"Super Fast Fashion" Brings Challenges To Traditional Fast Fashion Brands

According to the world clothing and shoe net, the growth rate of global retail market will slow down in recent years. Fast fashion It is considered to be a new channel for new retail sales.

Spain ranked first and ranked third in the world. clothing Retailer Inditex has gradually surpassed the popularity and global expansion of its brands such as ZARA and Massimo Dutti in recent years. H&M GAP and other fast fashion retail giants.

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The latest report shows that Inditex group's net profit reached 2 billion 300 million euros (about 18 billion 21 million yuan) in the first 9 months of fiscal year 2017, and its sales amounted to 17 billion 960 million euros (about 140 billion 722 million yuan). In today's context of solid retail closing, the group's earning power is beyond doubt.

But when the fashion is upgraded quickly and is considered to be an innovation of retail format, some European online retail brands have shorter design time and more updated "more fast fashion" in fixed time, bringing challenges to ZARA, H&M and other traditional fast fashion brands.

The trend of closing stores affects the industry.

Fast fashion industry is gradually recognizing the power of the electronic commerce platform, pushing the electric business to seek breakthroughs.

Although ZARA is sitting on the leading edge of the industry, compared with the fast fashion business website, it still suffers from the burden of physical shops. According to Bloomberg's latest news, ZARA has signed a leaseback agreement with buyers for 16 shops in Spain and Portugal, and the total value of the agreement is expected to reach $472 million. It is said that the main purpose of the sale is to invest more money in expanding ZARA online business in Spain.

According to Bloomberg reports, Inditex group plans to sell 400 million euros (about 3 billion yuan) of 16 shops, including 14 Spanish headquarters and 2 Portuguese. According to the plan, buyers will sign a 20 year after sale lease agreement with Inditex group, that is, buyers must lease Inditex after buying the store, and they will have the right to ask for clearance after 5 years.

The Inditex group, which realized that the store network was too large, began to see the electricity market as a new turning point. Inditex group said in its earnings report that at present, ZARA has set up electricity supplier channels in 45 regions of the world, and will further expand the scale of its brand e-commerce business in the future.

ZARA will also diversify the business brand while developing the electricity supplier. In order to enable consumers to have more choices and meet the needs of different consumers, they will continue to develop their brands of Bershka and Pull&Bear.

The fast fashion industry is gradually recognizing the power of the electronic commerce platform. Carle, CEO of Inditex, Sweden's H&M group, has already realized the crisis brought by digitalization to fast fashion brands. The global fashion retailing industry is undergoing a critical period of spanformation. Especially, the brand management mode and the retail channel are gradually tilting toward digitalization and youth. This makes the brand of the H&M group face enormous challenges.

According to H&M's earnings report, sales in the fourth quarter of 2017 dropped 4% to 58 billion 450 million kronor (about 44 billion 20 million yuan). To this end, H&M has launched a series of flagship minority and high quality new brands Arket and Nyden, at the same time, increased the investment of electric business, and settled in Tmall, China. According to Swedish media Breakit, H&M group will also launch a large discount e-commerce platform called P12 in April, and now 60 brands have agreed to join it.

In addition, the billionaire family with C&A, a clothing retailer in Holland, is about to sell the chain brand to Chinese investors. Germany's Der Spiegel reported from insider sources that the deal will soon be finalized. In response, C&A did not respond, but its parent company Cofra Holding told the media that C&A is trying various ways of spanformation and does not exclude all potential partners or external capital involvement.

According to public information, C&A has more than 2000 stores in Europe, employing over 60 thousand employees, and is one of the largest fashion retailers in the market. However, in the past two years, C&A has been withdrawing from the UK, Russia and other markets in the face of great pressure.

The UK's fast fashion brand, New Look, is still in the doldrums. According to the British Post Sunday, the value of its bonds continued to dive, and some anonymous potential buyers were considering buying their controlling shares at a low price. As of last June, New Look had lost 15 million 200 thousand pounds (136 million yuan) after tax, while sales fell 4.4% to 338 million pounds (about 3 billion 30 million yuan).

Data disclosed in C&A show that in the 2016 to 2017 fiscal year, the company's sales in Germany amounted to 2 billion 600 million euros (about 20 billion 505 million yuan). However, according to Fashionunited, the total sales volume of C&A 2016, compared with the previous period, has been greatly reduced in 2017.

Industry suffers from unhappiness

Traditional fast fashion brands also performed well, but the spanition came unexpectedly.

Fast fashion industry began to enter a difficult spanition period, fast fashion brand Forever 21 is no exception. But unlike other fast fashion or close shop or acquisition strategy, in order to improve the performance, Forever 21's spanformation way is crazy shop.

According to a UK market data, Forever 21 submitted its annual accounts as at the end of December last year, with a post tax loss of 75% to 29 million pounds (about 260 million yuan) from 16 million 600 thousand pounds (about 149 million yuan), and the turnover decreased from 53 million 860 thousand pounds (about 480 million yuan) to 46 million 500 thousand pounds (about 420 million yuan). Some analysts believe that this trend will continue to this year.

In order to change this downturn, Forever 21 launched the first attempt in the us to open 10 retail stores called Riley Rose before the 2017 Christmas holiday. The brand said that if the market responded positively, it will open another 10 by March 2018. Riley Rose mainly sells a series of beauty products. Besides selling products produced by its own brand, it will also introduce more popular new cosmetic brands on social media.

According to a statement released earlier by the brand, Forever 21 will also reissue its comprehensive store F21 Red, which expects the number of stores to increase from more than 30 to more than 70.

The F21 Red concept store was launched in 2014. It was originally a new comprehensive store for Forever 21 to meet the diversified shopping needs of consumers. The product classification includes Forever 21, 21 Men, Forever 21 Plus, cosmetics and footwear accessories. Lin Dachang, vice president of Forever 21 commodity department, said that the development potential of F21 Red is optimistic and the number of F21 Red stores in the world is expected to exceed 500.

Traditional fast fashion brands also do well.

The fast selling group of UNIQLO parent company achieved double growth in revenue and profit in the first quarter of the new fiscal year, exceeding expectations.

According to 2017/18's first quarterly report released by Xun marketing group, the first quarter of last year ended November, the sales revenue of fast selling group rose 16.7% to 617 billion yen (35 billion 920 million yuan), and the net profit of shareholders increased by 12.7% to 78 billion 500 million yen (4 billion 570 million yuan). The operating profit was 113 billion 900 million yen (6 billion 620 million yuan), an increase of 28.6% over the same period.

However, UNIQLO has been taking a big hit in the Asian market, but since its first entry into the US market in 2004, it has suffered many setbacks.

Data show that as of August 2017, UNIQLO opened a total of 1920 stores in the world. There are 44 in the United States, 2 in Canada, 36 in Europe, 20 in Russia, 12 in Australia, 151 in Southeast Asia, 179 in South Korea, 555 in the mainland of China, 25 in Hongkong, Taiwan, 65 in China, and 30 in Japan. In other words, the number of American stores in the world's largest economy accounts for only 2.3% of the world's total.

Another fast fashion brand named GU, which is known as "low quality uniforms", has attracted more and more attention in recent years. It was born in 2006, and is mainly priced at low price, which is about 2/3 of UNIQLO products. However, its market is mainly concentrated in Japan and has opened more than 300 stores in Japan. But GU's progress in overseas markets has been slow, and its first overseas store was opened in 2013.

It can be seen that whether or not the fast selling group's industry can continue to advance vigorously is mainly seen in the layout of overseas markets, and the overseas market depends on whether its localization strategy is close to local life.

Disadvantages increasingly exposed

Whether it's the traditional "fast fashion" or the "super fast fashion", the test is just beginning.

According to a report released by retail research firm Fung Global Retail&Technology, European online retail brands such as ASOS, Boohoo and Misguided are challenging traditional fast fashion brands, competing for "increasingly fast fashion" for consumers who are more and more difficult to satisfy.

It is reported that a product of ASOS takes 2 to 8 weeks from the initial concept to the final sale, while Boohoo only takes 2 weeks, while Misguided only takes 1 weeks. The new quantity and speed are also faster: Boohoo has 100 new items per week, Missguided is 1000 pieces per month, and ASOS is 4500 pieces per week.

In contrast, the cycles of ZARA and H&M are 3 to 5 weeks, while traditional retailers are 6 to 9 months.

The McKinsey report of management consulting firm points out that these fast fashion companies have repeatedly shortened their production cycles to meet the great demand for fashion clothes after the rise of the local middle class consumers as soon as possible in the emerging markets such as South America, Asia and the Middle East.

And its premise is digitalization. These retailers can easily get all kinds of information about fashion trends from the Internet, or simply "copy" the design inspiration of big brands, so that the ultra fast fashion brands can continuously update products and promote the shopping frequency of consumers.

Citing Peel Hunt retail analyst Jonathan Stevenson as saying, "if you want to make new business like Boohoo, you can't have a physical store." The electricity supplier is "invisible" against "tangible". To become faster and lighter, we need to get rid of the efficiency loss caused by the large volume of the physical shop, because the electricity supplier does not need to guarantee the stock reserves of each store.

But another disadvantage of fast fashion is that many brands are copying luxury products because of their lack of originality. Nowadays, fewer and fewer consumers are willing to buy products that are too similar to luxury brand creativity, which will embarrass them. Consumers' loyalty to fast fashion has been kept at a low level. When there are more choices in the market, they will not hesitate to turn to another brand.

Over the past year, the lawsuit between Forever 21 and luxury fashion brands has occupied a large number of media outlets. Forever 21 has been accused of trademark infringement by Puma, Gucci and Adidas this year because luxury fashion brands are increasingly intolerant of creative plagiarism against fast fashion.

In this way, the fast fashion brand has fallen into the "exhaustion period". Even in the Chinese market, the speed and sales growth of overseas fast fashion brands are slowing down.

According to statistics, in 2017, the three fast fashion brands Forever21, Gap and C&A only opened 4, 2 and 1 stores in China; ZARA opened only 11 stores, 6 fewer than 2016, and although H&M kept the speed of opening 62 stores, it also closed several of the most representative flagship stores.

Due to the decline of physical store performance and the pursuit of super fast fashion, fast fashion brand is facing a crisis. Although the electricity supplier may help them solve inventory problems to some extent, the business of e-commerce has brought new logistics costs, and is also not conducive to accelerating the upgrading of the supply chain.

In addition, the fast fashion strategy has sacrificed the quality of clothing to a certain extent, and the rapid increase of new products and the sharp increase in production have brought about a burden on the fast fashion clothing enterprises in the environmental protection efforts, in addition to raising the financial cost of the consumers.

It is pointed out that with the increase of the replacement rate of people in fast fashion clothes, this environmental burden is becoming more and more serious. Nowadays, almost every type of clothing is kept in the hands of consumers only half of it 15 years ago. The energy, such as water, electricity, land and so on, which was originally made for the production of these garments can not be recovered at all cost.

It can be seen that no matter the traditional "fast fashion" or the "super fast fashion" with strong trend, the test has just begun.

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