H&M And GAP Become Discount Stores, Fast Fashion Brands Are Trapped.

First fast since 2006

Since the brand entered China, it has been like a spring breeze blowing thousands of peach blossoms.

The retail market has injected a shot in the arm.

However, after ten years, the needle is facing an embarrassing situation of "failure".

In recent years, fast fashion

The decline of the performance of H&M, GAP and other brands has become normal. Once the clothing industry "sales myth" UNIQLO began to join the performance decline.

UNIQLO sales myth shattered parent company profit shrank by 30%

UNIQLO, who once created the "sales myth" in the clothing industry, is facing difficulties.

In April 7th, the fast selling group, the parent company of UNIQLO, the largest clothing group in Asia, announced the first half of fiscal year 2016, although sales increased by 6.5% year-on-year, its operating profit dropped by 33.8%.

Among them, UNIQLO's poor performance in Japan and the international market is the main reason for the sharp decline in the performance of fast selling group, which is the first time that the net profit of fast selling group has declined for the first time in the past 5 years.

"Consolidated income in the first half of this year has increased, but the decrease in operating profit has been mainly attributable to the unusually warm winter weather in the northern hemisphere at the end of last year, and the decrease in winter clothing sales of UNIQLO and the exchange loss caused by the appreciation of the yen".

"The Chinese market has not been affected by the decline in performance." the sales revenue and profits calculated by Renminbi in the first half of 2016 in the mainland of China increased, according to the Beijing Morning Post reporter.

We expect that in the second half of this year, the overseas sales of UNIQLO, including the Chinese market, will see a double increase in revenue and profit.

Our expansion in the Chinese market will continue. "

"Opening shop costs and labor costs are growing," Shen Meng, executive director of incense capital, believes that competition is too fierce and cost increases are the direct incentives for the decline of UNIQLO profits.

Worse than bad performance, UNIQLO's share price plummeted, which may make Ryui Masa, founder of the 2015 richest Japan, lose its richest seat.

H&M and GAP become discount stores, fast fashion brands are trapped.

In fact, the dilemma of UNIQLO is just a microcosm of fast fashion brands. Almost all fast fashion brands are immersed in the mire of "declining performance".

The world's second largest clothing retailer H&M released the first quarter of fiscal year 2016 reported that the company's net profit of 2 billion 550 million krona, compared with the same period last year, compared to 3 billion 510 million Swedish kronor compared to 30%.

GAP group, the largest apparel retailer in the US, was also hard to escape. In the fourth quarter of 2015, its net profit was $214 million, a year-on-year contraction of 33%.

In the fast fashion camp, ZARA is better off.

ZARA's parent company Inidtex group released its 2015 earnings report, showing net sales of 20 billion 900 million euros, an increase of 15.4% over the previous year, and net profit of 2 billion 880 million euros, an increase of 15% over the same period last year.

In retail stores, the discount and clearance activities of fast fashion brands are upgrading.

Beijing Morning Post reporter interviewed found that H&M, GAP stores nationwide are discounted all the year round, 70 percent off, 50 percent off promotional activities have become the norm.

The quality problem of fast fashion brands is becoming the main reason for consumers to leave. Even ZARA, which keeps a positive growth in performance, has frequently been blacklisted because of quality problems. Many brands such as H&M and ZARA have been on the quality blacklist for many times because of being detected "quality safety" or "fiber dimension components are not qualified".

Consumer gold lady bluntly said, "in the past, it was considered that the fast fashion brand was of good style and cost-effective.

Now, the quality of fast fashion brands is getting worse and worse, and some clothes are only enough to wear for one season.

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To make matters worse, the discount and inventory starts to enter a vicious circle. Fast fashion brands are paying for the "no bottom line discount" behavior.

Due to the continuous discounts throughout the year, H&M and GAP have been branded as "discount anywhere and anytime" in the minds of consumers. The influence of brands is rapidly declining.

Among them, GAP was named one of the ten fashion brands that Forbes was most likely to disappear in the next ten years in 2014, forcing GAP global president Jeff Kirwan to stand out: "it is inappropriate to say that we are a promotional brand.

But we can change the way we communicate with consumers. "

Retail consumption industry collective downturn fast fashion can not escape enemy fate

In the industry's view, the overall decline of fast fashion brands is actually affected by the overall downturn in the retail sector.

"Fast fashion brands enjoy the dividends of the market, but they are not enough to fight against the slump in the whole retail industry." clothing industry expert Ma Gang told the Beijing Morning Post reporter that after several years of rapid development, fast fashion brands have entered the bottleneck stage, the number of channels has been saturated, and the freshness and enthusiasm of consumers are no longer there.

"Fast fashion brand has entered the Chinese market in a completely new way, and has opened up shop rapidly, which has brought fresh feelings to Chinese consumers.

But now the sense of freshness has receded, increasing revenue in the form of open shop expansion and encountering the ceiling, which will result in the decline of performance.

The sharp decline in performance forced many fast fashion brands to increase their strength.

In June 2015, GAP announced the closure of 175 stores in the North American market, accounting for about 1/4 of the total number of retail stores in North America.

The fast fashion brand Forever 21 also announced that it will close its flagship store in Glasgow, Scotland.

The Chinese market is still a life-saving straw, aiming at the two or three line city.

Although fast fashion brands are shrinking globally, the Chinese market is still a battleground for fast fashion brands. In the case of saturated stores in first tier cities, fast fashion brands are aiming at the two or three tier cities.

While the North American market closes stores and layoffs, GAP is expanding the Chinese market.

GAP said that there will be 40 new stores in China this year.

UNIQLO also said that this year it will maintain 80 to 100 stores in China every year.

H&M expects to open 60 to 80 new stores in China this year.

ZARA, who has opened 166 stores in China, says that it is temporarily maintaining a "shrinking and prudent" shop strategy. The growth rate of stores will be between 6% and 8% in the next few years.

These new shops are mainly concentrated in two or three line cities.

Ma Gang pointed out that in order to maintain the growth of performance, fast fashion brands only expand the number of categories and shops.

When the stores in the first tier cities are saturated, new stores can only be opened to the two or three tier cities.

This kind of channel sink will be faced with the puzzling effect of reducing efficiency.

"At this stage, it is neither the best nor the worst."

Xiang Sheng, executive director of Xiang song capital, pointed out that in the background of the downturn in the consumer sector, the fast fashion brand's expansion in the trough period may increase the impact on current profits.