Not long ago, Inditex Group, the parent company of Spanish fast fashion giant ZARA, announced that its brands Bershka, Pull & Bear and Stradivarius will close all stores in the Chinese market in the near future. Retain e-commerce channels such as the official website and Tmall flagship store.
In fact, it is not just these three sub-brands. As the “leader” in the fast fashion industry, ZARA has not stopped closing stores in the past 2020. . In June 2020, Inditex announced that it would gradually close 1,000 to 1,200 ZARA stores.
In sharp contrast, some new fast fashion brands have achieved rapid development during the epidemic by leveraging the “dongfeng” of live streaming e-commerce in 2020. , squeezing out the market share of traditional fast fashion brands such as ZARA.
Fast fashion with weak stamina
As a fast fashion brand favored by many urban young people, ZARA has become a global fast fashion brand. The industry has always been like a “textbook” before. Not only did it open 7,000 stores in a short period of time, but the stores were often adjacent to luxury brands in the fashion business districts of major cities.
However, in recent years, some well-known fast fashion brands, including ZARA, have gradually lost their former style. Since 2016, some fast fashion brands have withdrawn from the Chinese market. From 2018 to 2019, well-known fast fashion brands such as NEW LOOK, Topshop, and Forever 21 also announced their withdrawal. In 2020, the “store closing wave” has spread even wider. GAP’s Old Navy, Esprit, etc. announced the complete closure of stores, and some companies such as Bershka, Pull & Bear, Stradivarius, H&M, etc. shop. Entering 2021, many brands have significantly accelerated their store closures, ushering in a new wave of fast fashion brands closing stores.
The most direct reason for fast fashion brands to close a large number of stores is the continuous decline in their operating performance.
Take ZARA as an example. In 2020, the performance of Inditex Group has been plagued by the epidemic and cannot restore its former glory. Public financial report data shows that Inditex Group suffered a loss of 400 million euros in the first quarter of 2020; although it turned a profit in the second quarter, it still fell 74% compared with the same period last year; the net profit in the third quarter was 866 million euros, higher than the previous year. The 1.2 billion euros in the same period last year fell by 27.8%.
At the same time, in the fashion business districts of major cities, the number of fast fashion brands that once served as the main attraction is decreasing, and discount activities are becoming more and more frequent. The reasons behind this include, in addition to the impact of the epidemic, the competition for the market from rapidly growing e-commerce brands.
Some industry insiders said that the 2020 COVID-19 epidemic has had a great negative impact on the brand’s offline marketing, but at the same time, new retail, unbounded retail, Omni-channel, KOL, live streaming and other “new terms” emerging one after another are also constantly reshaping business logic.
The relevant person in charge of an e-commerce platform said that taking Taobao as an example, assuming that there are 40 products on each brand live broadcast, 20 broadcasts a month would be 800 products, 10 The anchor has 8,000 models, which is almost equivalent to the size of a ZARA.
In comparison, traditional fast fashion brands represented by ZARA have obviously not kept up with this trend.
For a long time, “fast” has been the magic weapon for fast fashion brands like ZARA to win. Industrialized assembly lines, mass production, and short new product cycles allow ZARA to maintain the brand’s absolute market competitiveness under extremely high operating efficiency. This market model has been imitated by other brands for a period of time. So much so that some people in the industry commented: In the past few years, ZARA has taken the 12 words of “rapid imitation, affordable sales, and rapid iteration” to the extreme.
But in fact, no matter how fast ZARA’s supply chain responds, it still needs to “stock in batches”, and there is no guarantee that every product will be a hit with high sales. , over time, there will naturally be a backlog of inventory, which will lead to discounts and sales.
Defeat fast fashion with “faster”
ZARA seems to be “fast but never broken” model, it will be defeated by faster live streaming e-commerce in 2020.
“The biggest charm of live streaming is ‘zero inventory’.” A person in charge of an e-commerce brand said, “Live streaming sales have continuously shortened the sales cycle of goods. It takes an average of 3 months to sell out, instead of being sold out in a few minutes. Moreover, there is usually only one sample garment during the live broadcast. After the layout is completed, it can be broadcast live. Consumers and the supply chain can see the live broadcast items simultaneously. Inventory is no longer overstocked. Without inventory, costs and selling prices will naturally become extremely competitive in the market.”
After a live broadcast, orders can be harvested. In an efficient closed-loop clothing production market, an excellent supply chain can achieve production and delivery within 48 hours through the cooperation of all parties. In this process, live delivery has reconstructed the previous “C2B” model into the “C2K2B” model, that is, the “customer-KOL (Internet celebrity)-channel” model. Internet celebrity live broadcasts make up for the shortcomings of online sales user experience and can teach users “all-in-one solutions” for dressing, rather than simply selling a piece of clothing. The personality charm of the anchor also gives the product the appeal of a spiritual product. The recognition of many consumers has also given the product a spiritual label that is recognized by society. These factors have accelerated the rise of niche brands.
In fact, during the epidemic, ZARA salesWhile sales are plummeting, “ultra-fast fashion brands” represented by Boohoo, ASOS, etc. are rapidly rising. Taking Boohoo as an example, it has achieved sales growth through online sales channels, and its revenue in the first half of 2020 increased by 44% year-on-year. Ultra-fast fashion brands use flexible supply chains to speed up the production cycle to 7 days, and can release new products every week, satisfying consumers’ pursuit of fashion more quickly.
In other words, ultra-fast fashion brands are using faster business models to suppress traditional fast fashion brands.
However, many traditional fast fashion brands, represented by ZARA, while closing offline stores, still retain online stores and regard e-commerce channels as the basis for future operations. “Main battlefield”, perhaps they have also found some “flavor” in the fierce market competition. For example, Inditex, the parent company of Zara, announced that its young brands will focus on strengthening the development of e-commerce.
In this regard, some senior retail experts believe that fast fashion brands rely on “fast pace” and keeping up with fashion trends to please consumers. This is an advantage, but it is also a disadvantage. Once they cannot keep up, If you follow the so-called trend, you will soon be eliminated by the market. The closure of ZARA’s “Three Sisters” stores in the Chinese market is very typical. In the minds of many young consumers, these brands are always associated with “average quality”, “low price” and “discounted goods”. In the context of poor overall performance, proactively choosing to close these brand stores with poor performance and impact can also be regarded as Inditex’s method of “stopping losses in a timely manner”.
In addition, compared with the “golden age” of fast fashion more than 10 years ago, young consumers are becoming increasingly rational, and their tastes and preferences are more diverse and picky. The rise of local fast fashion brands and the more down-to-earth marketing methods of online shopping brands have carved up the original market share of many fast fashion brands. Foreign fast fashion brands should continue to innovate and change, quickly reflect market changes in design, quality, pricing, and marketing, and cater to the needs of their target customer groups to the greatest extent. At the same time, they also need to find differentiated advantages in order to compete in the increasingly brutal competition. continue to survive in the fashion market. </p
