Focus On Fast Fashion: Zara And Other Brands Continue To Decline And Close A Large Number Of Stores

Not long ago, INDITEX group, the parent company of Spain's fast fashion giant Zara, announced that its brands Bershka, pull & Bear and Stradivarius would close all stores in the Chinese market in the near future, leaving only e-commerce channels such as the official website and tmall's flag ship store.

In fact, not only these three sub brands, but also Zara, as the "shoulderer" of the fast fashion industry, has not stopped the pace of closing stores in the past 2020. In June 2020, INDITEX announced that it would close 1000-1200 Zara stores in succession.

In contrast, some new fast fashion brands have achieved rapid development during the epidemic period by virtue of the "Dongfeng" of live e-commerce in 2020, occupying 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 always existed like a "textbook" in the global fast fashion industry. It has not only opened 7000 stores in a short period of time, but also is often adjacent to luxury brands in the fashion business circles of metropolis.

But in recent years, some famous 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 Since 2016, some fast fashion brands have withdrawn from the Chinese market.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, famous fast fashion brands such as new look, Topshop and Forever 21 also announced their withdrawal. By 2020, the "store closing tide" will spread more widely. Old Navy and Esprit under gap will completely close stores, while some stores such as Bershka, pull & bear, Stradivarius and H & M will be closed. In 2021, a number of brands have significantly accelerated the closing speed, ushering in a new wave of fast fashion brand closing tide.

The most direct reason for the closure of fast fashion brands is the continuous decline of their business performance.

Take Zara as an example, INDITEX group's performance has been plagued by the epidemic in 2020, unable to recover its former glory. According to the public financial report data, INDITEX group lost 400 million euro in the first quarter of 2020; although it turned from loss to profit in the second quarter, it still fell by 74% compared with the same period of last year; the net profit in the third quarter was 866 million euro, which was 27.8% lower than that of 1.2 billion euro in the same period of last year.

At the same time, in the fashion business circle of metropolis, the number of fast fashion brands that used to be the main drain is decreasing, and the discount activities are more and more frequent. The reasons behind this, in addition to the impact of the epidemic, there are also the rapid growth of e-commerce brands in the market competition.

Some people in the industry said that the new crown pneumonia epidemic in 2020 has brought a great negative impact on the offline marketing of brands, but at the same time, new retail, unbounded retail, Omni channel, KOL, live delivery and other "new terms" are constantly reshaping the business logic.

According to a person in charge of an e-commerce platform, taking Taobao as an example, assuming that each brand has 40 live products, 20 shows a month means 800 products, and there are 8000 types of 10 anchors, which is almost equivalent to the size of a Zara.

In contrast, the traditional fast fashion brands represented by Zara have obviously not kept up with this wave.

All along, "fast" is the magic weapon of Zara fast fashion brands. Industrial assembly line, mass production and short cycle of new products can make Zara maintain the absolute market competitiveness of the brand under high operating efficiency. This market model has been imitated by other brands for a period of time. As a result, some people in the industry have commented that in the past few years, Zara has brought the 12 words "rapid imitation, affordable sales and rapid iteration" into full play.

However, in fact, even if Zara's supply chain reaction speed is fast, after all, it also needs "bulk preparation", and there is no guarantee that every product has a high sales volume. As time goes by, inventory will naturally be overstocked, and then it will be sold at a discount.

Beat fast fashion with "faster"

Zara seems to be a "fast but not broken" mode, which will be defeated by the more "fast" live e-commerce in 2020.

"The greatest charm of live delivery is" zero inventory. " A person in charge of an e-commerce brand said, "live sales have shortened the sales cycle of products, from the original offline average of three months to sold out in a few minutes. Moreover, there is usually only one sample garment for live broadcasting. After the board is finished, it can be put on the live broadcast. Consumers and the supply chain can see the live payment synchronously, and the inventory is no longer overstocked. Without inventory, the cost and price will naturally have super high market competitiveness. "

After a live broadcast, orders can be harvested. In the efficient closed-loop market of clothing production, excellent supply chain can produce and deliver goods within 48 hours through the cooperation of all parties. In this process, the previous "C2B" mode is reconstructed into "c2k2b" mode, namely "customer KOL (online celebrity) - channel" mode. Webcast makes up for the lack of online sales user experience, and can teach users about the "integrated solution" of wearing, rather than simply selling a piece of clothing. The personality charm of the anchor also makes the commodities have the calling of spiritual commodities. The recognition of many consumers also makes the products labeled with the spirit of social identity. These factors accelerate the rise of niche brands.

As a matter of fact, during the epidemic period, Zara's sales volume turned down sharply, while the "super fast fashion brands" represented by boohoo and ASOs were rising rapidly. Take boohoo as an example, with the help of online sales channels, the revenue in the first half of 2020 increased by 44% year-on-year. Super fast fashion brands speed up the production cycle to 7 days through the flexible supply chain, which can be updated every week, so as to meet the consumers' pursuit of fashion more quickly.

In other words, super fast fashion brands are using faster business models to suppress traditional fast fashion brands.

However, many traditional fast fashion brands represented by Zara still retain online stores while closing offline stores, and regard e-commerce channel as the "main battlefield" of future operation. Perhaps they have also explored some "flavor" in the fierce market competition. For example, INDITEX, Zara's parent company, announced that its young brands would focus on strengthening e-commerce development.

In this regard, some senior retail experts believe that fast fashion brands rely on "fast pace" and keep up with fashion trends to please consumers, which is both an advantage and a disadvantage. Once they fail to keep up with the so-called trend, they will soon be eliminated by the market. Before that, Zara's "three sisters" brand closed its stores in the Chinese market. In the minds of many young consumers, these brands are always associated with "average quality", "low price" and "discount goods". Under the background of poor overall performance, it is INDITEX's "timely stop loss" to take the initiative to close these brand stores with poor performance and influence.

In addition, compared with the "golden age" of fast fashion more than 10 years ago, young consumers are increasingly rational, and their tastes and preferences are more diverse and picky. The rise of local fast fashion brands and the more grounded marketing mode of online Taobao brands have carved up the original market share of many fast fashion brands. Foreign funded fast fashion brands should constantly innovate and reform, reflect market changes in design, quality, pricing and marketing, and meet the needs of target customers to the greatest extent. At the same time, they also need to find differentiation advantages in order to survive in the increasingly competitive fashion market.