Forever 21 Issued A Police Training, Fast Fashion Trembling, Cold Winter Is Coming?

Following the closure of stores in Tianjin and Hangzhou, at the beginning of last year, the famous fast fashion brand Forever 21 closed its store on Wangfujing street in Beijing, the first landmark store to enter the Chinese mainland market.

The closing of this landmark store is like a signal, and since then, people have been waiting for its final arrival in China.

In more than 1 years, Forever 21 has switched off Tianjin, Hangzhou, Beijing, Chongqing and other local stores, and recently closed the opening of less than 2 years in Xi'an stores.

There are only branches in Shanghai and Beijing, and large scale promotional activities are also taking place this month.

Although Forever 21 has not officially announced that it will withdraw from the Chinese market until now, the date on which the flagship store's announcement of the suspension of its Tmall flagship store has been processed from now until May 30th is regarded as the last day for them to bid farewell to Chinese consumers.

In fact, this is not a mistake made by Forever 21, but the whole fast fashion industry is having a headache.

Before them, ASOS has stopped operation, GAP decided to close nearly 1/4 stores, MANGO stores only had the peak 1/4, TOPSHOP completely withdrew from the market, and after that, the two big Zara and H&M of the industry had already threatened the crisis.

In March of this year, Zara's parent company Inditex released its annual report for fiscal year 2018 as of January 31st.

Although group sales increased by 3% from 25 billion 300 million euros in 2017 to 26 billion 100 million euros, the core Zara brand growth was also around 3%, a significant decline compared with the group's 9% in 2017, setting the slowest growth rate in 5 years.

In other words, Zara and even the whole Inditex are beginning to show the momentum of losing growth momentum.

Although Zara has not published its performance in China alone, it is not easy for them to make a living in China.

In February 2017, Zara shut down the biggest flagship store in China, and at the same time, they said they wanted to slow down the expansion of their stores.

In addition, according to fashion headline statistics, the price of clothes sold by Zara in the Chinese market has decreased by 10-15% over the past 2016-2017 years, and this trend seems to have been maintained until now.

In contrast, H&M's life is better.

According to its published 2018 earnings report as of last November 30th, thanks to the strong growth of online channel revenue of 22%, group sales increased 5%, up slightly faster than Zara.

But this is mostly attributable to the fourth quarter growth of 6%. In the first and second quarters before that, their sales growth was only -1.7% and 1.2% respectively.

Because sales were not as good as expected, in the 3 quarter of 2018, their inventory accounted for 33.5% of the total sales, exceeding the warning line of 30% of the health stock rate of garment enterprises. H&M had to burn the sky inventory, resulting in the company's profit falling by 41%.

H&M did not enjoy the unique treatment in China. Just like other fast fashion brands, they had to go through a hard time by closing the store.

Starting from the closure of one of the first stores in Xidan, 2017, the store of Yueyue city began to attract much attention. At the end of the year, the Changsha Huachang International Plaza store did not open, and it attracted more and more attention.

In fact, if we open first Chinese stores with Zara, it will be less than 15 years for the western fast fashion industry to enter China's market.

In the short span of 15 years, the fast fashion brand has been fighting against the city from high speed, killing the local fashion brand, and now it has become a bottleneck. Why?

The decade of fast fashion in China has just been more than ten years since the development of e-commerce.

Some people may think that the entity store can develop rapidly under the combating of e-commerce. This is a miracle, but it is not.

Fast fashion is rising in China by 3 points: fast moving, low price and free shopping environment.

Fast fashion brands "produce goods within 2-4 weeks" and "update the stock every day" are all abused. The price of a T-shirt less than 100 yuan at the beginning of entering the country is a sharp weapon for them to implement the "dimension reduction attack" on the local women's clothing brand of 200 yuan from a T-shirt.

After careful reflection, these 3 points are highly consistent with the characteristics of the electricity supplier.

By reducing quality, cutting value-added services and so on a series of costs, the price will be reduced to the extreme, and then the style will be enriched to the extreme. In a word, it is the same way to speed up the development of fast fashion and electric business.

In recent years, fast fashion has gradually lost its performance price ratio.

Of course, this is not to say that the prices of fast fashion brands are getting higher and higher. On the contrary, according to the data above, the average selling price of clothing sold by Zara in China is still declining.

However, the degree of homogenization of these prices is also getting higher and higher. The price of unique and innovative products is getting higher and higher.

In the case of Xiaobian's personal experience, it is also heavy and not warm. It is only a sweater with a nice look. UNIQLO sells for 299 yuan, and the western fast fashion brand sells for 399 yuan, and the service level of UNIQLO's stores is much higher than those of these fast fashion brands.

This may be the reason why Western fast fashion brands are on the decline, while UNIQLO 2019 has increased 6.8% in the first half of fiscal year.

In addition, the rise of the fast fashion mode with Chinese characteristics also constitutes a "dimension reduction attack" on the traditional fast fashion brands.

In the Internet + mode of social networking platform, some shops can update 2 rounds of products every month, and more importantly, they can release previews before the shelves, receive reservations and collections.

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.

I must mention that the rapid development of fast fashion several years ago is also one of the reasons for the development of commercial real estate.

From 2008 to 2017, the growth rate of shopping area in the 1234 tier cities was above 25-30%, but suddenly dropped to 15% in 2018.

The draught stopped, and the fashion brand also fell to the ground.

Of course, these fast fashion brands are also undergoing pformation.

H&M has been trying to become high-end in the past two years, and has launched dozens of brands in recent years. It also tried to set up a rich concept store in Sweden. Zara no longer pursued shop opening speed, but began to integrate existing resources and strengthen the advantages of supply chain.

At the same time, 2 brands are also learning from UNIQLO to develop a new online retailing industry.

This may help them survive in China, but it is impossible to get the status of wind and rain in the past decade or so.

Author: Huang Kun