Fast Fashion Giant "Pformation" Fans Economy, Launched A War Of Looting

It is at the window period of the annual report that many of the fast fashion tycoons that have not been favored have encountered the "pformation torture" of the market investors again.

The four giants have their worries.

Recently, Spanish group Zara Inditex, the parent group of fast fashion brand, announced its 2018 financial year results. Data show that net profit rose by 2% to 3 billion 440 million euros in the group period, up 12% in local currency, which seems to be the most "bad" growth rate of the group in the past 5 years.

According to the report, group sales increased by 3% to 26 billion 100 million euros in fiscal year 2018, compared with sales growth of 4%, slower than the 9% sales in fiscal 2017, and the gross margin was 56.7%.

What is more alarming to the industry is a report submitted by the Inditex group to the local regulatory authorities.

According to the data, the rental cost of the group's operating entities increased by 1.4% to 2 billion 392 million euros last year, which is 10% of the total revenue.

As of January 31st, Inditex group has 7490 stores in 96 countries and regions around the world.

Obviously, the huge scale of physical stores has become the "biggest burden" in the pformation period of Zara.

H&M has also disclosed its first quarter results in 2019, with sales increased by 4% between the year and 51 billion kronor, or about 5 billion 490 million US dollars, at a fixed rate of 10%, slightly higher than market expectations.

However, several agencies have pointed out that the current H&M recovery is mainly due to the lower base of comparison in the same period last year, and wants to confirm the "recovery trend" faster, and more performance is needed to prove the good data.

UNIQLO, which was born in Japan, staged a new pattern in the 2018 fiscal year, that is, "the mainland is not enough, and the overseas is coming together".

The 2018 fiscal year report of the fast retailing group of UNIQLO parent company (up to August 31, 2018) shows that the overseas market (including greater China) has surpassed the Japanese market for the first time.

From the data point of view, the overseas market sales rose 26.6% to 896 billion 300 million yen in the same period, and operating profit rose 62.6% to 118 billion 800 million yen.

During the period, the proportion of UNIQLO's performance in the Chinese market reached 25%, and China became the world's second largest market of UNIQLO brand.

Gap, a fast fashion brand that once dominated the North American market, is increasingly showing signs of "giving up treatment." by the end of February this year, Gap group announced that it will split into two independent companies: one of them contains only OldNavy that has developed better in recent years, and the other has not yet been named, but it will include existing brands such as Gap, Banana Republic and Athleta.

Transformation window focuses on "traffic star"

In the past two years, the fast fashion tycoons, who had always called themselves "quick wins", began to "low down" in the past two years, relying on spokesmen and cooperative stars to stir up topics and win attention.

The biggest action in the past two years is H&M. In March, Zhang Yixing announced that "the versatile musician" became the spokesman for the menswear brand in Greater China. As early as last year, H&M announced that Wang Yuan, an "idol of super popularity", became the spokesman of the brand new generation in China.

H&M said that the establishment of spokesperson is through continuous pursuit to enhance market competitiveness and brand influence.

In addition to signing spokesmen, H&M has also increased the proportion of Star Street filming and tide people cooperation in daily publicity campaigns for media and social networks.

This strategy seems to be doing well at the moment. At the end of March, Zhang Yixing released the single product Street patrolling "right way to greet spring". It forwarded more than 568 thousand on micro-blog, but the brand's ordinary type recommended micro-blog, the forwarding volume was basically very sad.

In September last year, H&M's biggest rival, Spain's fast fashion brand Zara, announced that Dongyu Zhou and Wu Lei became the Greater China brand ambassadors and sold the same products at Tmall flagship store.

The number of fans of Dongyu Zhou and Wu Lei on micro-blog is 28 million 600 thousand and 37 million 750 thousand respectively. As the new generation of "little flowers" and "small fresh meat", they have certain "carrying capacity". At present, they search for "Zara Dongyu Zhou" or "Zara Wu Lei" on Taobao's electronic business platform.

The "sudden love" of fast fashion brands for traffic stars is closely related to the change of consumer preferences.

Compared to luxury brands, the "millennial generation" accounts for a large proportion of the fast fashion brands today.

This generation coincides with the rapid development of mobile Internet technology, which has greatly changed their consumption outlook, consumption patterns and preferences.

"Millennial generation" emphasizes individuality, hopes to resonate with brands, and is more willing to listen to the recommendation of idols and fashion bloggers.

But some analysts believe that for fast fashion brands, traffic is a double-edged sword.

Traffic stars can bring goods, but they can also destroy a brand's big event, a new product release, or even shake the brand image.

A new report by Spotted, a market research firm, points out that fashion brands need to be more cautious in dealing with traffic stars and diversify their list of CO stars.

But this will bring more cost pressure to the fast fashion brand that wins the "good quality and low price".