Source: Xiaguang Society (ID: Globalinsights) Author: McGonagall Editor: Bell
The influence of Xinjiang cotton incident has not yet dissipated, and the brand H5span&Span is also counting on clothing from Sweden How to make a comeback in the Chinese market and re-harvest the younger generation of Chinese consumers.
This autumn, the first Chinese offline stores of H&M Group's high-end brands ARKET and & Other Stories will open in Sanlitun, Beijing and Shanghai, respectively. Many consumers do not know the relationship between the two brands and H&M.
In March of this year, H&M was boycotted by the Chinese market due to its “rumorous Xinjiang cotton” statement. Many irritated domestic consumers made it clear that they “resolutely resist” and “will not buy it again”. Subsequently, H&M’s stores on e-commerce platforms such as Taobao, JD.com, and Pinduoduo were removed from the shelves. The mall App was also removed from mobile app stores such as , millet, , Huawei, vivo, and Tencent. As a result, this year’s February In the quarter, H&M's sales in the Chinese market fell 23% year-on-year, with a loss of US$74 million.
Although it has angered Chinese consumers, H&M does not intend to abandon the Chinese market. Instead, it wants to rely on new brands such as ARKET and & Other Stories to “open the road” to get rid of the brand's “cheap and low quality” label, and The status quo of "community death" in China due to "rumoring Xinjiang cotton".
has a new face to attack the Chinese market
ARKET, which is about to open in Sanlitun, Beijing,It is a brand launched by H&M Group only in 2017, and is positioned as a Nordic fashion lifestyle store integrating men's, women's, children's and home furnishing collections. At present, ARKET has opened a total of 21 stores around the world. In addition to selling clothes, shoes and hats, it also sells food, perfume, beauty products and functional household products. Some stores are equipped with café, allowing customers to taste Nordic cuisine and freshly made coffee in the store.
Picture source: ARKET official website
Another & Other Stories, which is about to open its first store in Shanghai in China, was established in 2013 and is specialized in women's clothing. At first, it only sold cosmetics, and then gradually joined the product line of women's clothing, shoes, bags, and jewelry accessories.
H&M Group has expanded its COS, Weekday, Monki and other brands in recent years to further seize market share by creating a more diversified competitive landscape.
As the two latest sub-brands independently operated by H&M Group, ARKET and & Other Stories are positioned as mid-to-high-end routes. Compared with the rough texture of H&M clothes, it pays more attention to the quality and details of the clothes, and the price is significantly higher. A white shirt with similar styles is only sold at H&M store for less than 200 yuan, while the price at ARKET and & Other Stories is around 600 yuan.
A white shirt with a similar style is quite different in H&M (above), ARKET (bottom left) and & Other Stories (bottom right).
ARKET creative director Ulrika Bernhardtz once said,ARKET's design combines traditional Nordic style with functionality. The overall style is similar to COS, another brand under the H&M Group, with minimalist tones, comfortable fabrics and neat tailoring.
In order to break the impression of "fast fashion" clothing with poor texture and environmental protection, Arket claims to improve clothing design and quality by studying vintage clothing craftsmanship, in order to create high-quality, evergreen single products. In the selection of raw materials, sustainable materials such as recycled yarn, organic wool, and marine waste are also used.
Before the physical store opened, the two brands have already tested the Chinese market through the e-commerce platform. & Other Stories and ARKET opened official flagship stores on Tmall in August 2019 and April 2020 respectively, and currently attract more than 1.01 million and 256,000 fans. Among them, the best-selling canvas bag in the ARKET store has a monthly sales of more than 300 pieces.
Some consumers who have a good impression of & Other Stories and ARKET brand design do not know that the two brands belong to H&M. “I saw & Other Stories clothes on a fashion blogger’s Weibo before, and it was planted.” Guangzhou young white-collar Randa once learned about & Other Stories through social media, but was told that it was a H&M brand After that, she immediately said, "Fortunately, I didn't buy it. No matter how good the style is, I don't want to support any of H&M's products."
"How long has the Xinjiang cotton incident happened? Why does H&M have the face to open a store in China? I hope everyone will not go." After hearing the news that H&M's new store was about to open, Beijing white-collar Lu Ziyi said.
"H&M" lost the Chinese market
in the first quarter of this year,Mainland China is also H&M Group’s third largest market after the United States and Germany, contributing about 6% of its sales, becoming the only market where H&M sales have increased during the global epidemic.
In the second quarter of the "Xinjiang Cotton" incident, H&M's performance in China deteriorated sharply. The second-quarter financial report shows that from March 1 to May 31 this year, H&M Group’s net sales were approximately US$5.438 billion, a year-on-year increase of 75%, basically returning to the level before the epidemic. But its sales in the Chinese market fell 23% year-on-year, with a loss of $74 million. At the same time, H&M closed 13 stores in mainland China, including its flagship store on Nanjing West Road in Shanghai. The number of customers in the stores that are still open has also been significantly reduced compared to before.
Earlier, H&M Group Chief Executive Helmerson said that there are still about 10 stores closed in mainland China, but she declined to comment further on the mainland market, saying only that “as far as China is concerned, the situation is still complicated”.
In addition to the impact of the "Xinjiang Cotton" incident, the development of international fast fashion brands represented by H&M in the Chinese market has not been smooth in recent years. With the consumption upgrade in the Chinese market, the consumption outlook of the younger generation is changing. In the eyes of young people who pay more attention to quality and individuality, traditional fast fashion brands such as H&M are being marginalized.
According to the Thredup report of the fashion agency, 40% of millennials surveyed said they would stop buying fast fashion brand products, and 54% of Gen Z respondents decided to buy better quality products.
2018 to 2019 is a watershed for the development of international fast fashion brands in the Chinese market. Since 2018, the business of H&M and GAP in China has declined significantly, with annual sales decreased by 3.0% and 18.2% respectively. The sales growth rate of ZARA parent company Inditex has also begun to slow to 9.2%.
Niu Yun, a white-collar worker in Hangzhou, who has just turned 30, told Xiaguang that with the closure of some large H&M flagship stores in Hangzhou in recent years, it is obvious that the brand has been weakened. "I bought H&M when I was in school. I felt that the price was cheap and the design was trendy. The stores in major business districts also made the shopping experience very good. But I haven't bought any of its clothes for many years. Too rough." Niu Yun said, when choosing clothes he pays more attention to design, and will not consider too much "Xinjiang cotton" topic. However, the quality of H&M's clothes is so poor that they can't be worn after a few washes. The actual price/performance ratio is not high. "I would rather spend a little more money to buy clothes with more design and texture."
The quality of clothing is worrying, and it has always been one of the most criticized consumers of fast fashion brands such as H&M. For example, in May of this year, the news that "H&M was fined 130,000 for children's clothing that didn't meet the standards" appeared on the hot search. According to statistics, H&M has been subject to 7 administrative penalties in China this year, most of which are due to product quality issues. Since its registration in 2006, Haines Morris (Shanghai) Commercial Co., Ltd., which is wholly-owned by H&M, has already had dozens of administrative penalties. The penalties include impersonating substandard products as qualified products and false publicity.
frequent quality problems, coupled with increasingly fierce competition in the industry, have made many international fast fashion brands unable to escape the fate of defeating the Chinese market. The pandemic that has swept the world has accelerated the defeat.
British and American fast fashion brands ASOS, New Look, TOPSHOP, Forever 21, Urban Outfitters, and Gap Group brands Old Navy and Esprit have all announced their withdrawal from the Chinese market in recent years.
There are also some brands that have chosen to sell their business in the Chinese market, or abolish offline stores, and instead focus on the strategy of online e-commerce platforms.
In January this year,Spanish fashion giant and ZARA parent company Inditex announced that it will close all its Chinese offline stores of Bershka , Pull&Bear and Stradivarius . Only the official website, Tmall flagship store and other e-commerce channels will be retained. Mango , also a Spanish fast fashion brand, also announced this year that it will suspend the expansion of its Chinese stores, and will invest more resources to focus on e-commerce platforms in the future.
Dutch fast fashion brand C&A sold its Chinese market business to Beijing-based private equity firm Zhongke Tongrong last year, and sold 60% of its Chinese online business to in May this year. Antarctic e-commerce .
Fast fashion is declining, and international brands help themselves
International fast fashion brands have lost out in China. The deeper reason is that the traditional fashion they represent has become less and less suitable for the tastes of young Chinese consumers. NS.
According to iiMedia Consulting's data, in 2020, "Sankeng" clothing ("Sankeng" refers to JK uniforms, Lolita dresses and Hanfu, and generation Z consumers account for about 80%.) The scale will exceed 20 billion yuan by 2025 It is expected to reach 126.6 billion yuan. With the rise of niche apparel categories such as street fashion and Hanfu, the market share of fast fashion will be further compressed.
Source: Winshang.com
The market is shrinking at the same time,The competition between international and domestic fast fashion brands is also intensifying. According to incomplete statistics from .com, 8 fast fashion brands (MJstyle, Uniqlo, UR, MUJI, C&A, Gap, ZARA, H&M) will open a total of 126 new stores in the first half of 2021. Home, but only from 6 brands. The two fast fashion giants ZARA and H&M stalled at the same time in the first half of this year, and the number of new stores opened to zero.
Among the top three stores in MJstyle, Uniqlo and UR, two are local fast fashion brands in China. Among them, MJstyle ranks first, with 31 new stores opened in the first half of the year alone, surpassing the entire year of last year.
In addition, as e-commerce platforms and live streaming have become important sales channels, the fashion retail industry is gradually transforming to digitalization, which also has a strong impact on fast fashion brands.
However, some international brands are not willing to leave. After all, the Chinese market with such a huge consumption base contains huge potential that no one can ignore. In the eyes of these brands, the previous failed experience of operating in China may just be "wrong way of opening."
On August 4, 2021, Forever 21, which has twice withdrawn from the Chinese market, announced its third entry into the Chinese market. The video accompanying the official announcement of the return of its Xiaohongshu platform: "In 2021, Forever21 will return to the Chinese market, focusing on e-commerce platforms and linking with consumers in the new era through social media."
Currently, Forever 21 Has quietly settled in many e-commerce platforms such as Pinduoduo and Vipshop.
And H&M and ZARA who "persist hard" do not want to give up lightly.Even if they become the target of Qianfu in the "Xinjiang Cotton Incident", their performance is under pressure, and the number of new store expansions is zero, they still hope to find a new way out in the Chinese market.
Inditex, the parent company of ZARA, chose to retain the core competitor brand ZARA, close Bershka and other similar brand stores, and focus on digital transformation to expand online business; while H&M chose to promote the new brands ARKET and & Other Stories. Participate in the competition in the Chinese market.
Image source: ARKET brand Facebook
According to public reports, ARKET and & Other Stories both issued a "Boycott of Xinjiang Cotton" statement in September 2020. This disgraceful history will not be forgotten by Chinese consumers. As H&M Group's new means of expanding the Chinese market, ARKET and & Other Stories will return to the Chinese market this time, and they are destined not to easily make consumers pay.
[The author of this article, Xia Guangshe, reprinted with permission from entrepreneurs. If you need to reprint, please contact the WeChat public account (ID: Globalinsights) for authorization, unauthorized reprinting will be investigated. ]
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