What Can We Get From Tmall'S Fast Fashion H&M?

Shrinkage in physical stores

When the strategy can play a very limited role,

It's the only way to reach more consumers.

More than a year ago, I talked about electricity providers.

Magnus Olsson, general manager of China, also insisted that "independent preparation (electric business) is more beneficial to H&M."

According to the world clothing and shoe net, and in March 21st, the official announcement of the eve of March 21st, Olsson said that H&M was finally ready to build the official mall.

In line with the formal on-line activities, H&M identified Wang Yuan as the spokesman of the new student image in China.

At the same time, he also entered Tmall's activity platform for H&M, including model ho Sui, fashion blogger Rebecca and Fil Xiao Bai.

It can be said that the most popular selling method now is traffic star + net red.

The Swedish fast fashion company, which has a history of more than 70 years, is trying to get "new life" through e-commerce business.

In the year-end report of last year's fast fashion industry, the reporter has mentioned the growth difficulties faced by H&M.

In the fourth quarter of November 31, 2017, H&M Group sales fell 4%, the first time in more than 20 years.

The performance of the Chinese market is also not satisfactory.

Over the past 2 years, H&M's sales in China have declined to 2~3% year-on-year.

Before 2016, they were all double-digit growth. The peak period after the financial crisis was to achieve an increase of 83%.

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In fact, Olsson's view of self built electricity supplier is not wrong, which means that the brand side has more autonomy and control over consumer data, logistics and distribution, advertising and marketing.

Zara began to choose a self built electricity supplier, but opened Tmall flagship store in 2014.

It was only this year that H&M was launched on an independent electronic business platform. Although it did not disclose the relevant data, it probably failed to achieve the desired results.

This is not surprising. Buying clothes from Taobao or Tmall is the first choice for most Chinese consumers to buy online.

Tmall has also formed a certain degree of monopoly on the online apparel market.

According to the quarterly monitoring report of China's B2C market released in the second quarter of 2017 by Analysys B2C, Tmall occupies 307 billion 740 million of the 80.7% market share of the online apparel market, while second Jingdong accounts for only 8.7%.

Compared with a year ago, Tmall's market share was more concentrated.

At this point, Zara, H&M, UNIQLO, GAP four fast fashion brands have been stationed in Tmall.

Tmall is still growing at a high speed.

According to cloud consulting data, the growth rate of Tmall men and women's clothing in 2017 years is over 40%, creating a turnover of 131 billion 200 million yuan and 78 billion 800 million yuan respectively.

According to Lv Jianmei, vice president of Tmall clothing, told reporters that their contacts with H&M began at least 5 years ago.

H&M first chose the Monki of the group's brand name Monki before 2 years ago. "Monki's performance on us has given us confidence," Magnus Olsson said.

"Considering that Tmall has been very successful in recent years...

This is a natural step for us. "

Rather than being natural, it is better to be forced by circumstances.

After 2013, the number of new stores opened by H&M is around 60~90, but its single store income has been declining (except 2015). As a result, the number of stores increased by 14% in the year of 2017, and sales increased by only 2%.

This group of data in 2016 showed worse performance.

That is to say, the demand of H&M consumers is not enough for Chinese consumers to support such a fast expansion of physical stores.

Most of the new stores are in the low tier cities.

About 37% of H&M's new stores in 2016 are in three or four tier cities.

Of the 62 new shops opened in 2017, 22 were the first stores in three cities, such as Bengbu, Langfang, Ordos, Yiwu, Xianyang and Zhangjiakou.

As a whole, there are 96 stores in the four tier cities of the north and Guangzhou Shenzhen (H&M), and the remaining 360 are in 234 tier cities.

These new stores are following the new shopping mall and commercial real estate developers (such as Wanda and Yin Tai) to reach the 234 tier cities.

Commercial real estate has also given H&M some attractive policies.

"For example, low rent, low discount points, and some even have decoration subsidies," a commercial real estate developer who contacted the H&M Extension Department said in an interview.

But from the result, H&M tried to get the way of sustained growth through the channel sink. At present, it seems that it has not worked.

Inspired by the huge growth potential of the three or four line cities, there is Zara, but it is aware of the changes and complexity of the Chinese market earlier than H&M.

In 2015, Zara adjusted its shop strategy in the Chinese market, announced that it would postpone the opening of stores, and would set up flagship stores in key cities.

In 2016, the whole group only opened 54 stores, 2017 fewer years, and a net increase of 18 stores.

More of the more open brands are the more niche brands, such as Pull&Bear, Massimo Dutti and so on, while the number of stores in the main brand Zara is reduced by 10 compared with the previous year.

In the case of shrinking physical stores, the business seems to be the only option to reach more consumers.

Globally, H&M has also suffered from inadequate penetration of e-commerce.

At the analyst conference, Karl-Johan Persson Persson, the third generation head of the group, had to admit that "the volume of traffic in major markets such as the United States and China is decreasing" and "the flow of Amazon and Alibaba is growing".

In the United States -- H&M, the second largest market in the world, its market share in the online apparel market ranks behind Gap, Zara and Forever 21.

In order to show his determination, in the February 2018 H&M group investor day, he announced the process for the first time.

In 2017, online sales amounted to 290 KRK SEK, accounting for 12.5% of total sales.

The group's goal is to increase online sales by 20% at an annual rate of 75 billion kronor in 2022.

As an important part of its global layout, the Chinese market is obviously also in this ambitious plan (H&M China) refused to disclose the progress of China's electricity supplier.

Although the expansion of the fast fashion industry is much slower than the expansion of physical stores, the H&M market is the most conservative one in the fast fashion business.

With the entry of Stradivarius in May 2015, all brands of Zara's parent company Inditex, including Massimo Dutti, Oysho and Bershka, have already opened flagship stores in Tmall.

Although Gap is smaller, it is also the latest to enter the Chinese market. But in the first year of its introduction to China, it launched its own electricity supplier. In the second year, Tmall entered Tmall.

Not to mention, UNIQLO is the fastest fashion brand on the electricity supplier.

UNIQLO reached a partnership with Ali in 2009 and opened a flagship store in the "Taobao mall" (Tmall's predecessor).

Nearly 4 years ago, UNIQLO was the top five brands of women's clothing sales (2015 and 2016 were number one).

In 2017, the sales of UNIQLO dropped one hundred million in double 11.

"Fast purchase of UNIQLO online stores" has become a hot topic in the past 11 years.

Last year, the e-commerce market in UNIQLO China accounted for 10% of the total sales. That is to say, its electricity supplier income in 2017 was 2 billion 60 million yuan, almost equivalent to 1/4 of H&M's annual income in the Chinese market.

Pan Ning, CEO of China UNIQLO, clearly mentioned that "online business has expanded the number of fans" and has increased awareness.

This also lets the entity store also benefit.

In the year of 2013~2015, the growth of UNIQLO's average stores in China was around 100, but the single store revenue also increased by 25% and 17%.

Although the overall sales growth in China has slowed down after 2015.

However, in terms of last year's performance, UNIQLO's single store income (about 30 million 110 thousand yuan) is almost two times that of H&M China's single store income (about 1637 yuan).

And the fast fashion that has no physical stores in China, including Topshop, Urban Outfitters, Free People and so on, is more sensitive and faster than H&M when exploring Chinese consumers' online shopping enthusiasm.

H&M's decision to come to Tmall is too late. It has barely gained any dividends.

It is now only one of Tmall's 10000 apparel brands.

In March 21st, the news that H&M entered Tmall stayed on the first screen of the home page for two days, and was soon diluted by the 24 day Nike super brand day.

Almost every day is Tmall's super brand day.

However, H&M officials claim that Tmall stores visit more than 3 million hours in 24 hours and more than 1 million fans.

But the follow-up effect is hard to say.

Taking the Zara Tmall as an example, it has hardly entered the top 10 of Tmall women's clothing sales.

It is also very difficult to hope to reach more three or four tier city consumers through Tmall.

"Those consumers in the three or four tier cities, where the H&M brand is probably not yet known.

They might be able to find us on Tmall. "

H&M Magnus Olsson, general manager of Greater China, said.

But compared to a second tier city, the ecology of the three or four tier cities may be more difficult for international brands to adapt to.

For those consumers who are not familiar with H&M, Taobao is a consumer behavior focused on category and keyword search, which means that it is more likely to be submerged in many search lists.

A number of consumers have not yet established the habit of fast buying and eliminating clothing, and the demand for fast fashion is still relatively weak.

The taste and economic strength of the first batch of fast fashion consumers may have been upgraded and their choices are more abundant.

Fast fashion's slow action on the electricity supplier is also limited by the low profit mode.

Because the price of products is relatively low, the development of electricity providers has brought the cost of logistics and supply chain. If there is no optimization, it will reduce the profits of fast fashion.

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According to Inditex's 2017 earnings report, revenue grew 9% to 25 billion 300 million euros, including online sales growth of 41%, but gross profit margin further declined to 56.3%.

"We believe that value retailers (value retailers, usually a retailer who makes profits by selling large capacity goods instead of selling at a high price") is the largest group affected by online impact in the field of clothing retailing, "Anne Critchlow, an analyst at Societe Generale, said in an interview with BoF." for such retailers, trying to sell simultaneously from two outlets online and offline will seriously damage profits. "

She believes that due to the low price of H&M, the expansion of e-commerce business may add new logistics costs, making H&M's business development slow.

In an interview with reporters, Magnus Olsson denied that the development of electricity suppliers would reduce profits.

"According to the data released last year, the total sales volume of the group is 12.5%, contributing 22% of the profits.

This is a good result.

But other retailers do not earn much online business.

But the development of online business will have an impact on fast fashion brands with low price tag.

This is why UNIQLO recently began to vigorously promote the online single line picking - saving the last mile distribution costs.

When competitors began to optimize the structure of the electricity supplier's income, H&M just started to enter Tmall's costumes that were already in the air.

From the best selling products, we can see some problems of H&M brand and product mix.

3 of the top 5 best sellers in H&M Tmall store (at 12 noon on March 25th) are T-shirts priced at 39.9 yuan.

UNIQLO and Zara shop's most popular styles can also see the joint name of KAWS, INES DE LA FRESSANGE FRESSANGE, or the popular socks boots at the unit price of more than 300 yuan.

What is the relative competitive advantage or brand positioning of the main brand H&M that the group relies on?

In fact, H&M's long-standing strategy is to expand its business by expanding its stores, lowering its production costs and promoting its performance.

According to Europe's international report, it is the most successful fast fashion brand in the past 5 years.

But in terms of supply chain optimization and data utilization at retail end, there is a certain distance from UNIQLO than Zara, clothing material development and brand positioning.

H&M is accelerating the development of multi brand strategy, and its contribution to growth is also limited.

In addition to COS, &Other Stories, Cheap Monday, Monki and Weekday, H&M launched two new "lifestyle" brand new Arket and Nyden in 2017.

The performance of these 7 brands is much better than that of the main brand.

On investor days, H&M is also more willing to talk about these more dynamic brands.

It plans to grow at a rate of 25% per year and 2022 years to make the brand of new business reach 50 billion kronor's sales.

In mature markets, the important trend of clothing consumption does include diversification and personalization. This effect has appeared in China's first tier cities.

But in the short term, multi brand strategy is not enough to solve the H&M crisis, and its 93% sales still come from the main brand.

What's more, it introduced the sister brand in the Chinese market and was more conservative than Inditex when developing shops for these sub brands.

At present, H&M has only introduced two brands of Monki and COS in the Chinese market.

Far water can not save near fire.

Sales decline, gross profit reduction, stock price setbacks, this is H&M, Zara and GAP common problems, and they all hope that the electricity supplier to reverse the situation.

More and more consumers choose to buy clothes online.

According to euro's international data, in 2016, 14% of the clothing and footwear online markets were valued at 2317 billion US dollars.

In the world's major economies, it is even higher: in the US, online sales were 15.5% in 2016, 18.7% in Britain and 25.9% in China.

According to the global average 14% data, in addition to Gap 20% sales in fast fashion, H&M, Zara and UNIQLO do not effectively occupy the online apparel market.

Inditex plans to slow down the new store area and sell its stores to develop online businesses. It says it will become a "digital consumer goods retail companies".

In the Chinese market, it plans to make the proportion of online sales to 30% in 2021 years ago. Don't forget those brands that are born online, such as ASOS, BooHoo, and China's public brand and net red brand (such as "money maker's Sydney custom-made" and Zhang Dayi's "I'm happy"), they are currently 14%, who are more beneficiaries of online sales of clothing and footwear, younger and more sensitive.

Fast fashion online competition intensified, which is the beginning of the new round of competition.

More interesting reports, please pay attention to the world clothing shoes and hats net.