Consumed by fashion

开篇：润墨网以专业的文秘视角，为您筛选了一篇Consumed by fashion范文，如需获取更多写作素材，在线客服老师一对一协助。欢迎您的阅读与分享！

Across the street from a five-story H&M flagship store on Huaihai Road in Shanghai, Wang Yan took a break from shopping to smoke a cigarette and reflect on how Chinese fashion has changed since the clothing chain arrived roughly four years ago.

“First, prices are cheaper,” the 32-yearold Beijing native said. “Second, for these stores, the clothes are more fashionable than before.”

Wang embodied the evolving tastes of the middle-class Chinese consumer. He wore sports brands – a Nike jacket and backpack – that formerly dominated the mid-tier branded clothing market, but in his shopping bag was spring jacket from H&M competitor Zara, a decidedly more fashion-oriented brand.

Wang is one of the many Chinese consumers who can rarely afford luxury products but want more fashionable clothing than is available from sports brands or domestic retailers. As the internet spreads and incomes increase, Chinese consumers are becoming increasingly sophisticated and aspirational in their purchases.

“Fast fashion” stores have stepped in to meet this demand, led by Sweden’s H&M and Spain’s Zara. “This is a big new thing that has happened in the China marketing scene,” said Tom Doctoroff, North Asia CEO of marketing firm JWT and author of a forthcoming book on Chinese con- sumerism, “What Chinese Want.”

The fast-fashion brands have filled a long-standing gap in China between lowend, local brands and the foreign, luxury or sub-luxury brands like Coach, Doctoroff said. “H&M and Zara came around at the same time, effectively setting up a new price tier.”

More brands than a cattle roundup

Clothing brands expanded only gradually after China’s economic opening in 1979. At first, Chinese consumers were not very brand conscious.

Among the first clothing brands to rise to prominence in the 1990s were foreign and domestic sports retailers such as Nike and Li Ning. The association with sports gave these brands easy cache: Li Ning, for example, was founded by the well-known Chinese gymnast of the same name, while Nike built its brand through sponsorships, starting with that of China’s national basketball team.

Some local and Hong Kong brands found early success as well. Metersbonwe and Giordano sounded foreign and emulate foreign styles, although they did not follow foreign trends closely. Metersbonwe, founded in 1995, now has more than 4,500 stores in China.

A luxury boom followed in the 2000s, rapidly introducing new brands. China’s luxury consumption skyrocketed from less than US$800 million in 1998 to an estimated US$12 billion in 2010. Nearly every major luxury clothing brand can now be found in first-tier cities like Shanghai and Beijing.

Chinese consumers who could afford luxury brands were quick to take them up as a badge of wealth and status. Seemingly overnight, Chinese consumers became familiar with dozens of brands. That awareness helped pave the way for fast fashion.

“Within a really short time, within one to two years time, everyone seems to know all the luxury brands and they read about it, they talk about it on forums,” said Mariana Kou, a retail analyst at CLSA. “And the same thing applies to mass market brands, the fashion brands [like H&M].”

Super models

By the time Hennes and Mauritz, better known as H&M, entered China, it had honed its business model through decades of expansion in Western markets. Founded in 1947 in V?ster?s, Sweden, the company expanded to Norway in 1964 and to the UK in 1976. The 1980s and 90s saw H&M reach further into continental Europe, and in the 2000s it launched its first stores in the US.

The company designs most of its clothing in-house following the style of the latest fashion trends. It then outsources its production and buys in large volume to keep costs down before distributing to stores worldwide. H&M prices its products relatively cheaply to appeal to a young market, mostly consumers in their 20s.

H&M introduced this model to Asia in 2007, when it opened its first stores in Shanghai and Hong Kong. The company’s customers also skew young in China; it appeals to Chinese consumers who have just entered the workforce, Kou said.

H&M’s worldwide strategy of occasionally teaming up with luxury designers and celebrities to design co-branded lines has been particularly well-received in China. The Versace for H&M line that launched last year, for example, gives some of the vaunted association of a soughtafter luxury brand at a far lower price.

Zara, H&M’s primary competitor in China, opened its first store on the mainland in 2006 and adheres more closely to the definition of fast fashion, bringing the latest runway fashion trends to stores as quickly and cheaply as possible.

Unlike H&M, Zara wholly controls its manufacturing process, so that it can bring runway inspirations to market in as little as two weeks. H&M, by using subcontractors, often has longer lead times of six to 12 months. However, speed costs money, giving Zara a slightly higher price point than H&M.

Other brands are often associated with fast fashion because they have similar strategies and pricing in China, even though they offer less fashion-oriented clothing. Japan’s Uniqlo, for example, concentrates on high-quality, basic clothing at slightly lower prices than H&M.

This tier of clothing is more affordable than luxury brands, but it is not“cheap chic,” as the stores are described in the West. For example, an H&M sweater priced at US$35 in the US retails at roughly US$47 (RMB299) in China, about 36% more. Yet Chinese also have far less to spend than Americans: per capita disposable income in the US for 2011 was more than six times Shanghai’s average of US$5,760.

“Compared with the local brands, Uniqlo, H&M, Zara are a bit pricey,”said Takahiro Kazahaya, a retail analyst at Deutsche Bank.

First-tiers first

H&M, Zara and Uniqlo all focused on first-tier cities upon entering China. Typically, the companies first rolled out a flagship store in an attention-grabbing location.

“You’ve got to come in big. You’ve got to come in as a brand that is famous, and one way to do that is with a flagship store,”Doctoroff said. “Everybody has these larger stores for stature.”

That often means choosing a location in malls and on shopping streets that are already populated by luxury stores. Because launching ad campaigns is expensive in China and Zara and H&M had few stores until recently, these brands have generally relied less on advertising and more on generating buzz through flagships and events. Once Chinese shoppers are somewhat familiar with the brand, the chains then began to open smaller stores in that city.

The strategy has worked so far. H&M had 82 stores in China as of November last year after nearly doubling its stores on an annual basis. Zara had 91 stores as of October 2011.

It’s more difficult to discern the success of these stores financially, since the companies release little China-specific data.

H&M’s total sales for China were US$539.4 million for fiscal year 2011, up 42% from 2010. Zara’s parent company Inditex Group does not release Chinaspecific sales data, but one analyst esti- mated that Zara sales were US$515.3 million in China in the fiscal year ending in January 2011. That estimate may be low, since Zara’s average store in China is larger than its average store in a Western markets.

Neither company discloses profits. But Kou of CLSA said their relatively high price points probably make them profitable. In Western markets, these stores generally start turning profits relatively quickly after opening; that likely holds true for the China market as well.

Both companies have consistently named China as one of a few key expansion markets. H&M says that it will open 275 stores worldwide in 2012 with the most being opened in China, the US and UK.

This expansion seems rapid, but it is slower than China’s sportswear and domestic brands, which use franchising to allow for more rapid growth. Giordano, for example, has 448 wholly-owned stores and 700 franchised stores, according to Kazahaya’s estimates. Opening whollyowned locations takes more time, but it allows H&M and Zara to have more control over details like distribution, product rollouts and inventory. It also ensures consistency in how the brands are presented.

This slower pace means that H&M and Zara are just beginning to expand to lower-tier Chinese cities, a task not without pitfalls. Shanghai, Beijing and Guangzhou are often comparable to many major Western cities in their consumer demand and retail offerings. The gap is not always easily bridged between them and second-tier cities, where consumers typically earn less and have less exposure to foreign brands.

But these secondary markets can definitely support stores, albeit on a smaller scale, Kou said. Their strong presence in first-tier cities means many shoppers in second-tier city already know the brand.

These second-tier cities will soon become saturated with retail outlets, as first-tier cities have already become. At the moment, H&M has 14 stores in Shanghai and eight in Beijing while most secondtier cities only have one or two locations, according to the company’s website.

The mid-range price tier may be less than a decade old, but it is already growing crowded – as Gap found when it opened its first China store in 2010.

“A few of these players have a little bit of a head start on us. There are of course real estate challenges, where we’re fighting for the best locations,” said Jeff Kirwan, managing director for Gap’s Greater China division. “We certainly see the competitive nature of the landscape in China ramping up quite a bit.”

1.3 billion clothes-horses

The growing wealth and size of China’s middle class seems to ensure H&M and Zara’s success. As incomes rise in China, shoppers will raise their sights to more fashionable clothing, and H&M and Zara have helped light that path to everhigher aspiration.

Consumers now have a clear trajectory from local brands to Uniqlo, H&M and Zara, on to lower-priced luxury brands like Hugo Boss and Dolce & Gabbana, before topping out at stores like Louis Vuitton and Prada, said Kou of CLSA.

As this retail space gets more crowded in China, stores will have to differentiate themselves, and branding will become even more important, Doctoroff said.

“Fashion brands are badges and you use them to express identity, so the allure of wearing a brand from… the next level up in the premium scale is not an enduring competitive advantage,” Doctoroff said. “You see the same thing happening in luxury. It’s a tangled glop of glitter [in need of differentiation].”

Flagship stores and grand opening parties likely will not be enough to accomplish that, he said, so stores will need to begin formal marketing campaigns in China, something that so far only Gap is doing in the mid-range price tier. The internet, and especially microblog services like Weibo, will only further encourage the pursuit of brands as badges of social success.

“The Chinese are the most brandfriendly people in the world,” Doctoroff said. “They use brands as tools for success in society, as weapons of advancement in the battlefield of life.”