What Did Forever21 Do Wrong When He Withdrew From The Chinese Market?

Fast fashion market is now in danger.

Fast fashion, which has gained popularity from China, is now being forced to withdraw at the same speed, but in a short period of 5 years.

According to fashion business news, after closing the flagship store of Tmall and Jingdong, and the Chinese official website, the fast fashion brand Forever 21 of the US has basically completed the clearance at the next store in China, and will officially withdraw from the Chinese market.

Whether Shanghai flagship store or Beijing Yau Tang store, after less than a month's sales promotion, there are only empty shelves left.

Forever21, founded in 1984 by Zhang Dongwen and Zhang Jinshu, born in Korea, has grown into one of the largest fashion chain brands in the world in more than 30 years.

In 2008, the brand tried to enter the Chinese market, but it failed until 2011.

The withdrawal of Forever 21 in China is not without signs.

Since the end of last year, the brand has quietly shut down stores such as Tianjin, Hangzhou, Beijing and Chongqing, including Hangzhou's lakeside in77 flagship store, Beijing APM and other important shops.

In March of this year, Forever21 also closed its first store in Xinyi District, Taipei, in June 2015.

The 6 flagship store at JINGWAH center in Tongluowan, Hongkong, also withdrew from the 2017 lease and was taken over by the American underwear brand Victoria'sSecret.

Before China, Forever21 began withdrawing from Belgium, Holland, the United Kingdom, Germany, France and Japan and Australia, and most of its stores in North America have been closed since 2016.

According to Forbes data, Forever21's sales plunged 14% to 3 billion 400 million dollars in 2017, with a loss of up to 400 million US dollars.

In addition to the trouble of over expansion, Forever 21 is facing the dilemma of the awakening of consumer attitudes. The vast majority of Forever 21 products are priced between us $4 and US $20. Now consumers are making choices about the availability and morality of clothing, becoming increasingly tired of Forever 21 low quality and cheap goods.

For a time, China's fast fashion field left only a few giants represented by Zara, H&M and UNIQLO. NewLook, ASOS and Marsha general store had already left the field. Topshop, after nearly 5 years of testing the Chinese market in Tmall, decided to leave without formal entry.

The industry can not help but begin to reflect that behind the big retreat is whether there is a problem in the fast fashion industry itself, or that Chinese consumers are growing too fast, and what competitors on the field can do to attract more and more picky consumers.

"Fast fashion" actually stems from "FastFood", which means that the core of the industry is not only the cheap sale at the front end, but also the design, production and manufacturing supply chain of the back-end, that is, SPA (private brand retailer).

Under the leadership of Zara, H&M and other brands, fast fashion apparel quickly conquered the Chinese consumers in the period of aesthetic growth, and also provided a great business opportunity for Chinese apparel suppliers. Brands such as Forever21, Marsha and New Look entered the Chinese market with this easterly wind.

The rapid change of fashion retailing has led to the differentiation of fast fashion.

First, from the front-end sales analysis, Forever21 and other fast fashion players who started their efforts in the Chinese market after 2008 seem to have successfully entered the road with the help of their predecessors, but have never gained absolute market advantage.

Before these brands entered China, fast fashion, the dominant position of potential market, has been firmly occupied by giants such as Zara, H&M and UNIQLO. Consumers also have a preconceived judgement and recognition of fast fashion. It is almost impossible for a later person to compete for a share from overlord by simple reproduction. This is even more a myth for the 5% of Forever21 in the global fast fashion industry.

In addition, the hesitation in the Chinese market has also become a stumbling block for Forever21. When Zara, H&M and UNIQLO continue to build stores in China, the brand from Losangeles, USA, has left again after testing the water in 2008. It is not until 2011 that it has returned to the original stage. It has long been the best time to accelerate penetration, and it is difficult to stand out from the competition.

According to fashion headline data, although Zara and H&M have closed some poor stores in China in recent years, Zara and its sister brands still have 593 stores in China, while H&M and UNIQLO have 535 and 672 respectively, while Forever21 has the largest number of stores in China but 20, and can not compete substantially with the former two.

From the perspective of the back-end problem, the difference between Forever21 and Zara lies in its lack of originality and autonomy.

As a fast fashion textbook, Zara has two points that have always been praised by the industry.

One is the design headquarters made up of 350 designers. Unlike the competitors Gap, H&M and Primark, Zara has no chief designer, and each designer has the autonomy. The product style will ultimately be decided by the latest sales data of all regions. Therefore, the design department has the independence without the ratio of Lun ratio, averaging two times a week to provide new products to the store flexibly according to the trend of the trend.

Designers will analyze products that are salable and unmarketable based on daily feedback sales data, which will directly affect the style of products in the coming weeks.

Second, the Zara parent company Inditex group's products are about 2/3 in short term delivery, which means that the brand can flexibly design and produce according to market demand and avoid unnecessary inventory, so Inditex group's stock has always been the lowest in the industry, so that it has no seasonal fashion in real sense.

Looking back at Forever 21, the new initiatives in recent years have no more than the addition of multi brand beauty shop Riley Rose and 21Red comprehensive concept store. Instead, they appear frequently in the public eye due to the lawsuit of luxury fashion brands such as Puma, Gucci and Adidas, and the brand image has fallen to the bottom.

At the same time, Forever 21 product quality is too bad and the style does not conform to the market has become the Chinese consumer's eyes recognized the drawbacks.

Many young consumers say that the design of Forever21 is tailored to American style, and advertising models are almost foreigners. Many styles are not suitable for Chinese consumers, and the quality is not as good as that of Zara and H&M.

Forever21's loyalty to the 15 to 25 year old group is very low.

Once the product is not updated and meets the consumer's fresh demand, they will not hesitate to turn to another brand, plus not enough exposure and marketing investment. Forever21's defeat in the Chinese market seems to be an established fact in the eyes of the industry.

Similarly, there is also a super fast fashion ASOS. In May 2016, the British fashion e-commerce website announced that it had stopped operating in China.

In the earlier reports, fashion headlines pointed out that suppliers, logistics and other problems were limited. Besides the slow updating of goods and unsuitable tastes for Chinese consumers, there was the same problem in ASOS, Forever21 and other foreign fast fashion in China, that is, high price and lack of price advantage.

In response to the dilemma of fast fashion in China, Franklin Chu, an analyst in the women's wear daily, put forward 3 suggestions for competitors who remain on the market in the latest report.

Product design and size localization.

Data show that Chinese consumers are smaller in size than Westerners, and prefer products such as dresses.

With the rise of lifestyle awareness, high-end sports apparel is becoming more and more popular among Chinese consumers.

We should increase investment in quality and avoid price war.

Since China is the largest textile producer in the world, the price of fast fashion is almost no advantage before the local fast fashion. Now China's middle class consumers are richer than 10 years ago, so it may be easier to break through from the entrance of quality.

Shift your focus to the next line.

With the rapid development of Alibaba, Jingdong and other electronic commerce giants, China's price parity clothing market has been highly fragmented. Apart from the traditional clothing brands, there are tens of thousands of brand names launched by net red.

According to statistics, Taobao recorded nearly 2 trillion and 700 billion yuan of merchandise in fiscal year 2018, and women's clothing is the most popular category so far.

Therefore, the cost of acquiring new users on fast fashion online is no less than that of opening new stores. Another report shows that the return rate of consumers buying clothing online is low.

The departure of the weak does not mean that the fast fashion industry is in decline in China. At least, it still sticks to the brands such as H&M, Zara and UNIQLO in the Chinese market. Instead of giving up, it constantly seeks new breakthroughs in an attempt to consolidate its market share.

At the beginning of this year, H&M announced that Zhang Yixing, a versatile musician, became the spokesperson for his brand in the Greater China area. He is also the first annual spokesperson for H&M brand Greater China, based on the men's clothing with a sense of design and quality, and further promoting the development of his business in Greater China.

In March last year, H&M also announced the popularity of idols as the brand name of the new generation in China.

With the improvement of the consciousness of sustainable development of consumers, H&M is constantly strengthening the brand's own environmental image. It will announce the supplier's information on the official website, such as clothing materials, origin, supplier name, factory address and number of workers, so as to win more consumers' favor.

At its fashion summit in Copenhagen last year, H&M said its goal was to establish a circular and renewable business model and plan to adopt recyclable or other sustainable sourcing materials in 2030.

Zara also announced in September last year that micro-blog's official account announced that China's 90 star Dongyu Zhou and Wu Lei were the brand ambassadors of Greater China, the first spokesperson for the brand.

The other brands of the parent company Inditex group had little habit of hiring spokesmen before, but they suddenly introduced star resources in 2018, such as MassimoDutti's Janine Chang, Oysho's Li Qin and Pull&Bear's Wang Kai Kai.

At the same time, Zara also launched official website and e-commerce services in 106 countries and regions, and added a series of beauty makeup.

According to group CEO PabloIsla, over the past 5 years, the group's total investment in online channels has exceeded 7 billion 700 million euros, of which 1 billion 500 million euros has been designated for upgrading technology and logistics.

PabloIsla also stressed on the activities of the Wall Street journal last Tuesday that although Zara did not enter the field of electricity until 2010, the positioning and direction became clearer, which allowed the group to take a lot of detours. "If it happened 10 years ago, it would be very different."

At present, Zara has tried door-to-door service in China, and will expand to other markets in the future.

UNIQLO, who has entered China for 13 years and landed on Tmall 10th anniversary, has chosen to impress consumers with its products, not only increasing investment in new materials research and development, but also attracting young consumers through regular cooperation series with designers such as AlexanderWang and J.W.Anderson.

Young talent is also an important resource that UNIQLO wants to fight for. The parent company Xun marketing group said earlier it would raise the salaries of its employees.

Thanks to the importance of foundation and innovation technology, chairman and CEO of fast marketing group, UNIQLO has now surpassed Zara and H&M, becoming the fastest growing fast fashion brand.

In the first half of fiscal year ended February 28th, sales of XXX group increased 6.8% to 1 trillion and 270 billion yen, or 76 billion 300 million yuan, and net profit increased by nearly two digits. It recorded 9.5% to 114 billion yen, or about 6 billion 800 million yuan, a record high.

"Fast" and "cheap" are the necessary weapons for Zara and other fast fashion brands to win consumers. In order to keep up with the increasing demand of consumers and cope with increasingly fierce market competition, fast fashion brands have to increase profits by pressing the supply chain, constantly reducing costs and improving production efficiency.

LiviaFirth, founder of sustainable development consultancy Eco-Age, pointed out last year that in the past 15 or 20 years, mass retailers have been brainwashing consumers, making people think that buying a $five T-shirt is normal and is a must. But the environmental costs and moral costs behind it have not been noticed.

However, some analysts say that fast fashion brands still need to be highly vigilant. With the gradual rise of Chinese clothing manufacturing and retail sales, apparel groups with more than 10 billion turnover have springing up, and the brands such as Taiping, Jiangnan Buyi and di Su fashion have also been listed successfully. They not only have sufficient funds, but also have a better understanding of Chinese consumers' preferences.

In the latest report, CITIC Securities pointed out that taking into account the cardinal factors, the improvement trend of consumption and the apparel industry inventory situation, the domestic garment sector showed a low and high trend this year. The second half of this year is expected to improve the recovery. The focus is on the sports and children's clothing industry with high level of scenery and clear headed layout, such as Anta sports, Lining and Semir apparel.

"Survival of the fittest is the crux of the garment industry". Some people admitted that when the number of entrants becomes more and more, the importance of maintaining their own differentiation becomes more and more obvious.

To be sure, Forever21 will not be the last player to be eliminated in the fast fashion world.

It will be bad luck to go the old way, and fashion is also the same.