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Foreign fast fashion brands face falling sales in China

A growing number of foreign fast fashion brands that used to fill the wardrobes of young Chinese have been going out of style.

On Thursday afternoon, the three-story Forever 21 store on Changde Road in Shanghai was in disarray. The store was holding a big fire sale to liquidate its inventory, with all items selling for 30 yuan ($4.38) or less. Some counters were cluttered with piles of dumped shoes and clothes, and customers were rummaging through the piles as if searching for treasures in a rubbish heap.

A salesperson at the store told the Global Times on Sunday that Forever 21 is soon going to exit the mainland market, but she said she hadn’t heard from the company about the exact date.

The Global Times dialed the customer service hotline of Forever 21 on Thursday and Sunday, but nobody answered the phone. Nor did the US-based fashion brand reply to e-mails from the Global Times requesting details about its mainland strategy.

Forever 21’s official website in China has been shut down, as has the brand’s online store on Tmall.

Shutting down

For overseas fast fashion brands, the Chinese market has been a hard nut to crack, particularly in the past few years, as market growth reached a peak and gradually slowed and as domestic fashion brands have started to catch up fast.

Some brands have failed, like Forever 21. New Look, a UK-based high street fashion brand, announced in December that it would close all its stores in China. According to a report by the Guardian, the fashion chain was planning to close 120 shops in China after reporting disappointing sales in the country.

Another well-known UK high street fashion company, Topshop, also announced last November its decision to shut down its online store on Tmall. UK-based fast fashion brand Next also announced a shutdown of its mainland website and said that it would no longer ship products to addresses in China.

Some overseas fast fashion brands are still operating in China, but judging by their financial data, it looks like their heyday has already passed.

For example, net sales of Inditex, the parent company of popular fast fashion brands such as Zara and Bershka, rose by 3 percent on a yearly basis in the 2018 fiscal year, according to the company’s financial report released on its official website.

That’s quite a slowdown compared with the company’s 9-percent net sales growth in the fiscal year of 2017.

The company’s net profit growth also slowed from 7-percent growth in fiscal year 2017 to 2-percent growth in the 2018 fiscal year.

Inditex China refused to disclose its business performance in the mainland market when asked by the Global Times on Thursday.

But according to domestic media reports, some of its brands have already slowed down their business expansion in the mainland. For instance, Zara opened 12 new stores in the mainland in 2017, compared with 17 new stores in 2016.

Some overseas fast fashion brands have managed to survive in China but have made no significant progress over the years.

According to statistics sent to the Global Times on Friday by Euromonitor International, a market research provider, the market shares of H&M and Gap in China were roughly the same in 2018 compared with 2014, with the two brands accounting for 0.4 percent and 0.1 percent, respectively, in the mainland market in 2018.

Losing interest

Overseas fast fashion brands offer trendy clothing at relatively low prices to customers – in most cases, at the cost of quality. In the past, those brands were quite popular among domestic customers, particularly young women, and it was easy to find a mainland Zara or H&M store stuffed with customers searching among piles of apparel.

But temperatures seem to have dropped significantly for fast fashion brands.

The Global Times visited an H&M store in a large shopping mall in central Shanghai on Thursday. The three-story outlet looked mostly empty on the first floor with only about a dozen customers strolling about. The salespeople were idly chatting with one another.

Customers in China have shown waning interest in fast fashion brands in recent years. A Shanghai-based white-collar worker surnamed Wang, who is 27 years old, said that five years ago when she was a student, her wardrobe was filled with overseas fast fashion apparel like Zara, but she rarely buys those brands anymore.

“I think the reason for this change is because five years ago, there were not many clothing brands in China for me to choose from, particularly as online shopping was not very common at that time. But now, there are numerous choices on online shopping platforms like Tmall with all sorts of fashion styles and all sorts of price ranges,” she told the Global Times on Thursday afternoon.

Quality is another thing that bothers her about overseas fast fashion brands. “For me, all the overseas fast fashion brands in the mainland can be categorized into two types: cheap with bad quality like Forever 21 and H&M, or cheap with just so-so quality such as Zara,” she said.

These days, she often surfs online to choose clothes from independent online clothing boutiques that provide Asian-style apparel.

According to Wang, many of those brands have much better quality than overseas fast fashion clothing and are cheaper too.

Fang Shaoqing, a 20-something woman now living in Shanghai, said that her addiction to overseas fast fashion brands has become increasingly weak in recent years.

“I still have a habit of looking around in Zara or H&M shops, but nowadays I don’t buy many of those clothes, even after trying them on. I think now I tend to buy clothes that don’t easily become outdated in their design, even if they are priced relatively higher than many of those fast fashion clothes,” she told the Global Times.

But Yan Ming, a 21-year-old student who now lives in Shanghai, said that she still buys a lot of fast fashion clothes, particularly as they start to market themselves on popular online shopping apps like Xiaohongshu.

“For example, there are many models posting beautiful pictures on Xiaohongshu wearing Zara clothes. Those pictures have pushed me to buy the same clothes,” she told the Global Times, adding that about 50 percent of her wardrobe today is made up of overseas fast fashion brands.

Craving customization

Despite the receding interest domestic customers have in overseas fast fashion brands, their clothing consumption has actually risen in recent years. According to the Euromonitor data, the retail value of the apparel sector in China reached 2.08 trillion yuan in 2018, up from 1.6 trillion yuan in 2014.

Domestic clothing sellers are also catching up fast to snatch market share from overseas brands, with many homegrown fast fashion brands becoming increasingly popular among domestic customers.

The Guangzhou-based fashion retailer UR, for example, has managed to open 150 stores in China in just 10 years from 2006 to 2016, according to domestic news reports.

A Shanghai-based clothing boutique owner also told the Global Times, on condition of anonymity, that her boutique’s business has been on the rise in the past two years, though she was not sure about the overall industry’s performance.

“What domestic customers care about most is style, quality and after-sales services,” she said.

Yan Qiang, a professor of the Beijing University of Posts and Telecommunications, told the Global Times on Sunday that Chinese customers today often seek clothes that can represent their unique personalities, and even in fast fashion, which is characterized by mass production and rapid updates, they are still looking for such customization.

“As for making clothes, industrialized batch production no longer works in China. I think overseas fashion companies should change their mind-set and learn a bit more about domestic customers’ tastes in clothes if they want to grab the market here,” Yan told the Global Times on Sunday.
Newspaper headline: Fast fashion goes out of style

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