ZARA is still there but no one wants to learn it

Even the dull people can perceive that the number of fast fashion stores around them is decreasing. In the retail industry, opening and closing stores are both “daily tasks”, but the fast fashion retreat has become the consensus of the Chinese commercial real estate industry in recent years: starting from 2017, Forever 21, New Look, Old Navy, Esprit, Earth Music & Ecology Other brands have announced their withdrawal from the Chinese market.

ZARA’s parent group Inditex announced in June this year that 1,200 stores worldwide have closed, which is regarded by the outside world as the most powerful evidence of the decline of global fast fashion brands-the largest fast fashion brand is still the case, let alone the second, third, and fourth place.

Before announcing the store closure, Inditex Group had more than 7,400 stores worldwide. All stores of its brands are standard: the style is uniform, the lights are bright, and the new products of the season are densely packed in one store. As usual, the clothes hangers Of clothes will be constantly changed according to sales data.

But at the same time, ZARA is still opening stores and large stores.

On October 15, ZARA’s new Asian flagship store opened on Wangfujing Street, Beijing. Unlike the usual stores in shopping centers, this flagship store is a single-family building with 4 floors and an area of ​​over 3,500 square meters. Originally opened here was the flagship store of the Chinese menswear brand Hailan Home.

The new flagship store has several distinctive features: green plants and flowers are everywhere, a large LED curved screen has a full 8 pieces, men’s and women’s clothing and shoes and bags have independent experience areas, and the cash register has also been newly designed. In this four-story store, each floor has a quick payment area, and there are several facial charging devices that make the customer’s payment process faster-in short, it is completely different from the previous store.

Large flagship stores are often the performance of a brand “showing muscles”, and at the same time, they hope to impress consumers again with new elements. But ZARA is facing a more drastically changing Chinese market:

  • Consumer needs are becoming more and more personalized and vertical. In the past, ZARA and H&M, which were located in the golden spot on the first floor of the shopping mall, were replaced by sports fashion brands and light luxury brands after the lease expired;

  • The arrival of the epidemic strongly catalyzed the rise of new sales channels: e-commerce live broadcasts. This channel change has adversely affected the manufacturing side, supply chain, and even the company’s operating model;

  • On the supply chain side, digital transformation is continuing. From dough accessories to garment manufacturing, to a complete flexible fast-reverse supply chain, there are a large number of companies wanting to share the pie.

It is difficult to determine whether ZARA’s future in the Chinese market will gradually fade out or if it will make a comeback.But what is clear is that in a rapidly changing market, it is difficult for a brand with monopolistic hegemony, absolute voice and bargaining power to appear in China’s fast fashion field.

For many brands that have tried to imitate ZARA, this is not good news.La Chapelle, formerly known as the “Chinese version of ZARA,” has continued to expand its losses since 2018: in the first half of 2020, it achieved revenue of 1.43 billion yuan, a year-on-year decrease of 63.80%; a net loss of 707 million yuan, compared with the previous year An increase of 41.97% over the same period. According to statistics, since the beginning of this year, La Chapelle has become a person to be executed 63 times. In October alone, the number of times he became a person to be executed was as high as 18 times.

Perhaps, there will be no more “Chinese version of ZARA”.

ZARA is not fast enough

There are two secrets for fast fashion brands such as ZARA to conquer the world:

One is the magic of the fast fashion model itself. It is fast, has many choices, and is fashionable. New models on the fashion week show will appear in fast fashion stores in two weeks. The price of this speed may be insufficient quality and design sense, but it is affordable and can provide consumers with a feeling of “fashion democratization”;

The second is the mutual achievement of fast fashion brands and shopping malls: when fast fashion brands enter China, shopping malls are very keen to use fast fashion to attract traffic. ZARA, H&M and even Uniqlo are the most important brands for new shopping malls when attracting investment. In a shopping mall, fast fashion brands are often crowded together.

But by 2020, speed itself is no longer the advantage of fast fashion brands such as ZARA-women’s clothing stores on Taobao can be shipped faster than ZARA everywhere.

Take Chenfan, the head brand group currently Taobao women’s clothing, as an example. According to the data provided by Chenfan, the company’s GMV in 2019 was 3.3 billion, ranking third in the Taobao (Tmall + Taobao) women’s GMV ranking. , Ranked behind Lingzhi Group and Uniqlo. Chenfan currently has two main businesses: its own brand and MCN. In addition to well-known top celebrities like Sydney, there are more than 200 celebrities under contract for incubation.

The confidence that Taoist brands can compete with fast fashion giants is their supply chain capabilities. Mrs. Qian (Qian Yufan), the co-founder of Chenfan, said in an interview with Tiger Sniff that at present, Chenfan has a total of more than 1,000 cooperative factories at the end of the supply chain, and they are extremely subdivided: there are factories specializing in knitting and shuttles. Weaving factories and so on. From placing an order to shipping, the entire production cycle is very short. For a category like T-shirts, it may only take 4 to 7 days, and the construction period for categories involving special fabrics (such as double-sided woolen coats, etc.) will be longer.

In addition to the “fastness” of the production process itself, compared to traditional fast fashion brands, Taobao’s online celebrity women’s clothing store has a closer and closer relationship with consumers-thanks to the special attributes of the “Red Man Store”, Taobao stores We can more accurately estimate orders and reduce inventory.

For example, before the new launch, Sydney will post a “grass-grass notice” through Weibo. The copy of the notice is “Tell me which comment you like”, and then it will list Taobao links and start selling. The entire process is highly data-based: social media interaction data, likes and collection ratios on the Taoxi platform can help brands estimate the first order volume of different styles, so that the stocks that have been prepared since then are “less risky” and will not be Causes serious inventory, and the remaining part of the return order is “sales-based production.” At present, the average inventory turnover days of Chenfan women’s clothing is only 53 days.

Mrs. Qian believes that at the end of the supply chain, Chenfan’s ability is not only the ability to coordinate orders, but also customize and design the needs of its own consumers, and provide them to the supply chain in the reverse direction. The celebrity matrix has multiple communication channels with consumers (weibo, Xiaohongshu, etc.), and can communicate with consumers in two ways-not only can they perceive their needs in time, but also use the celebrity’s own aesthetics Opinions influence the consumption choices of fans.

The “small order and quick reverse” model of “small batch, multiple styles, and multiple batches” came from this. In this mode, new trends in consumer information will be “blocked” by e-commerce channels first, and products will be quickly released to test market responses, and there is no way to change another batch.

This faster-paced “market trial and error” has also disrupted the update rhythm of ZARA who are highly dependent on offline stores. Not to mention, in today’s commercial real estate environment, standardized and long-lasting store formats are gradually losing their appeal.

A senior practitioner in commercial real estate told Hu Xiu that the consumption experience provided by traditional fast fashion offline stores is relatively static, while the most popular stores in shopping malls today are more personalized experience-based formats, such as concept pop-up stores, New retail stores with a higher degree of digitalization, etc.

Business always likes the new and dislikes the old. When the best location provided to ZARA and H&M at low prices in the past can no longer produce higher business efficiency, it is inevitable to change to a new brand.

ZARA is trying to change in the direction of the tide:

  • In terms of offline stores, the newly opened Asian flagship store provides a completely different shopping experience from traditional ZARA stores. Clothes are no longer densely packed together. The experience and display space has become larger, and technological elements such as self-checkout and interactive large screens have changed. many;

ZARA is still there but no one wants to learn it 1

ZARA New Asia Flagship Store

  • In terms of online sales, Inditex Group announced in June this year that it would invest 1 billion euros to expand its online e-commerce business and 1.7 billion euros to upgrade offline stores, hoping to achieve the goal of online sales accounting for 25% of total revenue by 2022 ——This figure was 14% last year.

By optimizing offline stores and pouring resources into online e-commerce business, ZARA’s current transformation may be a little slow, but fortunately, it is strong enough. Fashion business consultant and columnist Leng Yun believes thatThe great thing about ZARA is that while maintaining the speed, it can also maintain a very wide SKU width (more than 20,000 new products on the shelves each year) and the depth of the product, that is, each SKU sells tens of thousands to hundreds of thousands a year Pieces, while ensuring a high degree of sold-out. This means that ZARA’s product efficiency is very high.

In addition, ZARA’s efforts in digitalization did not begin today. Leng Yun said to Tiger Sniff that in the “pre-e-commerce era”, ZARA’s efforts in IT systems, database construction, and software and hardware investment far surpass most clothing companies.

To this day, it is still one of the most successful apparel retail companies in the world-but why is this model difficult to replicate in China?

Harder consumers

Rather than saying that ZARA is declining, it is better to say that its huge fashion empire is being eaten away by smaller brands.

The Chinese clothing consumer market is in a stage of drastic changes. Perhaps girls once favored ZARA’s fashion and speed, but now they have turned to a niche brand that is more unique and can express themselves.

In the interview process of Huxiong, “cost-effectiveness” and “diversity” were words mentioned by many interviewees.

Zhou Dong, the co-founder of clothing IP incubator and clothing supply chain platform Light Chain, believes that after the reform and opening up, Chinese people have fewer choices in buying clothing and value “functionality” (warmth, skin-friendliness, etc.). Since the 1990s, we have entered the “apparel consumption 2.0 era”. People began to buy brands and LOGOs. NIKE, Adidas and later Supreme can all be included in this category.

“Now, it is the 3.0 era. Everyone is expressive consumption, focusing on quality and cost performance.”Zhou Dong said, “The new trend now is: de-branding.”

Leng Yun also expressed a similar view, “A certain trend is’diversification’, brand styles will eventually become more diversified, monopolistic and dominant brands will decrease, and the number of niche brands will increase.”

Clothing is a high-frequency, non-standardized consumer market. “It’s not when the season is changing that girls need to buy new clothes,” Qian Yufan believes. “Because of the existence of such consumer psychology, you don’t even know where the consumer’s saturation point is. She may need endlessly. More beautiful outfits.”

“ZARA has too many competitors,” a ZARA loyal fan told Hu Xiu. She started buying ZARA since she was in college, and has still maintained a monthly purchase frequency after four or five years of graduation. She still likes ZARA’s convenience and speed-it can be bought at any time when shopping, and the price is not “sick”, but the sense of fashion originally provided by ZARA to her is becoming more and more easily replaced. “I also buy dozens of dollars. Taobao stores also bought thousands of dollars in buyer’s stores. Most of the ZARA clothes bought in the past have been eliminated, and a small part can still be worn with them.”

Mrs. Qian also thinks,Different from the consumption of skin care products, the consumption characteristics of clothing categories (especially women’s clothing) determine that the competition between brands often crosses prices.

Consumers’ choice of skincare brands is often locked in a relatively fixed price range: they are used to using a few thousand yuan for ladies’ brands, it is difficult to choose very cheap open-shelf products. However, consumers who buy one or two hundred yuan of clothes are quite likely to buy five or six thousand yuan. It is difficult for clothing brands to tell which ones they are competing with, because “competition is everywhere.”

In the apparel industry, niche and individualization do not necessarily mean small amounts. After all, this is the world’s largest single apparel market. According to a survey conducted by management consulting firm Oliver Wyman, affected by the epidemic, the size of China’s apparel market will drop by 15% in 2020, evaporating about 400 billion yuan-that is, the overall size of the apparel market will reach 2.3 trillion yuan. On such a huge cake, you can cut enough weight no matter how you cut it. Mrs. Qian believes that even some seemingly niche clothing categories, such as large-size women’s clothing, can still achieve a large volume.

As for the Chinese people’s pursuit of “cost-effectiveness”, it can be confirmed by Uniqlo, which has been selling in full swing in China in recent years.

According to the financial report released by Uniqlo’s parent company Fast Retailing Group, the number of UNIQLO directly-operated stores in the Chinese market (767) exceeded Japan (764) for the first time in August this year. Compared with 5 years ago, the number of Uniqlo stores in China has basically doubled. Since 2015, Uniqlo has won the sales champion of Tmall’s “Double Eleven” women’s clothing category for 5 consecutive years.

Zhou Dong believes that unlike ZARA, Uniqlo’s clothing is more popular and has a wider audience, but at the same time, it is also using the UT series to co-brand with major IPs (KAWS, Ultraman, Naruto, etc.) for cultural output. “It is a brand that is more suitable for China’s national conditions. Everyone’s pursuit of high quality and cost-effectiveness is actually far greater than we thought.”

Opportunities are hidden in more fragmented markets

Changes in consumer demand are driving changes in the supply chain.

Earlier, Tiger Sniffing Pro’s article “This Thing That Ali Hasn’t Done, Worth Trillions” mentioned that the apparel industry has slowly divided into two camps: one is the big brand + efficient integration of the supply chain camp, the other is the small and medium-sized Brand + loose supply chain camp.

ZARA is a model representative of the former, but in today’s Chinese apparel industry, new opportunities appear more in the supply chain camp of small and medium brands + loose, socialized production capacity.

In 2020, which is hard to find, the clothing supply chain has rarely become a capital reservoir for many early financing:

  • In February, Miaoyou Technology, a provider of apparel supply chain management solutions, announced the completion of a 50 million yuan Pre-A round of financing. The investor is Oasis Capital and Source Code Capital pursues investment;

  • In February, Kuaiyi, a children’s clothing supply chain platform, announced the completion of an angel round financing of RMB 10 million, with the investor being Zhejiang Daben Investment Management Co., Ltd.;

  • In June, the clothing supply chain B2B e-commerce platform “first-hand” announced the completion of a $40 million Series C financing, led by CMC Capital, and the old shareholder Huaxing New Economic Fund followed suit;

  • In August, the clothing supply chain service platform “Shanshu Technology” announced the completion of a round of financing with an amount of more than 100 million yuan. Xiangfeng Investment led the investment, Hongdao Capital, Dahe Venture Capital, Inno Angel Fund, and Harvest Capital followed the investment.

  • ……

In September of this year, Alibaba’s three-year business Rhino Intelligent Manufacturing officially launched, dropping a powerful bomb in the clothing manufacturing industry.

This model factory aimed at the cloud-based transformation of the clothing manufacturing industry supports Ali’s ambition to transform the manufacturing industry. Ali said that in running the entire process from back-end to front-end, Rhino will be used as an open source platform and open to the outside world.

However, the clothing production process is very long, roughly including the following links:

Fabric accessories production-cloth accessories wholesale-clothing (garment) processing-brand end / ready-to-wear wholesale end-retail end.

From the current observable business situation of the rhino factory, the main business of rhino is still concentrated in the garment manufacturing link-that is, production, and less involves more upstream design, fabrics, accessories and other links. Since it is the head brand of Taobao, Chenfan cooperated with Rhino during the preparation period. Chenfan told Huxi that the cooperation between Chenfan and Rhino Intelligent Manufacturing began in 2019. Although Rhino’s main business is garment manufacturing, it also has the ability to collaborate with fabrics.

In other words,The fist is as powerful as Ali. At this stage, it is still only possible to cut into the clothing supply chain from a small incision, and then continue to develop upstream and downstream.

Leng Yun believes that in addition to garment manufacturing, there are too many parts that need to be changed in the entire process of making clothes. She said that the current digital transformation at the end of the supply chain is basically integrated into the digital transformation of the fabric part, but the clothing accessories are a very trivial non-standard product. Take a button as an example. It may have different sizes, materials, and colors. The elements will change every quarter. According to the design of different styles of clothing, in addition to conventional accessories, there are many unconventional accessories.

“From a production point of view, even if only the stitches are missing, or the zipper is missing, the entire mass production cycle will be stagnant,” Leng Yun said. Therefore, there is currently no more mature digital transformation program for accessories.

In the production process of a garment where a button or a zipper is very important, “speed” is no longer the only goal worth pursuing-how can we make it more refined and smaller?

“Consumers’ requirements are definitely getting faster, better, and more cost-effective. This is a very natural trend,” said Mrs. Qian. But when the speed reaches a certain level, it becomes more difficult every time you want to accelerate.

Zhou Dong pointed out that most of the supply chain manufacturers with socialized production capacity want to make goods within 7 days, and the quality must be uncontrollable. “Where do your fabrics come from? Your fabrics must be in stock, but there is no stock. Good quality, unstable, and price-performance ratio cannot be guaranteed, because all the stocks are marked up throughout the process.”

Therefore, the core contradiction at the end of the apparel industry chain lies in: high quality, cost-effective, flexible and quick response, which almost constitutes an “impossible triangle”-to achieve all three is the long-term goal of the supply chain, and it is also a very difficult thing.

As mentioned above, this is a sufficiently large market. Because of the constant changes in consumer demand, it is difficult to reproduce a large-scale enterprise that has both brand power and supply chain capabilities like ZARA and provides large and complete solutions. More opportunities are hidden in more fragmented markets.

Such a market is still worth looking forward to. No matter how you cut this cake into a piece, you can get a rich and delicious taste. What needs to be considered is that on the brand side, with the rise of more unique and personalized small and medium-sized brands, what kind of capabilities should the supply chain end provide and how to serve these small and medium-sized brands?