Store Expansion Support Performance Fast Fashion Downhill Travel To Seek Pformation

With the arrival of the tide of consumption upgrading, market demand is changing, such as Zara, H&M, GAP, UNIQLO.

The magnificent scenery of the giant.

Cheap, homogeneity, and lack of individuality have become the reason why more and more consumers are abandoning fast fashion brands.

"The freshness and novelty of the fast fashion brand gradually return to the plain.

Consumers are less sensitive to product prices, and people are more and more able to accept goods with high price, good quality and large brands. Zara, H&M, GAP and UNIQLO fast fashion brands are the representatives of "low-end consumption".

Cheng Weixiong, the clothing industry observer and general manager of Shanghai Liang Qi Brand Management Co., Ltd., told reporters that consumers today are more partial to their niche and products that highlight their unique tastes.

According to the long tail theory, most of the demand will be concentrated on the head, which is called the popular market. The tail end is personalized, scattered, and small demand. It is called non popular market, and the larger the demand for the tail, the greater the market will be.

The traditional fast fashion brand is obviously unable to meet the growing demand for the long tail of the consumer market. This may be a one or two of its business performance.

Recently,

The 2016 financial year results released by the parent group Inditex show that although sales and net profit have increased by more than 10% over the same period, the gross profit margin has narrowed to 57% from 57.8% in the previous year, exceeding the market expectations and the lowest in 8 years.

Compared with Zara, the performance of several other fast fashion companies is even worse than that of the other companies. The sales growth rate of the fast retailing group of UNIQLO parent company has dropped from 21.6% in 2015 to 6.2% in 2016. The operating profit margin of H&M group has dropped to a new low of 12.4% in recent years, while the net sales of GAP 2016 fiscal year have even declined slightly compared with 2015.

From the above performance report, although the sales revenue of several other fast fashion brands is growing except for GAP, this growth is largely attributable to the expansion of the number of stores rather than the improvement of its profitability.

In the past year, the world's most famous fast fashion brands continue to maintain the position of horse race enclosure: the Zara parent company Inditex group has 279 global open shop in 2016; the total number of UNIQLO global stores has increased by 160 over the same period last year; the H&M group has opened 427 new stores and 11 online stores worldwide.

Industry experts pointed out that in the retail industry, sales is not an important indicator of the development of enterprises. With the continuous expansion of stores, sales increase is inevitable, but this does not mean an increase in profits.

In fact, behind the rapid expansion of several fast fashion brands, the profit growth rate is slowing down.

On the one hand, with the development of the economy, store rentals and labor costs are becoming more and more expensive, resulting in higher operating costs and narrowing profits.

On the other hand, rapid expansion will cause greater inventory pressure and lead to a decline in profitability.

However, based on long-term strategic considerations, fast fashion brands still have to expand their stores continuously under the pressure of inventory.

Guo Zengli, director of the Development Committee of the China shopping union shopping center, told reporters that the increase in the number of stores can guarantee more shipments, increase the number of single products sold, reduce the cost of single products by using the advantage of scale, and provide more space for price reduction. In essence, it is to exchange quantity for price advantage and enhance product competitiveness.

At the same time, the profit margin is not the sole goal of fast fashion brands. With the increasing number of fast fashion brands and increasing competition pressure, we must expand the scale and increase the premium of the brand with high sales and high sales volume if we want to seize more market share.

In addition, the establishment of stores also has the expansion of property, for future restructuring ahead of schedule consideration.

Cheng Weixiong said that because of the fierce competition between the fast fashion industry, all brands are in a state of "riding a tiger". In order to maintain the existing market share and not be excluded from other competitors, the expansion of stores has become the simplest and direct measure.

At the same time, more and more electronic business platforms are actively developing offline businesses, attracting consumers through the advantages of offline integration, becoming a strong competitor of traditional clothing stores. Fast fashion is also a way to deal with the impact of e-commerce by using stores to seize market share.

Under the current market background, clothing fast fashion industry also knows that relying on store expansion "simple and crude" way is unable to save itself, so in the past year, the mainstream fast fashion enterprises have carried out a variety of pformation attempts.

One of the measures taken by UNIQLO is to introduce customized services.

Ryui Masa, founder of UNIQLO, said that UNIQLO sold its products to people's daily life and launched customized clothing according to customer feedback.

To ensure the implementation of this strategy, UNIQLO follows the Zara's "15 day myth" and tries to shorten the production cycle from design to delivery to about 13 days.

The use of sub line brand's high growth and pulling up the group's total profit has also become a major measure.

At present, all the fast fashion brands have their own sub line products, such as Zara's Zara Home, GAP's Banana Republic, Old Navy, GU of UNIQLO, etc., and the sales of each sub line product are good, and the profits are also higher.

For example, the main brand of XXX group in 2016, the profit of UNIQLO business decreased 12.6% compared with the same period last year, while the profit margin of the sub line brand GU increased by 34.8%.

2016, sales of Zara Home increased by 17%, while Zara growth rate was only 13%. In 2014, the growth rate of Zara Home was once more than 30%.

At the same time, as more and more new cosmetic brands want to follow the example of Zara and H&M, and create the "fast fashion kingdom of beauty," the fast fashion clothing brand that has been emulated goes the opposite way, and has started the idea of make-up such as lipstick, eye shadow and so on.

Recently, Inditex group's sub brand Bershka has launched the first beauty series Beauty by Bershka, and H&M has launched the make-up test water of lip gloss such as Hello Kitty series as early as 2009, and the profitable cosmetic industry has become a new position for fast fashion brands to increase profits.

According to the market research firm Euromonitor International, the global beauty and skincare category indicates that the growth rate is far faster than that of clothing shoes.

Guo Zengli pointed out that the demand for cosmetic products is high, the utilization rate and the elimination rate are very high, and the price is easier to bear. This can make the fashion brand expand the target audience without affecting the brand image.

On the other hand, cosmetic products are also excellent entry points, and are a way to attract a large number of consumers, so there are more and more fast fashion brands entering the beauty field.

"Fast fashion brands enter the US make-up, which is the extension of the industrial chain to the downstream. This represents a new trend, and has also become a new profit growth point. Maybe it will go into food, toys and other fields in the future. Through the continuous expansion of the industrial chain, the brand can be built into a one-stop shopping experience base.

Guo Zengli said that in order to adapt to the market changes and achieve brand sustainable development, fast fashion enterprises should invest more energy in product design, and design products with fashionable personality and consumer aesthetics.

At the same time, change the traditional cognition of consumers, strive to improve the quality of products and improve the details.

In addition, the industry chain should continue to expand to the downstream, increase the conversion rate of joint performance, produce the effect of 1+1>2, and also pay attention to the competition with the competitors, and have their own uniqueness in product and business mode.

"

The brand should gradually return to the mass market, identify its position, do not repeat the mistakes of KFC and McDonald's when entering the Chinese market, and face the emerging market consumers with a pragmatic attitude.

At the same time, it can extend the front line to emerging market countries such as India, advance the layout and seize the opportunity.

Cheng Weixiong suggested.

For more information, please pay attention to the world clothing shoe and hat net information report.