ZARA Frequently Closed Shop Without Signs, Can It Escape The Cold Winter In The Industry?

Under the haze of epidemics, fast fashion brands are also uneasy.

ZARA, GAP, H&M, UNIQLO, Muji and other fast fashion giants have shut down some stores. Among them, UNIQLO closed 370 stores, accounting for nearly half of the total number of shops, the loss is great, it is sad.

Naturally, there is no doubt about the natural impact of the epidemic. However, Spain's fast fashion brand ZARA has already begun to shut down offline stores without warning before the epidemic has yet to spread.

Did ZARA anticipate the outbreak and shut the shop ahead of time? Obviously, this is impossible. So what exactly did ZARA encounter in China?

01

Expansion slowdown

ZARA high light time is long gone.

At the end of 2019, ZARA suddenly closed all shops in Wuhan, which caused various conjectures. But in fact, closing shop has become the ZARA normal.

As early as in June of that year, ZARA shut down two stores in Beijing's core business circle, one is Dongzhimen Raffles shop, the other is Wangfujing new Dongan store.

In fact, Zara began closing its stores in China, dating back to February 2017. At that time, because of the adjustment of business circle, ZARA closed the flagship store in Chengdu Lun sum shopping center, which was once the largest flagship store in ZARA.

Although the reasons for closing stores, such as lease expiration, fire inspection and other reasons are also explained, but the pace of ZARA expansion is slowing down.

Back in 2006, ZARA landed for the first time in Shanghai, China. The first store set a record of single store sales of 800 thousand yuan per day. At that time, single store sales of similar brands were less than 10 thousand yuan per day.

In the ten years since then, ZARA has been on the run all over the country, with an average annual number of 20 shops. But since 2014, this data has begun to show a downward trend of volatility. And if the number of closed stores in the year is counted, the expansion of ZARA is actually far smaller than expected.

Meanwhile, the price of clothes sold by ZARA over the past two years in the Chinese market has also fallen by 10% to 15% on average. To a certain extent, this means that its brand influence in the minds of Chinese consumers is weakening.

02

Huge market in China

ZARA more initiatives to enhance product competitiveness

ZARA has lost its glory in China, but China cannot be lost as its "second largest market in the world".

In view of this, ZARA has taken a number of measures to adjust product business around "catering to the aesthetic and consumption needs of the main force of the millennial generation and Z generation", trying to find new growth points.

First of all, cross border cosmetics to expand product categories.

In February 2019, ZARA launched the parity route, and the make-up series for Asian women began to enter the Chinese market, but only in the official website and Tmall flagship store. In addition, ZARA has also expanded its perfume line and made a series of products with the founder of high-end fragrance brand JoMalone.

Secondly, provide personalized customized services.

Customized services can greatly meet the individual needs of different consumers. To this end, ZARA launched a free personalized customization service in August 2019, involving 28 single products. Consumers need to search for the "Edited" page in Zara official website and choose the size of the clothing to edit the text embroidery.

Finally, integrate products to improve business efficiency.

Previously, the product line classification of ZARA was rather mixed. For example, there were three series of WOMAN, BASIC and TRF in women's clothing, which were mainly mature, basic and girls. Today, the official website only keeps three categories of women, men and children, and adds shoes and handbags to further reduce the inconvenience in operation.

Only by "good" products and services can consumers and businesses join together. Then, ZARA adjusts products and services from multidimensional perspective, and will undoubtedly establish closer ties with consumers.

03

Accelerate the transformation of Digitalization

ZARA parent company Inditex group profits rose

Unlike the slower pace of expansion, the momentum of ZARA penetration online has been strong.

In the first 9 months to the end of October, ZARA parent Inditex Group sales rose 7.5% to 19 billion 800 million euros, gross profit margin was 58.2%, net profit rose 12% to 2 billion 720 million euros, of which third quarter profits rose 14% to 1 billion 200 million euros.

In the same period last year, the Inditex group's revenue grew by only 3%, while its net profit increased by only 4%.

All kinds of reasons, in addition to the adjustment and innovation of Inditex group's brands, to a large extent, digital transformation has promoted the improvement of online and offline service quality.

As the core brand of Inditex group, ZARA has assumed the main driving force of growth. Therefore, behind this gratifying data, there must be a huge contribution.

It is worth mentioning that the Inditex group has also set up a new building for the Zara business sector. It seems that ZARA's determination to continue to expand the territory of electric business has been decided. The digital ambition of Inditex group is obvious.

Depending on China's unique electricity supplier environment, ZARA built its electricity supplier business in China in 2012 by adopting a self built e-commerce mode. In 2014, it opened its flagship flagship store in Tmall. At present, the number of fans is 20 million 60 thousand.

Fans can win the world. In the fast fashion industry continues to slump today, the huge amount of fans on the online channel will build a moat for the development of ZARA.

04

The industry has been in the cold winter.

Nothing is more important than survival.

Since 2018, fast fashion brands such as NEWLOOK, TOPSHOP, Forever21 and OldNavy have closed stores and withdrawn from the Chinese market. Forever21 has filed for bankruptcy protection, and OldNavy parent Gap expects to close 230 stores in 2 years.

The reason lies in the fact that the survival of the fittest is the inevitable result because of the laws of the industry's development. On the other hand, the fast fashion brands in China are rising, and the advantages of foreign fast fashion brands are long gone.

Therefore, the fast fashion brands that can be left are strong.

From this point of view, ZARA's "slow pace of expansion" may be only a reflection of the winter of the industry, but it is obviously not enough to deal with the crisis in this way alone.

However, there are still many opportunities for ZARA to stay behind than the fast fashion brands that have left the Chinese market. Close shop and epidemic situation are not terrible. The key is how to take this opportunity to reflect on the management and operation of enterprises and achieve a better start.

For example, how to promote the renewal of aging products? How can we speed up the production of new product lines? How to speed up the integration of fashion aesthetics with Chinese consumers? Is there any need to expand the sinking market?

As the saying goes, staying green mountains is not afraid of firewood. At this time, survival is more important than anything.