Zara, H&M And Other Fast Fashion Days Are Over?

Fashion has always been like a gust of wind crossing, leaving no fixed trend.

Discount, clearance, shop withdrawal, and the fast fashion that has sprouted everywhere is experiencing turmoil. They once were the weather vane of countless Chinese women to touch and catch up with the trend, which lasted for nearly ten years.

No good news.

In August 8, 2012, Beijing Wangfujing commercial street, the four new floors of the Forever21 store opened on the top and bottom of the whole 2500 square meters. Under the huge brand name, the crowd of young women came to queue up for shopping.

Like the brands such as GAP, Zara, H&M and so on, it is also a fast fashion route. There are many kinds of goods and cheap prices. The main customers are those who are 20-30 years old and young white collar workers. Similar to the birthplace of Europe and the United States, the Chinese have also started a fast-paced life. Clothes are catching up with celebrities.

The huge opening ceremony did not bring a good red business to Forever21.

Because in recent years, business has not been improving. Forever21 closed more than 200 stores in 3 years and withdrew from Tianjin, Hangzhou, Chongqing and Taipei. The first landmark store on Wangfujing street also came to a close after 5 years. Last week, it also announced a notice of suspension of operations on flagship stores on Jingdong and Tmall platforms.

A shop customer service told China News Weekly that after the final customer service process was cleared, the brand would withdraw from China.

In recent years, fast fashion and retailers such as Topshop, ASOS and Marsha general have lost the Chinese market, so the industry has not been surprised by the exit of Forever 21.

As early as 2016, ASOS, which had been unaccustomed to China, stopped operating.

After seven consecutive quarters of declining global performance, GAP plans to close its 1/4 store.

The number of MANGO shops has decreased from more than 200 in the peak period to about 50 now.

TOPSHOP ended its cooperation with Chinese agents in August last year and closed the Tmall flagship store on the eve of double eleven.

Fast fashion as a whole has fallen into a slack and there is no good news for big players.

The Inditex performance of the Zara parent company, which has long dominated the industry, slowed down from the second half of 2016. In the 2018 fiscal year, the sales growth slowed to 3%, 26 billion 100 million euros, and net profit 12%, the worst growth rate in nearly 5 years.

Equally difficult is H&M. In the three quarter of 2018, H&M stock of nearly 39 billion Swedish kronor (27 billion 500 million yuan), accounting for 33.5% of total sales, exceeded the warning line of 30% of the clothing enterprises' health stock rate. H&M had to burn up the stock of days, resulting in the company's profit falling by 41%.

After the rapid expansion of the world's horse racing enclosure, the fast fashion market has been highly saturated, and performance diving and survival difficulties. These "speed sequelae" foreshadowed that once good days seemed to be gone forever.

"Only fast does not break" failure?

High end design, civilian price, fast fashion in the past ten years has not encountered "can beat" opponent.

A Burberry style fast fashion windbreaker is only two weeks away from the initial design to the display window. It may be produced in Southeast Asia, and sent to the world through Spanish airports. Buying clothes in a large and efficient supply chain system is like picking up the bottled water.

Fast fashion has done the utmost in the matter of "fast". For example, Boohoo, ASOS and Missguided can produce goods in 2-4 weeks, Zara and H&M5 weeks, while traditional retailers take 6-9 months. Missguided can launch 1000 new products every month, update the stock once a day, and ASOS complete the product process in 2-8 weeks, the average time to market is about 6 weeks.

This breakthroughs in business mode, with rapid response and high turnover, builds a moat, occupying the minds of consumers, and arousing Shopping Spree: many people are overspending with the idea of "throwing several times to throw". The European and American wind has also affected the dressing aesthetics of a generation of young women. In those years, Topshop jeans even appeared on the overseas purchasing list.

The great gap between fast fashion and traditional mode quickly becomes a dimension reduction attack. Especially in the Chinese market, which is fragmented, lacking in powerful integration and highly dispersed, local clothing companies are watching the cake being taken away. Jay Chou, a student leisure brand that has been identified by Mr. Jay Chou, has closed 1500 stores in three years, and lost the first time after being listed.

Fast fashion does not always wear "Golden Bell". After years of fast food consumption, customers began to stress quality, delicacy and individuality, as if A&F, GAP and AGG, who had been on the decline for a while, were simply "fast".

"If the material and durability are considered in the price range, these brands are really not as good as Taobao." Liu Pei, a Post-80's white-collar worker, said that before going out to the streets, he would go to fast fashion stores. Nowadays, he seldom goes to the market, and the impressions and rough texture that he always disappears has obliterated the first impression.

Today, consumers are faced with more diverse choices, focusing on quality, refinement and individuality, and advocating rational shopping. The style is acceptable, but washing is deformed and can not be worn for several times.

Xiaomeng Lu, head of China business at Access Partnership, global public policy consultancy, stressed that Chinese consumers have been used to shopping on APP, hoping to deliver them on the same day. They have not paid much attention to the price, but often have little loyalty to the brand itself.

Contrary to China's highly electricity consumption trend, fast fashion pays too much attention to offline shops, and online long vacancies are quickly filled by thousands of net sellers like Sydney and Zhang Dayi.

Keep pace with the trend of the trend - product design display - generation factory production, China's unique fast fashion mode has already taken shape. Net red business or endorsement of the brand shop every month to the new one or two phase, formally launched the first half of the month or even earlier release preview, accept the reservation and collection. According to the feedback of customers, stores predict sales volume to factory order, and even more accurate than fast fashion in targeting the needs of target customers.

In the cost structure of the more optimized electricity providers and rents, the popularity of the decline of the physical shop bundle, fast fashion began to expose problems.

Store customers are getting smaller and fewer, inventory backlog, discount and clearance become normal. At the end of the season, the price is always 2-5, but the brand image has changed to low. Those customers who choose to look for fashion and brand choose to leave. They represent the most consuming group.

Analysts are directly saying that the good days of Zara are over.

In the past two years, the price of clothes sold by Zara in the Chinese market has fallen by 10% to 15% on average. Thus, the net profit of Inditex group in 2018 has increased by only 2% to 3 billion 444 million euros. Group Chairman and chief executive officer Pablo Isla acknowledged that the profitability of the group was being hit by fluctuations in the exchange rate and the rising rents of physical retail stores. Since the 2016 fiscal year, the profitability of the parent group Inditex has been shrinking and gross margins have fallen for four consecutive years.

H&M once maintained the speed of opening a new store in 4 days, but in the 2012-2016 years, the H&M operating profit rate dropped from 18% to 12.8%. To ensure profitability, H&M abandoned the goal of adding new 10%~15% stores every year, and the landmark Xidan Joy City store was also closed.

Things are not improving. In the 2018 fiscal year, H&M group's sales increased by 5% compared to the same period last year. After the growth rate stagnation, the bigger trouble was the daily inventory. The data showed that the stock size increased by 13% over the first half of last year, reaching 36 billion 333 million kronor (about 25 billion 600 million RMB).

In Europe, the fashion of fast fashion collectively copying top brands has been criticized repeatedly, and tens of millions of euros are paid annually for infringement penalties. But profits are far more than fines, and this design pattern has not been abandoned. One change is that the judgment of clothing intellectual property has been tightened. Last year, Diesel and Marni's parent company in the design plagiarism lawsuit against Inditex group, the court decided that Zara lost the lawsuit, insisted on copying the copy fast fashion, and was on the road of no turning.

The deeper panic comes from the rule that "only fast does not break". Fast fashion's weak design ability will slow down the front-end reaction speed, and the advantage of the supply chain will not be able to speak. Turnover will slow down, and competition will lose, and the impact will be fatal enough.

The era of fast fashion has gone away?

After the impact of a generation of consumers, the role of fast fashion has undergone subtle changes, the drawbacks of its own models are gradually emerging, and the changes in the overall external consumption environment are gradually slipping from the front-end of the trend.

Regrettably, this trend is still showing no signs of reversing.

The expansion path of fast fashion is usually in the first tier city central business district to open a spacious store, and then follow the commercial real estate developers to the two or three tier cities, settled in the mall, Wanda Plaza, Cade MALL, Yintai and other shopping malls, corresponding to the commercial property blowout that started in 2011. According to statistics, nearly 400 new department stores were added in the same year, and about 250 new stores were added in 2013.

Commercial real estate driven fast fashion is mainly reflected in the low cost of strong brand entry, which can usually get preferential policies to reduce shop rents and decoration subsidies.

For ten years, the bubble Express has now been weak.

In 2013, investment in China's commercial business space development reached 11945 billion yuan, up nearly 30% compared with the same period last year, but with the large number of shops in Shenyang, Qingdao and other shopping centers vacant, the commercial development plan far exceeded the actual demand of the market. In the past 2014-2018 years, the vacancy rate of shopping centers in the second tier cities of the whole country was nearly 9.26%, concentrating on the more aggressive second tier cities in emerging business circles such as Tianjin and Chongqing.

To bypass the competitive second tier market, a feasible path is to continue to penetrate into the vast three or four line market and compete for the long tail customers. But the commercial real estate bubble that started to dissipate has added uncertainty to the plan. In the growth rate of commercial real estate investment with an average low to -0.8%, the number of new shopping centers has been less and less, and the volume area has also been greatly reduced in the past three years, and the industry is still at a high supply stage.

Statistics show that in the four quarter of 2018, the typical city shopping centers in China (commercial area of 50 thousand or more) accounted for 22.3% of the total number of clothing stores, and the number of shop opening accounts for 21.7%, the worst performance in five formats.

Fast fashion can't run.

With the departure of Topshop and NEW LOOK, the rest of the shop slowed down: 30 H&M, 8 Zara and 4 C&A. Last year, 65% of the ten fast fashion brands continued to gather in a second line. It seems that the sinking plan did not go smoothly.

In the 2018 China family smart consumption report, Nelson pointed out that the second tier cities tend to be rational consumption, and the 345 line cities began to enjoy the upgrading of consumption. Thanks to the popularity of smart phones and the rapid development of electricity providers, the consumption habits of the three or four line cities are getting closer to a second tier city. Fast fashion brands have to let go of their efforts to adapt to the Chinese market.

The fast fashion has always learned the most popular way of selling nowadays -- traffic star + net red, signing Wang Yuan, Zhang Yixing, Dongyu Zhou and Wu Lei to endorse, and turn the customer target to the young fans behind the stars.

In terms of business, H&M increased the supply chain investment and hoped for high-end Cos and &Other Stories. Zara slowed down the pace of opening stores, and integrated the home Zara Zara to enhance synergy, focusing on the digital spanformation of stores, and continued to strengthen the advantages of the supply chain. They also cut into the hot beauty market and launched parity cosmetics. In addition, C&A marched into the wedding dress market and GAP overweight children's clothing business, trying to find a new growth point for training.

Strong desire for survival, because the opponent is too strong.

Taking advantage of the supply chain, UNIQLO seize the electricity supplier opportunities, and use the new retail strategy of online and offline linkage to drive a continuous growth of four years. The report shows that the Greater China market has become the main achievement of overseas markets, and online channel sales are particularly strong, accounting for 15% of the total revenue in the Greater China region.

As of fiscal year 2018, H&M has 465 stores in 153 cities in mainland China; Zara parent company has 580 brand matrix stores, and UNIQLO, which advocates basic and cost-effective, is totally counter to the scale of 673.

H&M launched Tmall flagship store last year to win more online traffic. In September last year, Zara's first new retail concept store located in Times Square in Shanghai was bound to avoid a fierce competition.

Ten years ago, fast fashion led the trend. Now, to maintain its status, we need to continue to invest in a larger scale of war.