"In the north, Guangzhou, Shenzhen and the international community, people pay attention to the international trend, so pursuing fashion is what the brand must do, but the demand of the two or three tier cities may be more realistic," the source said.

Cheng Weixiong also pointed out that the consumption characteristics of the two or three line cities have obvious characteristics of diversification and regionalization, and consumers are not necessarily looking at the international brand.

"After all, clothes are used to wear, not necessarily fashionable, maybe finding the right match."

Li Moting has been loyal to H&M over the past few years because she thinks that it is fashionable to wear H&M in the city of Dongguan, but "the clothes in the shop are quite large, and I don't wear much, so I often look at other brands."

In her view, since it has entered the two or three tier cities, H&M should be appropriately changed according to local consumption needs.

it can be seen that due to the diversity of demands of the two or three tier cities, H&M should also make efforts in the aspects of style and edition, instead of simply copying the storefront of the first tier cities.

besides, Chinese consumers have brand awareness for a long time and there are differences in choice.

"The consumption of this fast fashion brand abroad is like buying bread. Maybe it will not be worn next summer, but consumers in China, especially in the two or three tier cities, may continue to wear them next year. These are fundamental differences," Cheng Weixiong said.

in Cheng's view, although the preferential policies of some two or three line cities make the international brand occupy the channel and cost opportunity, but to really do well, it depends on whether the brand can ultimately meet the real needs of consumers.

even if the entry cost is low, if it can not bring good income and popularity after opening a shop, not only the overall operating cost will rise, but profits will decline. "And as a shopping mall or shopping center, it will not continue to give preferential conditions for the sake of face".

This is a precedent.

according to public media reports, Hangzhou's first fast fashion brand Mango withdrew from Qingchun Yintai, and relevant officials of Qingchun Yintai said, "the reason for Mango's dismantling is poor performance. We give it the best location on the two floor, but it doesn't seem to be a very good achievement."

It is reported that the sales performance of Mango counters in recent two years has been declining from 20% to 30%.

for H&M, more challenges come from competitors.

UNIQLO, Japan Fashion fast fashion brand, began to attack China after 2011.

At present, there are 359 outlets in UNIQLO, of which 182 and more than half of them are in China, accounting for 15% of the total number of stores in China.

"P >" the development of uniqo in the two or three line city in recent years, the main attack on the local demand for popular trends, the importance of clothing practicality of the mass market.

Besides, the production line will be added to serve China and realize the local production and sale in China.

In contrast, H&M6 has become a production line in Asia, but mostly in low wage countries such as Bangladesh and Kampuchea.

Du Yanhong said, like H&M, other international fast fashion brands and local brands are also accelerating the expansion layout, especially in the two or three tier cities, and the increasingly fierce market competition will bring pressure to H&M.

In the expansion, we need to pay more attention to the change of consumer demand.

at the same time, "new stores generally have a incubation period, which will increase capital expenditure and lower overall performance". He pointed out that the rapid expansion and opening of stores should pay more attention to the carrying capacity of regional economic development and the future market competition, that is, we should pay attention to applicability and foresight.

"the two or three line market is very large. If we do not respect the market demand and continue to expand, this development is not sustainable. Further deepening will not necessarily be as prosperous as it is on the surface, but it is likely to be a dangerous start." Cheng Weixiong believes that "international brands want to eat in the 1-4 line of China. It takes a lot of effort. If we do not know clearly, we will expand blindly, and we will probably get bogged down in the mire and not be able to be independent."