Who Has The Advantages Of Fast Fashion Three Giants H&M, UNIQLO And ZARA?

The 2017 Q1 financial report was published.

Although sales increased by 7% to $6 billion 20 million, net profit fell by 3% compared to the same period last year.

If we look back at the performance of H&M in 2016, this figure is not surprising. Last year, its gross profit margin dropped from 59.5% in 2012 to 55.2%, and its operating margin decreased from 18.01% to 12.4%, the lowest level in five years.

And Japan

Brand Uniqlo (

The parent company's fast selling group recorded a $16 billion 118 million income in the 2016 fiscal year ended in August 31, 2016, an increase of 6.2% over the same period, but a significant slowdown compared with the 21.6% increase in the 2015 fiscal year.

By contrast, Inditex of Zara parent company is still growing at a high speed with a total revenue of 24 billion 800 million euros, a record high.

According to Forbes statistics, Inditex has become the third largest apparel group in the world in 2016, second only to Dior and Nike.

In the fast fashion industry, ZARA continues to lead the way with its record annual performance, while H&M and Uniqlo, which are also the most popular two brands in China, are becoming more and more inclined to decline. Although they are standing in the middle of the domestic private garment enterprises, the confrontation between the three armed forces at the top of Pyramid is almost all of them.

H&M "desperation" continues to expand

As for the decline of H&M's performance, we can find out some reasons from a notice of investment bank's big business last year. The report says that although H&M still expands at more than 400 stores a year, its operating profit will shrink by 40% by 2020.

All this inference comes from the continuous discount sale of brand.

The other H&M almost entered a vicious circle, that is, constantly increasing the discount to stimulate consumers, consumers expect H&M more discount to make consumption. In order to alleviate the inventory will not be more serious loss of record, H&M can only continue to increase the discount, which has brought huge loss of goodwill to H&M.

Interestingly, the parent company Hayne Maurice group quoted all kinds of weather and environmental factors in the quarterly earnings report, which means that the group must increase sales promotion.

Hayne pointed out that Maurice and H&M are at the critical point of development, that is, profits will be on the edge of high-speed decline. Since 2007, the operating profit of H&M per square meter has dropped from 10900 kronor to 5200 kronor, or more than 50%.

Constant discounts directly reduce the growth of sales per unit area and prevent sales from falling by sacrificing gross margin. Therefore, we can understand that the decline in profits of Hayne Maurice is the victim of its sales growth.

If sales are not maintained, the group may have experienced a real decline in both sales and profits.

The relationship between fast fashion and commercial real estate is like the relationship between clothing brands and department stores in the past, such as Esprit and agogue. The former needs the latter channel, while the latter needs the former to get the flow of people, rents and sales returns.

If either of the two sides has problems, the other side is hard to be independent.

But now, China's commercial real estate has shown a regional bubble after radical development over the past few years.

Although it seems that fast fashion is the favorite object of all new shopping centers, luxury goods also want to live next to them.

But if the bubble of commercial real estate breaks down, for the fast fashion like H&M, the plan to go down to the three or four tier city following commercial real estate will also be disrupted.

The report of China commercial real estate research center said that the supply of commercial real estate projects in China will peak from 2016 to 2017.

According to the no fashion Chinese Web report, Zara already perceived the problem of China's commercial real estate in 2015.

At the time, the world's top fast fashion announced that when the total number of stores in Greater China was more than 500, shops would be postponed and more efforts should be made to increase the return rate of single stores.

The return rate of single stores is precisely what H&M is now sacrificing when it expands in China.

The commercial real estate bubble is neither too early nor too late. The 345 line is also a consumer market which is quite different from the first tier cities. Local brands, including Metersbonwe, have created their own consumption groups by means of setting up franchised stores, lowering prices, naming variety shows, and asking celebrities to endorse, and these marketing methods usually do not conform to the style of international brands.

But in recent years, H&M has changed its spokesmen from European and American stars to domestic stars. It seems to be a test for the three or four tier cities.

H&M also began to regard the electricity supplier as another path.

Recently, the company has changed the original "10-15% store expansion target" to "sales growth of 10-15% per year" as the goal. The difference between the two is that the latter covers the share of the electricity supplier business.

But H&M China has no advantage over the electricity supplier.

In 2014, H&M launched the electricity business in the Chinese market, and chose to build its own electricity supplier, which means that it lost an important traffic entrance.

Zara also started its own business at the beginning, but it also settled in Tmall in October 2014. The main reason is that China's online business is not in line with Zara's expectations.

H&M's explanation for insisting on self built electric business is, "Tmall is like a marketplace for online shopping, a portal website.

This pattern is also common in the United States and Europe.

For us, it's important to focus on the way we provide ourselves, how we can keep in touch with our customers, and provide customers with what they want, or even exceed their expectations.

This strategy is understandable. Self operated e-commerce means more direct control over consumer data.

In addition, despite the downturn in department stores and major brands, H&M group plans to open 430 new stores in 2017.

In contrast, Zara has slowed down its opening rate since March last year, and the new store plan has been downgraded to 6-8% from the original 8%-10%, and has shifted its focus to the expansion of e-commerce business.

Although fast fashion is the main business, H&M's purchasing strategy is not as flexible as Zara, and its response to consumption trends is not fast enough.

In the expansion of stores, the brand value of H&M is also rising.

But expansion has also brought risks to it, and investors are not optimistic about it.

According to the world clothing and shoe net, from 2016 to 2020, the average annual growth rate of China's clothing retail market will be only 6.3%, which is far lower than the 15% growth of clothing industry and the growth of 8%-10% men's clothing in the early industry. Two, the average annual growth rate of the clothing market in the United States between 2016 and 2020 has shrunk to 2.7%.

But no expansion is impossible for the H&M group. Its biggest market, Germany, is showing a weak sales growth, while France, which ranks fourth in the market contribution, has a 4% negative growth.

Under such circumstances, H&M group still claims that "to open stores in China and the United States" will be desperate.

UNIQLO relies on Asia to nurture

For UNIQLO, it is still the US market that makes it most tangled.

Data show that in the 2017 quarter of fiscal year, the loss of us business in UNIQLO has narrowed. When asked about the time when UNIQLO was making profits in the United States, Ryui Masa, founder of the brand, did not respond positively, but was alert to H&M, pointing out that the Swedish brand also had an example of losing 900 million US dollars in the US.

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But Ryui Masa said the United States remains the most important market for UNIQLO, and Asia is the engine of its growth.

After the financial crisis, China has provided great opportunities for the global retailing industry. From the 2016 and 2012 fiscal year reports, we can see that revenue doubled, but profits remained unchanged.

This means that China has given the retail industry the space to make mistakes. UNIQLO can make a huge profit in China, and on the one hand, it can expand in the US.

However, few analysts in the industry are optimistic about UNIQLO's future in the US. Tang Xiaotang, founder of No Agency, a fashion retailing research firm, commented on UNIQLO, saying that the expansion of UNIQLO's losses in the US has been based on the growth of China's market profits.

However, due to the wrong strategy, its parent company's fast selling group has declined in the last fiscal year and the Chinese market profits. The group's first quarter financial report shows that profits have risen, but China's leading international market has been sluggish and recorded a 0.2% decline in the first quarter of fiscal year 2017.

If earnings growth in other international markets can not offset losses in the US market, even if there are no border taxes and manufacturing problems in the United States, UNIQLO may actually opt out of the US market.

In fact, industry analysts already wanted Ryui Masa to stop making "the American Dream".

The stagnation of Japan, the difficulties of the United States and the slowdown in China's most important overseas market forced Ryui Masa to abandon the target of 5 trillion yen in 2020, which was set up by the fast forward group last year. Now they have changed their target to 3 trillion yen, while the current 2017 fiscal year is expected to receive 185 million yen.

Ryui Masa said last week: "with the help of digital technology, I firmly believe that 3 trillion yen can be achieved". In early March, when he unveiled the new headquarters of UNIQLO, Tokyo, he came up with the belief that "digital technology will change the world", hoping to pform XXX group from a pure clothing retailer to a "digital consumer retail companies".

Ryui Masa's specific vision is that through artificial intelligence and big data, the physical store stores the supply according to the needs of its region. This is the opposite concept to the traditional chain store. At the same time, consumers can understand the supply chain and inventory of Uniqlo UNIQLO so that consumers can buy clothes for them, and Ryui Masa says this is the "answer" to change the world.

To achieve this level, supply chain, computer system and store network must be equipped with suitable systems. Liu well is saying that all the necessary components can be put into place in a year.

But for the so-called "digital consumer retail companies" strategy, Tang Xiaotang said, this is actually a euphemistic wording of UNIQLO learning to Zara.

At the end of 2016, Pablo Isla, chief executive officer of Zara parent company InditexSA (Indo textile) group, said publicly that success is not due to any magical mode or superstar, but through the ability to respond to data and pform it into a fashionable product and then pass it on to consumers.

Comparing the pformation of UNIQLO to Pablo Isla, there are some subtle differences.

Just like Pablo Isla always wanted Zara to get rid of the label of "fast fashion".

Ryui Masashiya has also consistently denied that UNIQLO is a fast fashion brand and even promotes brand technology genes, but the company's Fast Retailing seems to have dragged heavily on this matter.

Tang Xiaotang said that fast fashion was once regarded as an innovation in the retail industry. But in recent years, with the increasing attention paid to environmental protection concept and corporate ethics and social responsibility, fast fashion has been tagging a Foxconn style original sin label. It not only stimulated consumers' desire for material goods, but also caused great waste. Meanwhile, the production process was accompanied by sweatshops and pollution.

With the passage of time, fast fashion is getting faster and faster, but this mode has become a common mode of operation in the industry, and has no avant-garde significance.

ZARA close shop, open shop

On the contrary, ZARA, in the future, the Indo Textile Group will set up a store by integrating the stores of its own brands, stores and stores, and only shops in the core area of a city to enhance the efficiency of the whole group's revenue.

The Chengdu flagship store, which was closed in February this year, is actually a microcosm of ZARA's 2017 strategy. The official explanation is that "the early garrison in shopping centres is too urgent, and the next task will be to open flagship stores in key cities."

In the impression of Chengdu locals, ZARA, a department store that locals the flagship store, is no longer known as "shopping center" on 31 of the main road.

According to the world clothing shoes and hat net, it is a key step to expand the online business of Indo textile.

Because these large stores will not only undertake the selling function, but in the future, Indo textile will be able to reach customers from more than 7000 offline stores in the world through online channels, so as to achieve seamless online and offline connection, especially in the Asian market that the company attaches great importance to.

Fast fashion is foreign capital show.

According to investment survey, polls in the three quarter of 2016 showed that Japan's fast fashion brand UNIQLO continued to consolidate its popularity in casual wear category with the most radical expansion speed and the opportunity to enter the Chinese market earlier.

19.3% of respondents said UNIQLO was one of the two brands they bought most frequently, more than 17.4% of the fourth quarter of 2015.

In addition to the continued popularity of UNIQLO, the popularity of H&M and Zara in the three quarter of 2016 increased similarly in the fourth quarter of 2015.

The above three fast fashion brands occupy three of the four most popular brands in the most popular Top 10 brand.

Another popular popularity is the brand name of the local brand, Hai Lan home.

Because of the fact that international brands are embezzling the market in China, most of the local brands in China are closing up at high speed. However, Hai Lan's home has become an exception again. The number of stores has continued to show high growth, and even new stores are much higher than UNIQLO each year.

However, it is worth noting that the Hai Lan family, which is listed through the shell technology, has been questioned both in its operation mode and in the capital market. Behind its radical expansion is the incentive to bet agreements and high inventory risk.

In the face of the same macro economy, fast fashion brands still have more advantages than Chinese brands, including China's surplus commercial real estate. They prefer to hire other brands such as UNIQLO, H&M, Zara and so on, and then attract other merchants through the 1000 square meters of the above brands. At the same time, the advantages and rents of these brands will be given.

Several mainstream international fast fashion brands have adopted direct mode in China. On the contrary, Chinese local brands adopt mixed mode, and most local brand wholesale businesses are more important than direct ones, so the efficiency of unified management is greatly reduced.

Although local brands are trying to learn many patterns of the international fast fashion industry, the investment reference survey says the effect is not ideal.

In view of the fact that the international brand could not be resisted, Chinese local brands appeared in 2016, but there were many Chinese brands' acquisition of international brands in the year.

Investment reference said that although mergers and acquisitions could significantly enhance the design and marketing capabilities of the shortest board of local brands in China, it is almost impossible for a Chinese fashion group to threaten the four fast fashion groups in the near future.

Another more worrying possibility is that the real purpose of the M & A events may not necessarily be the attempt of local brands to build up a local company that can compete with international fashion giants, and to raise market capitalization and cash in is the norm for the A share market.

More interesting reports, please pay attention to the world clothing shoes and hats net.