[Close-Up] Will China Produce Its Own Zara And H&M?

To get fast fashion business opportunities from Zara, and now want to get rid of the convergence with Zara, Urban Revivo wants to find a new path on the basis of "fast fashion".

In August 2017, Hai Lan's home invested one hundred million yuan in its own capital to become a Chinese local fast fashion brand Urban Revivo (hereinafter referred to as UR), and completed an important step in the pformation of brand younger.

The UR in the "marriage" was founded in 2006. This young Chinese brand has become a new choice for the growth point of Hai Lan's home with a brisk business model and targeted young target consumers.

Nine times out of ten people who know the brand of UR have seen it when they go shopping.

It has not done any major marketing, and its brand value is still in its establishment stage. As with many Chinese local clothing brands, its survival philosophy seems to replace advertising by spreading channels, so as to brush the sense of existence in the consumer's living space.

On the knowledge side, some netizens often have a consensus in discussing the impression that UR gives to people: "see Logo can feel it is China" or "product carefully excavate occasionally surprises".

But the most frequent evaluation is to compare it with the two fast fashion originator and giant Zara and H&M.

The western fast fashion business model was born 30 years ago in Asia, and has also cultivated several major international giants such as Zara, H&M and UNIQLO.

After entering the Chinese market one after another in 2004, they quickly conquering the city and spent the running in period and gradually matured.

In this jungle game where the fittest survives, it is not easy for UR, a local brand, to survive in fierce competition.

However, compared with international rivals, it is still hard to compare with its international rivals, such as capital strength, brand combination, group size and market share. There is still a long way to go to shorten the distance from our predecessors.

UR Guangzhou headquarters (photo: Jia Lin Wei)

I wanted to copy a Zara.

UR, which was born in Guangzhou, is a complete Chinese lineage. Its headquarters, factories, major design teams and logistics are all in Guangzhou.

Li Mingguang, founder of UR, is not a novice in the industry. Although he is a financial background, he has had nearly ten years of experience in garment industry after his switch.

He acted as a Menswear brand VJC, settled in Shanghai Hang Lung square, but eventually ended in a loss, then created a BC brand similar to Levi's's brand name Jeans.

Li Mingguang has never denied that UR is learning Zara, the founder of fast fashion.

It takes about two or three years for Li Mingguang to know Zara from Japan, to find out the fast fashion business mode and then to design his own brand.

"At that time, I think fast fashion is the blue ocean of China's clothing industry.

Zara gave me the biggest shock from a report, which said that Europeans' biggest recognition of fast fashion is "wear it a few times."

I think so, because fashion is something that is constantly updated.

In 1963, Amancio Ortega, the Spanish brand Zara, was the world's richest man and beat Bill Gates last year.

He only registered the name "Zara" for 30 euros at that time.

Starting from the corner clothing store, twelve years later, it grew into a Inditex group with a market value of over 100 billion. Now, the group has nearly 7500 stores in 58 regions of the world, with annual sales exceeding 25 billion euros.

The market value of head brand Zara also reached 14 billion 837 million euros in fiscal year 2017.

Several times faster than the supply chain of traditional clothing industry is the reason why fast fashion has become rich.

In 13 to 15 days, new clothing will be changed from design drawings to ready-made clothes on shelves, and the fashionable elements of luxury goods will be picked up at the fastest speed, and the popular style of big data extraction can be combined. Fast fashion brands can keep up with fashion trends.

Coupled with the low price, the young consumers will pocket their income.

Through the observation of consumers at that time, Li Mingguang felt that implementing fast fashion is challenging but feasible in China.

Though at that time, the Chinese also pursued the "wearable" property for clothing, fast fashion was the opposite.

But he believes that "consumers will change themselves, because the past consumer behavior and fashion trends are reversed, and young people are beginning to pursue differentiation."

Part of this judgment comes from his own fashion view: "I started to dress up in junior high school. I often took part in literature and art activities at school. I did some breakdancing, and I played all day long.

But fashion is born with hobbies, and I can read such books. "

Li Mingguang called UR the first local fast fashion brand in China, and he dared to eat the crab because of its lack of confidence in the traditional clothing industry.

"Most of China's garment enterprises are wholesale mode, small amount, slow update, slow response, and no concern about terminal sales information.

It's easy to do before 2006, as long as clothes can be sold.

But at that time, the industry began to shuffle, a large number of international brands entered the Chinese market, consumers began to change, the traditional mode has already failed.

The pformation of department stores is also one of the driving forces.

In the past few years, shopping centers began to rise, with large volume and diversified investment brands, so even UR could have a good chance of being a new brand.

In October 1, 2006, the first UR was officially opened in Guangzhou's good Plaza. Li Mingguang also closed the BC Jeans.

Li Mingguang chose Guangzhou as a base camp, not only because he was Cantonese, but also because Guangzhou had the innate advantage of incubating the brand.

The industrial chain of garment factories, fabrics, accessories and so on is very perfect here.

But now I think the first shop is still a bit anxious. In order to cooperate with the opening time of the Plaza, UR has only two months to prepare from signing the contract to business. The initial team hastily organized a lot of goods from the accumulated factory resources, which led to the fact that the shelves were not full.

The important teams such as buyers, design and so on have not yet been fully established, but Li Mingguang himself, his younger sister, his wife and his past employees have done it.

Fortunately, competition and opportunity came at the same time.

Urban Revivo Collection shop (photo: Jia Lin Wei)

Groping forward

In those years, the international fast fashion brands have entered China one after another. Zara and H&M were settled in Shanghai in March 2006 and April 2007 respectively. Even in 2002, they entered China's frustrated UNIQLO. They also got a turn in 2005 with Misaki Sato and creative director.

Large groups in the first and second tier cities, so that the cognitive focus of Chinese consumers for fast fashion is basically from Zara and H&M.

At present, Zara has nearly 200 stores in China, nearly 500 in UNIQLO, and more than 370 in H&M. These fast fashion giants have added 7, 34 and 21 in China in the first half of 2017, even in the first half of the expansion.

With these big groups developing the Chinese market at the same time, the situation of UR can be imagined.

Before November 2016, the number of shops in UR was only 150, and now there are about more than 200 shops outside Shanghai.

For fast fashion consumers, the location of prominent and easy to find shops is one of the main factors to increase the probability of random shopping. Although opening shop is not fast, it is the development strategy of UR, but in the face of the international fast fashion of the massive attack, UR's most optional gold position in the shopping mall is also fast occupied.

The development of UR online channel was crowded in the crowded track in 2014. In that year, it entered Tmall, and launched its shopping function on the official website in 2017, but its function is not yet perfect. It is expected that a new version will be launched in May this year.

In China, a developed country with electricity providers, occupying online channels is just as important as offline layout.

Since 2016, Zara has announced that it will slow down the pace of opening stores, increase the input of e-commerce channels, and repeatedly hit the top in Tmall's clothing sales.

On the day of double eleven in 2017, UNIQLO sold 100 million of its sales within 1 minutes after zero and became the fastest brand in clothing category.

In March, H&M, who was only admitted to Tmall, was thought to be too slow to be questioned repeatedly, especially when the retail industry in the past two years encountered a cold winter.

After opening the electricity supplier, UR's online performance also rose sharply, increasing by 317% in 2017, 10 times more than in 2015.

However, the results of retail channels are mostly based on the supply chain. For such a fast fashion brand, which is optimistic about the Zara mode, the supply chain is still the biggest business focus of the company in the first few years.

First of all, we built factories, improved supply chain and company structure with the advantage of local resources. At present, most of UR factories are located in Guangzhou, and are closer to the headquarters of Baiyun District.

The number of self owned factories is about 10%, and most of them are cooperating with third party suppliers.

Brand, marketing, product, development and functional departments of the five main sectors are also slowly expanding. The design and development team has 500 people, and about more than 40 buyers.

Li Mingguang's younger sister, Li Rimei, is a member of the start-up team. Now she is mainly responsible for the work of the buyer team. Her colleagues call her "Mei Jie".

"Our buyer team has diverse backgrounds, including professional designers, people who are highly sensitive to business, and people who like to study fashion without design background," he said.

Mei said that there are also designers from Zara who serve as consultants.

Occasionally, Li Mingguang himself is a buyer, trying to find inspiration in artistic activities such as exhibitions, galleries and operas.

But Guangzhou's art activities are not very active, and he encourages buyers to go abroad.

With the cooperation of various departments, the leading time of UR's production is currently 30 days, and the fastest can reach 10 days.

However, due to the early exploration of business models for a long time, the operation of UR has only entered a fast track in recent years.

According to Wen Zhijun, vice president of marketing, the incubation period is at least 8 years, until the fast growing 2012 of fashion industry is really ready.

According to Li Mingguang's statement, UR has made some achievements since 2016. In 2016, sales exceeded 2 billion and exceeded 3 billion in one year. The first store in Guangzhou's good Plaza and Chengdu Hongxing store have been the main achievement, and brand awareness is also improving.

From the consumer in the shop, 20 to 25 years old is the main force.

Yang Li, a girl in Shanghai, is 25 years old. When she met her, she was lined up outside the fitting room of Hua Shi Dian, with 5 or 6 clothes in her hand.

"I think there is no difference between UR and Zara and H&M, because they do not have a fixed style.

So every time I visit Nanjing West Road and Huaihai Road, these business circles will visit each other.

But UR doesn't seem to be as famous as Zara. I also know for the first time that UR is a domestic brand. "

Liu Yuqing, a friend who goes shopping with her, thinks that the quality of Zara and UR is better than that of H&M, and that the design of Zara will be more important.

"But now all of my friends are wearing Zara, and the crash shirts are very serious. So there are more and more UR now. This style is better controlled and cheaper than Zara."

Consumers such as Yang Li and Liu Yuqing are increasing, and they have more specific judgments on each brand. Many consumers' perception of UR is usually like "Zara brand".

This seems to have reached Li Mingguang's expectations.

However, he was not too happy to get up.

Li Mingguang's "initial heart" changed.

In UR, you can see a large number of printing styles (Photography: Calin Wei).

Get rid of Zara and be yourself.

The disadvantage of binding with Zara is beginning to show. Li Mingguang realizes that the Chinese version of Zara is weakening the image of UR herself.

Plus the expansion of stores is still slow, the main layout of the city is still in Guangzhou, Shanghai and other places, UR brand recognition far behind the fast fashion of several head brands.

"UR is indeed a reference to the Zara mode. Many Chinese enterprises are also using for reference and imitation. But the imitation of the clothing industry will have a feeling of being despised."

Li Mingguang still decided to explore the possibility of pformation, but this time, unlike this twelve years ago, this time he said, "we want to be a unique UR."

Some people feel that it is not necessary. Some people in the company have likened Li Mingguang's idea to "build a temple in the city" and feel that the business mode of Zara is also very good, so there is no need to pform it in order to make a distinction with it.

But Li Mingguang believes that the business model is no problem, but it is time to find the brand DNA, but also to make up for the missing places, for example, today's large volume of fast fashion brands have also come to their own need for pformation.

In the past two years, Zara and H&M have closed up shop waves, and the store reform has been put on the important agenda.

"Zara is now big and it's hard to make a comprehensive change.

Now UR is still very small, and there are not many physical stores, so it can still develop many channels, but it will not take the old road of Zara and H&M.

Li Mingguang said.

The idea of pformation took shape in 2015, and the company pursued more precise positioning, trying to open a market space between fast fashion and light luxury. Li Mingguang called it "fast luxury fashion".

With the difference of other fast fashion brands, UR now hopes to highlight its own print, print style and space design.

The printing pattern is the most important distinction between UR and Zara on the product.

To this end, UR's product department also set up a printing team specially.

"Printing pattern, size, color and density arrangement is the main consideration of the team, which is also a feature of UR."

The staff in the team said.

And the version style will also highlight the Asian figure, not deliberately pursue leisure loose profile.

In fact, the space design is a "fast shop" style that continues fast fashion. Apart from the large area and the ability to place more products, "how to make thousands of square meters of shops not boring" is Li Mingguang's concern more than Zara.

"You see the shelf arrangement of Zara and H&M is all right, but UR is the form of a buyer's shop, and you can see as many products as you can at any location."

Therefore, in the Guangzhou headquarters building of UR, there is a special space for the experimental field of spatial layout. "Although thousands of shops are hard to achieve, it is a concept to change more shops as much as possible, and we will follow the big trend."

Space design test points in UR headquarters building (photo: Jia Lin Wei)

Urban Revivo Accessories shop (photo: Jia Lin Wei)

Li Mingguang's attention to space design is also reflected in the two sub brands of the group Collection and Urban Revivo Accessories.

Collection's two shops are in Guangzhou. Because of its high-end positioning, there are not many products on the shelves.

The walls at the entrance of the shop are hung with works of art, with very few models showing the main products, while the other clothes are arranged in a semi circle with more distance and elegant style.

Five brands of accessories Urban Revivo Accessories have been opened in Guangzhou, Shenzhen and Hangzhou. The overall design of the store is black, with a neat row of small squares on each side of the container, with shoes and bags inside, and small spotlights above the cabinet on each product.

There are suspended glass showcase and model exhibition area in the middle of the shop, and a round full mirror.

However, according to insiders, as Urban Revivo Accessories's shop style wants to show a sense of superiority, some consumers tend to mistake themselves for high-end brands, so stopping at the doorway only to wait and see will not go into shops to see carefully. In fact, the prices of these products are in the hundreds of dollars.

This has led directly to sales of Urban Revivo Accessories, which has not been as good as expected.

Li Mingguang's original intention is to match the space design and brand positioning. Modern, luxurious and modern are the key words of UR.

Perhaps UR's space design is qualified, but the new brand needs further exploration.

At the end of 2017, UR renovated the Huashi Plaza store in Huaihai Middle Road, Shanghai as the latest brand image shop.

After renovation, the shop has a sense of art. There are two floors in the shop. There is a huge moon on the background wall of the staircase, which is decorated with white lights and gray keynote decorations.

As one of the hot business circles in Shanghai, Huaihai Road has many traffic and great competition.

So this store has chosen the Zara, H&M, UNIQLO, Gap, and the international fast fashion brands such as TOPSHOP, which will open in September, hoping to find opportunities to stand out.

But in the overall shop plan, Li Mingguang still wants to take a robust route, with about 50 plans a year.

And this plan is not confined to China.

Photo source: Urban Revivo

It's not easy to go out to sea.

At present, the whole company is preparing for the most important thing -- the opening of Westfiled Shopping Center store in London in September.

UR hopes to move closer to international fast fashion brands by expanding overseas and increasing investment portfolio. Although Li Mingguang feels that UR is still growing rapidly, it has not yet entered the outbreak period.

He is still waiting for the overseas and domestic efforts, and decided to increase the investment in electricity providers in 2018, increase capital investment, and strengthen offline integration and IT technology.

In fact, the ambition of internationalization comes from naming the brand.

"When I first wanted to call Urban Renewal (urban renewal), when I registered, I found a similar company in the United States and later changed to Revivo," Li Mingguang said. "Our vision is to create a global brand, so the style of clothing has always been European style, and after going abroad, it will not deliberately emphasize the identity of Chinese brand."

However, the difficult road of internationalization is not to be imagined.

As a chain of production all in China, UR wants to compete directly with Zara, H&M, Mango and other predecessors overseas. It means that we have lost the familiar resource supply and market environment.

Not to mention, the UK itself has also produced a large number of high street brands, such as Topshop, Primark, All Saints, New Look and so on.

According to Li Mingguang's estimate, the first three years after going to London are a challenge, and there will be great challenges in terms of products.

For example, how to balance the cost of style, version and logistics, and how to balance the price with UR, is also a problem.

Perhaps building a factory in London is a way to solve the problem of logistics, but Li Mingguang plans to plan when the number of shops in Europe reaches a certain level.

But more difficult is the question of consumer acceptance.

The acclimatization after going abroad was also shown in Zara and H&M.

Durbin, general manager of ruitede leasing, a real estate service provider, once said that the problem is also in the process of channel sinking, in addition to the fact that the product is not in line with the Asian figure in terms of style and edition.

These foreign brands have misjudged the Chinese market. After having tasted sweetness in the first and second tier cities in China, fast fashion is eager to move towards the three or four tier cities, but actually these two consumer groups are different: first, consumers in second tier cities are more likely to catch fast fashion.

The essence of it is fast and fashionable, and it can replace other styles after several times, so it will not care too much about quality.

Consumers in the three or four tier cities prefer to choose good quality products. The fast fashion of "first-class price, second rate design and three quality" will not be too popular.

This is also useful for UR, who is preparing to enter London in September.

Li Mingguang regarded fashion capital London as the starting point of the global market, and also UR catching up with the international market.

Brand is an important step.

Although in 2016, UR opened its first overseas station, Singapore Raffles Plaza, in December 2016, and opened a store in Singapore Lion City Square in August 2017.

But in Li Mingguang's view, entering Singapore is not a truly internationalized step.

"At that time, it was mainly because of cooperation with Cade business, just in Singapore, we went there, but I think there is no difference between opening a shop in Southeast Asia and opening a shop in China. In my mind, London is the first big shop that we really go out.

Overseas expansion or London as a global international?

At the beginning, I believe London can radiate the whole world. "

He said.

This time, not only did the store design team rush to London a few months ago, but also a local design team was set up to avoid the problem of product acclimatization.

The London store was opened in Westfield, the largest shopping mall in Europe, and this cooperation was discussed by the company and CBM Richard Ellis.

The shop has more than 2100 square meters and is the only Chinese brand in the entire shopping mall.

According to insiders, UR's business in Singapore is not very good. In fact, after Li Mingguang proposed to go to London, there were also voices of opposition at the top of the company.

The general objection is that the risk is large, the rate of return on investment is uncertain, and may have a great impact on the profits of the company and so on.

But Li Mingguang wants to "look at the long term and make sure that there is no profit in the international market in the short term. But when I open the door to the European market, there is a lot of room for association." this ambition may be due to disloyalty. "Chinese clothing companies have more than 30 billion of them. Why can Zara do 150 billion? UNIQLO and H&M can exceed 30 billion?"

"

The business model that allows to join is likely to help UR prepare overseas start-up fund in the future. In China, the proportion of UR franchise is about 62.5%.

UR's affiliate mode is very much like a hotel, partners pay money, UR is responsible for production, design, store management, operation and so on, and there is no difference from self run.

Li Mingguang said that UR will be able to go direct and join in parallel overseas. The next step may be a franchise system in Thailand and Malaysia.

Technology is also part of UR's next step.

Recently, Zara's new mobile application, Zara AR, is officially launched. Consumers can turn on a software camera for a shop window, create a virtual model and try to wear clothes, and make a list online.

And Li Mingguang's technological concept for UR is to focus on the "product" part, collect and analyze consumer behavior and preferences, and then go to the right medicine.

According to Li Mingguang, UR will further increase the product portfolio. It is expected that the first sports brand JGO will be launched in the second half of this year. Lifestyle brands are also planned, but there is no plan to increase the beauty line.

More and more rich product portfolios may also be one of the reasons why Hai Lan's home has become a shareholder, because Hai Lan's home has set up lifestyle brand Hai Lan optimization living hall. According to the information obtained from the Hai Bang home by the billion power network, the number of SKU in the whole store has reached 6000, including

Cosmetics, bedding, kitchenware, tableware, stationery, travel products and other categories have also been selling cosmetics since March. What seems to be cheaper versions of MUJI products.

But for cooperation, Li Mingguang said Hai Lan's stake in the stock market is more financial investment purposes. At present, the two group has yet to determine the direction of specific business cooperation.

International rivals are hard to fight, and the two armies face each other, but few in China.

Li Mingguang was ready to make a profit until it was late, and the high - hit campaign was doomed.

Getting fast fashion business opportunities from Zara, and now trying to avoid becoming more and more like Zara, Urban Revivo must keep looking for new ways on the basis of fast break fashion.