Analysis On The Current Situation And Development Prospect Of China'S Fast Fashion Industry In 2020

1. Fast fashion industry appears "slow down" trend

Fast fashion is a kind of clothing production mode of "fast response to customers' fashion and fashion consumption demand". It aims to shorten the cycle from production to sales of clothing products by optimizing the supply chain, and provide customers with certain fashion clothing at a lower price. The main features of fast fashion are as follows:

From the perspective of consumer groups, working men and women under the age of 30 who live in the first and second tier cities and love beauty and sociality are the main consumers of fast fashion. In terms of age structure, the post-90s account for more than half of the total, and the post-00s also gradually rise, becoming a new consumer group that can not be ignored in the fast fashion industry.

In recent years, with the continuous change of people's consumption demand, the attraction of fast fashion brand is gradually declining, and its excessive fast experience is difficult to sustain. With the development of resource-intensive and human intensive industries facing difficulties, fast fashion brands' profit space has been gradually compressed due to the inflexible response of the management team, and the development speed has slowed down significantly.

In terms of the number of stores, the number of new fast fashion stores in China has shown a downward trend in recent two years. According to incomplete statistics, in 2019, eight fast fashion brands, including H & M, Zara, UNIQLO, mjstyle, Muji, ur, C & A and gap, will add 218 stores in the mainland (excluding the upgraded stores), setting a record low.

2. China's fast fashion industry reshuffle intensifies domestic brands into top three

At present, the growth of domestic economy and residents' income is gradually slowing down, and consumers begin to get rid of the blind worship of high-end brands and high unit prices. With the gradual retreat of the fast fashion boom, the business growth of fast fashion brands appears differentiation. In the context of consumers returning to rational consumption, UNIQLO has successfully adapted to the pursuit of high cost performance and stood out.

In April 2019, Internet Weekly and eNet Research Institute jointly released the 2019 fast fashion brand list. UNIQLO, Zara and handu Clothing Co., Ltd. ranked the top three. In the top 10, the last seven were H & M, Adidas, Nike, only, Vero Moda, Senma and taipingniao.

Compared with the top five of the 2018 list, Adidas retreated from the second place to the fifth place, handu clothing house ranked in the top three, Zara jumped to the second from the third, and UNIQLO and H & M ranked the same.

Through the list, it can be seen that although after a round of reshuffle, domestic brands can still be on the list of the original traditional clothing brands or such Taotao brands as handu clothing house. Local fast fashion brands such as ur, mjstyle and hot air are far away from H & M and Zara.

The third place of Taotao brands such as handu Yishe has something to do with the increasing penetration rate of e-commerce in China's clothing industry and the growing development of live online shopping. In particular, as a new flow track, live broadcasting has spawned viya, Chen jiekiki and other anchor operators with goods. Through c2m mode, these head anchors can develop their own products and transform the upstream supply chain, so as to occupy a certain proportion of the fast fashion industry Market share.

3. UNIQLO rises against the trend

With the outbreak of commercial real estate, international fast fashion brands are expanding rapidly in China. In 2002, UNIQLO opened its first store in Shanghai, which has opened the curtain of China's fast fashion market. A few years later, many foreign fast fashion brands such as H & M, km, Zara, Forever 21 and other foreign fast fashion brands have successively entered China, and started the "horse race enclosure" era for nearly 10 years.

In recent years, due to the downturn of commercial real estate market, the impact of e-commerce platform and the trend of consumption upgrading, the expansion pace of fast fashion in the mainland market has been slowing down. 2018-2019 is the watershed of the sales development of overseas fast fashion brands in China.

The business of H & M and gap in China declined significantly. The annual sales of H & M and gap decreased by 3.0% and 18.2%, respectively. The sales growth of INDITEX, the parent company of Zara, began to slow down to 9.2%. British high street brands Topshop and newlook announced their withdrawal from China in 2018, and Forever 21 announced its withdrawal from China in April 19.

The outbreak of the epidemic in 2020 and the continuous downturn of the global economic environment exacerbated the withdrawal of international fast fashion brands. In March 2020, gap's Old Navy announced its formal withdrawal from the mainland. Following Zara's failure, Esprit closed its stores at the end of May, announcing a temporary departure from the Chinese market.

In this context, UNIQLO still maintains the average annual opening speed of 100 new stores, with the number of newly opened stores in the mainland ranking first among foreign fast fashion brands, and its performance is particularly eye-catching. By may 2020, UNIQLO has opened more than 3600 stores worldwide (nearly 820 in Japan and about 750 in mainland China).

Compared with Zara in Spain, H & M in Sweden, gap in the United States and other European and American fast fashion brands, UNIQLO, which originated in Japan, has more obvious regional advantages. The similarity of culture and body shape helps UNIQLO better understand the body shape of Chinese people and design clothes closer to the daily life of Chinese people. The Japanese always pay attention to details. In order to better develop the Chinese market, UNIQLO even analyzes the differences between southerners and northerners in China, so as to better distribute and promote goods.

In the 2014-2019 fiscal year, the sales volume of UNIQLO's parent company FMCG showed a continuous growth trend. In fiscal year 2019, fast retailing group achieved sales of 2.29 trillion yen, a year-on-year increase of 7.51%. Affected by the epidemic situation, as of May 31, the comprehensive operating revenue of FMCG in the first nine months of fiscal year 2020 was 1.5449 trillion yen, a year-on-year decrease of 15.2%, and the operating profit decreased by 46.6% to 132.3 billion yen.

From a regional perspective, UNIQLO's international market revenue has surpassed that of UNIQLO's Japanese market since fiscal year 2018. In fiscal year 2019, the gap has further widened. UNIQLO's international revenue has exceeded 1 trillion yen, reaching 1026 billion yen. In fiscal year 2020, revenue and profit in Greater China have shown growth trend in May and are recovering at a strong speed.

Fast Retailing said that the revenue of Greater China market is expected to exceed 1 trillion yen by 2022 fiscal year, that is, from about 33.1 billion yuan in fiscal year 2019 to about 65 billion yuan.

UNIQLO's rapid success is closely related to the current development stage of China's consumer market. With the gradual slowdown of domestic economy and household income growth, consumers begin to get rid of the blind worship of high-end brands and high unit prices. While the overall consumption capacity of middle and high-income groups is rising, they pay more attention to the improvement of their own quality of life by high-end goods. The era of flaunting can consumption is over Consumers return to rational consumption, and consumer companies that successfully comply with consumers' pursuit of cost-effective products are easy to come out.

In addition, it is also an important reason for UNIQLO to rise against the trend when the giants in the fast fashion industry are showing fatigue one after another, such as seizing young consumers through big brand cooperation funds and attaching importance to technology empowerment

4. The rise of domestic brands may usher in a golden decade in the future

At the same time, domestic fast fashion brands are gradually favored by more and more consumers. With the upgrading of China's consumption, the market influence of local brands is gradually released. Coupled with the mature and huge local supply chain, local fast fashion brands and online celebrities have also risen through network channels in recent two years. The specific manifestations are as follows:

First of all, domestic fashion brands are rising and gradually occupy a certain market share in the fast fashion market. In 2018, tmall's national trend action took taipingniao, Li Ning, clot, JNBY, angel Chen, etc. on the New York Fashion Week, the development of "Guochao" has attracted more and more attention in the industry. Many domestic brands began to pay attention to "Chinese design", integrating Chinese cultural genes into the expression context of internationalization and youth by means of CO branding and cooperation.

According to the report on the development of Chinese consumer brands in 2020 issued by Ali Research Institute, the market share of online Chinese brands will reach 72% in 2019; in FMCG, Chinese brands have occupied more than 4 / 5 of the foreign brands in the subdivision categories in the past two years.

Secondly, in terms of marketing methods, with the rise of e-commerce live broadcast, c2m and MCN concepts, young groups, as the main force of fast fashion consumption, are also more willing to accept new things, such as Taobao, live broadcast with goods on twitter, etc., and the first online layout of local fast fashion enterprises will also promote the structural optimization of industrial sales channels. For example, Anta, Li Ning, Tebu and other sports brands attract consumers' attention by publishing fitness action teaching copy videos, live training classes, online sports challenges, etc., and attach online links to fitness equipment purchase.

According to the statistical data of nearly 2000 samples from the first, second and third tier cities in the "Tencent data laboratory: clothing consumer insight white paper in 2018", online access has exceeded offline access, accounting for 56% of the domestic clothing information acquisition level.

Finally, the change of consumer preferences in the fast fashion industry is also an important reason for the emergence of domestic brands. According to the National Bureau of statistics, the number of generation Z in China has exceeded 226 million in 2019, accounting for 16% of the total population. According to McKinsey's fashion format report in 2019, generation Z will continue to provide a growth rate of 3.5% - 4.5% for the fashion industry.

With the continuous improvement of China's market consumption power and influence and the enhancement of cultural self-confidence of Chinese young groups, generation Z developed with the internet no longer blindly pursues foreign brands, but is willing to support high-quality domestic products, which makes the competitiveness of domestic fast fashion brands continuously improved.

According to the relevant research jointly released by Huayang Lianzhong, Huayang fashion and Sina Weibo, only 15% of generation Z people have not bought fast fashion brands in the past year, and the average purchase frequency is 12.5 times a year, which is close to the fashion brand. In the fashion product category preference ranking of generation Z, fashion brand, light luxury brand and fast fashion brand ranked the top three, and national brand ranked fourth with the proportion of 17.7. "Relaxed and stress-free shopping experience" is a bonus item for generation Z to buy "fast fashion".

Under the impact of the epidemic, many fast fashion brands that focus on offline stores have suffered huge losses, and the advantages of local online fast fashion brands relying on e-commerce channels are also more prominent. With the rise of the national tide, the younger main consumer groups and the change of consumption trends, local fast fashion brands will usher in broad growth space, and are expected to enter the golden decade growth period in the future.