Fast Fashion Is Displacing Chinese Casual Wear Brands

on August 26 2014 | in Retail Trends | by | with No Comments

Uniqlo, China, fast fashion,

Fast fashion brands such as Zara, H&M, and Uniqlo are displacing established Chinese casual wear brands.

Popular Chinese brands, including Meters/bonwe, Espirit, Giordano, and Baleno, are finding it hard to compete with the low prices, high product variety, and quick turnover of the fast fashion brands, according to Want China Times.

Compared to the pricing of Hong Kong-based Espirit, fast fashion brands cost 10 to 20 percent less on average. What’s more, fast fashion brands keep a smaller inventory of products, which means faster turnover. For fast fashion brands, out-of-season inventory accounts for 15 to 18 percent of total inventory, which is half of the out-of-season stock held by the local competitors.

Ma Gan, an apparel industry expert, told the Beijing Times, “Zara and H&M have very powerful inventory management systems that are capable of simultaneous inventory information exchange in each of the chain stores and headquarters.” This system allows these companies to monitor customer demand and more efficiently allocate inventory.

Due to risks from a slowing economy and increased foreign competition, China’s Meters/bonwe recently sold a third of shares to Chang’An Fund for US$17 million. Meters/bonwe is still the country’s leading casual wear maker, but it has had to close 220 stores, many in first-tier cities, out of the 5,220 it owned in total. The company announced in October of last year that it would develop its online to offline business and use data analysis and cloud computing to more efficiently target customers.

Shen Meng, chair of Xiangsong Capital, doesn’t see fast fashion as a response to a sudden change in consumer demand or trends, but rather as an improvement in production speed and a streamlined supply chain.

“Many of the companies in the Chinese fashion industry neglect the need to explore and analyze the market and the importance of research in design,” said Shen. He added, “These companies are just following the market trend because their production plans are based on how existing products sell.”

Meters/bonwe isn’t the only Chinese label feeling the heat from fast fashion.

Baleno, owned by Hong Kong-based Texwinca, saw its net income drop by 9 percent last year to US$86.2 million. The company has closed 338 stores in China in the last fiscal year.

In order to reduce costs and inventory, many other brands have closed stores in China as well. Hong Kong-based retailers Giordano and Jeanswest closed 45 and 253 shops respectively. Etan Paris shuttered 88 shops, and Espirit closed 38.

Conversely, Japan’s Uniqlo opened 77 stores in China last year, while Sweden’s H&M opened 60, US-based Gap opened 34, and Spain’s Zara opened 20.

Fast fashion brands have been so successful in China because their small inventories and quick turnover allow them to quickly adapt to changing consumer demands. If Chinese casual wear brands don’t change their business practices, they will forever be trying to catch up.

image credit: tobze

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

« »

Get Your Copy of the June 2015 China Consumer & Retail Monthly

Follow Us

Daily Updates By Email

Latest Posts

Scroll to top