ZARA Has Closed 37 Stores Due To The Epidemic, But This Is Not The Biggest Trouble.

New pneumonia epidemic haze is not dispersed, UNIQLO, GAP, H&M and other fast fashion giants have announced a substantial closet. However, ZARA (demand area: 1000-2500 square meters, 117 shopping centers, and 15 plans this year) is an exception.

However, according to the exclusive observation of CEO brand, a number of shopping malls in Xi'an, Hangzhou and Chongqing have been closed, and 37 ZARA stores in these stores have been closed, plus 4 Wuhan stores closed in December last year. Before and after the outbreak, there were at least 41 ZARA stores.

The loss caused by the store is still "labor pains". For this veteran fast fashion giant, the bigger hitch is the "Chinese puzzle".

Escaped from SARS, but failed to avoid the shadow of the new pneumonia.

During the sixteenth Spring Festival in China, ZARA was forced to "scale off stores".

Recently, according to the exclusive observation of CEO brand observation, the shopping centers of 9 cities in Hefei, Hangzhou, Nantong, Wuxi, Chongqing and Fuzhou were all closed down by the continuous impact of the epidemic. All stores are closed except supermarkets and drugstores.

Enquiries ZARA official WeChat learned that ZARA has 37 stores in these 9 cities. This means that, at the end of December, ZARA closed at least 37 stores, plus 4 stores in Wuhan which closed quietly at the end of December last year, and the total number of closed stores was 41.

At present, ZARA is not the only fashion giant to shut down. Previously, UNIQLO announced that it had closed 370 stores. GAP, H&M, Muji and other fast fashion giants have announced a temporary closure of some stores.

Looking back at the SARS period in 2003, the impact of the clothing industry was basically in keeping with the development of the epidemic. From 3 to 5, the impact was serious in the first half of the month, and gradually resumed normal production activities from 7 and August.

Perfectly stagger the SARS storm, ZARA first landed in China in Shanghai in 2006, and won a "good start". According to reports, ZARA's first store in China's first spring festival hit a record high, with single store sales of 800 thousand yuan per day. At that time, the sales volume of similar clothing brands in China was 10 thousand yuan.

After that, ZARA ushered in the golden development period of 10 years. Before and after 2008, China's national shopping center opened up "blowout". ZARA also opened up more than 20 new stores in the period of high light.

In the first quarter of 2019, ZARA parent Inditex Group sales amounted to 5 billion 930 million euros, and China was its second largest market in the world. Due to the impact of epidemic situation and shop closure, the group's first quarter 2020 revenue will be hit to a certain extent.

However, the impact of the epidemic is short term, and the extension of the timeline shows that ZARA has more problems in China.

　 ZARA internal and external troubles

From the perspective of the enterprise itself and the industry environment, ZARA is facing operational resistance.

As the core brand of Inditex group, ZARA has always been the main performance engine of the group. In the first half of 2019, ZARA revenue was 8 billion 890 million euros, accounting for nearly 70% of the group's total global turnover.

China is the second largest ZARA market in the world, next to the Spanish market. According to the fashion headline data monitoring, the price of clothes sold by ZARA in the Chinese market in the past two years has decreased by 10% to 15% on average. To a certain extent, this shows that ZARA's brand premium is decreasing in the eyes of consumers.

According to statistics from win business network, ZARA stores in China have slowed down in recent years, from 16 in 2014 to 12 in 2019. The highlight time of more than 20 stores increased in ZARA.

ZARA's new stores are declining year by year, and the corresponding industry environment is that the traditional fast fashion brands are fading away.

In 2015, the global fast fashion industry was plunged into a "closed shop tide", and the market was repeatedly weakened. ZARA naturally reduced the pace of expansion in Hua men shop, but it rapidly expanded in 2016. The pace of shop opening slowed down in 2017 and closed the flagship flagship store in China.

2018 is the year of fast fashion brake. NewLook and TopShop have withdrawn from the Chinese market one after another. In those days, ZARA added only 8 stores, hitting the bottom.

In 2019, ZARA's new store rose slightly to 12, but hit a fast fashion "cold winter".

According to incomplete statistics of win business network, in 2019, there were 8 fast fashion brands including H&M, ZARA, UNIQLO, MJstyle, Muji, UR, C&A and GAP, and there were 218 new stores in the mainland (excluding upgraded stores), a record low.

Some fast fashion brands are still struggling, and others are going to bid farewell to the Chinese market. The US Forever 21 announced that it had completely withdrawn from the Chinese market. Topshop, the British high street brand, also closed the Tmall store and withdrew from the Chinese market.

When the foreign fast fashion brands are cooling down year by year, the fast fashion brands in China are heating up. Take UR as an example. Over the past four years, more than 30 new stores have been opened each year. Local new fast fashion is catching up with the international fast fashion giant's original market share.

To sum up, ZARA is in a dilemma, and the pace of change will accelerate. After all, China is a market that can not afford to lose.

　 Multi dimensional adjustment, seeking new selling points

In the past two years, ZARA has taken actions and self adjustment from various aspects, trying to create new consumption highlights and reasons.

1. replace the brand new LOGO

In recent years, many famous brands such as LV, GUCCI, Celine, Bottega Veneta have changed LOGO. The move is intended to speed up the younger generation and create a new image in order to help boost sales.

Among them, Bottega Veneta, under the leadership of the new creative director, not only changes LOGO, but also designs a new look. The brand reached double-digit growth in the third quarter of 2019, up 9.8% to 284 million euros.

In such a new situation, ZARA also replaced the new "third generation LOGO" in January 2019, retaining the original Serif serif fonts, and the letters became more slender and compact.

In this regard, the evaluation of social media is mixed. Some people think that the change of LOGO is of little significance, and others believe that this is a signal for the transformation of the brand to the high-end market.

2. multidimensional adjustment of business lines

In addition to the replacement of LOGO, ZARA has also adjusted its business from multiple dimensions to cater for the aesthetic and consumption needs of the main force of the millennial generation and Z generation, and seek new growth points.

ZARA moves frequently in 2019. In February of that year, its new make-up series officially landed in the Chinese market, and only in the official website and Tmall flagship store. This series of products is mainly targeted at parity, especially for Asian women. Its make-up line first took the lead in the US and Europe at the end of 2018.

In addition, ZARA also expanded the perfume product line. It works with the founder of Jo Malone, the high-end fragrance brand, to launch Zara Emotions by Jo Loves CBE series.

However, the cross-border operation of ZARA is obviously slower than other fast fashion brands. Its biggest competitor, H&M, launched H&M Beauty in 2015, and sister brand Bershka launched its first beauty series Beauty by Bershka in 2017.

In August 2019, ZARA launched the first personalized customization, involving 28 single products. Consumers in many countries, including China, can enjoy personalized customization services on the Edited website of the brand website.

3 months later, ZARA launched the first online series, ZARA SRPLS, which goes on the uniform wind route.

Some of the new attempts are being carried out, some of them have stopped quietly.

A few days ago, CEO brand observation found that ZARA girl product line TRF quietly withdrew its brand official website and APP, currently there are three main plates, WOMAN, MAN and KIDS. Before, in the three sub lines of Woman, Basic and TRF, TRF was young and cost-effective. The move suggests that ZARA is not so successful in trying to open up new business lines.

3., continue to increase the intensity of e-commerce.

Since 2016, the growth momentum of Inditex entity stores has been slowing down. Some media commentaries believe that an annual rent of 18 billion is a huge burden. Therefore, in the past few years, Inditex has been trying to shut down inefficient stores and continue to increase the electricity supplier business.

In 2018, group business revenue accounted for 12%. In the same year, the group announced that all its brands could be sold all over the world through online channels, and gradually increased services such as online shop product line shop returns and so on.

In order to advance digital ambition, ZARA changed hands in 2019. Coo Carlos Vrespo take over CEO. Pablo Isla, the group's CEO for 14 years, said Carlos Vrespo is a key figure in the group's digital strategy, which will help its brand to achieve faster next year's goal of providing e-commerce services in all regions of the world.

As of October 2019, the total number of Inditex's stores has reached 7486, and the electricity supplier has covered more than 200 countries and regions, of which 2139 are ZARA stores.

ZARA China's e-commerce business started in 2012, adopted the self built electricity supplier mode, and entered the Tmall brand flagship store in 2014. As of February 2020, the number of fans of ZARA Tmall official flagship store reached 20 million 40 thousand.

At present, the physical stores have been frustrated, many clothing brands have tried to increase the intensity of e-commerce to make up for the loss of performance. However, ZARA has made no special statement in this regard.

ZARA's epidemic situation is temporary, but it is not easy to return to high light in China. The international fast fashion is weakening in China, and the local fast fashion brand is rising. ZARA product aging problem remains to be solved, the new business line is still in the incubation period, the benefits have not yet appeared. These are the "Chinese problems" that ZARA needs to face.