The apparel giant has delivered the “worst” report card, and the market may suffer a huge loss of nearly 300 billion U.S. dollars! How to endure this cold winter?
The COVID-19 epidemic in 2020 has made the already extremely competitive apparel industry even worse. Under the epidemic, the production and operation of garment enterprises have been hindered, and they are facing multiple difficulties such as reduced market demand and shrinking orders. What is the current survival status of enterprises?
01 The clothing market is in the doldrums, and discounts and promotions have become the norm
Guangzhou Panyu Clothing Market is a famous clothing wholesale market in China. In the past, the market was bustling and crowded with people buying goods. Now the entire There were very few customers on the street.
Usually there are few discounts in the clothing wholesale market, and prices are usually based on the quantity of goods taken by customers. This year’s discount promotion banner Appeared in almost every store.
Discount promotions are not a special case of the clothing wholesale market. On the other side, Wuhan is a “shopping paradise” with well-known domestic and foreign brands. Chuhe Han Street will also carry out discount promotions to the end. There is a clear gap between the clothing industry this year and previous years. On the one hand, manufacturers were unable to start operations in the early stages of the epidemic, resulting in delayed supply of product types; on the other hand, retail stores had too many discounts. The normal level should be 20% off, but now it is 40% off. Despite this, there are still not many consumers.
Financial expert Ye Tan: Before the epidemic in China, there were actually many similar clothing brands, including those that had done well in the past, and they were all going bankrupt in a series. Now we are in the process of reshuffling. On the one hand, companies are going bankrupt, and on the other hand, some new brands will emerge.
According to official data from the China Garment Industry Association, from January to May 2020, the retail sales of clothing products by units above designated size in my country totaled 288.7 billion yuan, a year-on-year decrease of 25.6%. Online retail sales fell 6.8% year-on-year.
02 The global apparel industry collectively spends the winter
Under the impact of the epidemic, domestic and foreign clothing brands have been affected. Some brands are facing bankruptcy and closure, and some have to close many stores around the world. The global clothing industry is collectively experiencing a cold winter. Affected by factors such as poor management and the epidemic, Victoria’s Secret UK, a famous underwear brand headquartered in New York, entered bankruptcy liquidation proceedings. More than 800 jobs were at risk. The Victoria’s Secret show held in Shanghai, China, became L Brands’ fashion swan song.
In recent years, Victoria’s Secret has begun to decline. In order to save the brand, Victoria’s Secret has made a lot of efforts from changing brand spokespersons to developing new products. But for now, self-rescue measures have had little effect. On July 8, Brooks Brothers, an American menswear brand that has been in business for 202 years, filed for bankruptcy. The New York Times says Brooks Brothers is America’s “oldest continuously operating clothing brand.” Since its birth in 1818, Brooks Brothers has provided clothing for 40 U.S. presidents, including Lincoln, Roosevelt, Nixon, Kennedy, Bush, Clinton, Obama and Trump.
Brooks Brothers survived two world wars and the Great Depression. Many Americans call this company almost the same age as the United States. The classic brand is “the pride of the country”. Even with 200 years of brand equity, Brooks Brothers still has not been able to withstand the impact of the epidemic.
In the three months to the end of April, sales of Inditex, the parent company of Zara, fell 44% year-on-year to 33 billion euros, with a net loss of 409 million euros.
Inditex has announced that it plans to close 1,000-1,200 stores by 2021.
Chinese fast-moving consumer goods brand La Chapelle closed 4,400 physical stores last year, and its revenue continued to decline sharply in the first quarter of this year, down 57.75% year-on-year.
Swedish H&M, the world’s second largest clothing retailer, had 3,778 stores temporarily closed as of the end of March.
GAP, the largest clothing brand in the United States, was already showing weakness before the epidemic. Affected by the COVID-19 epidemic, GAP’s first-quarter sales fell by 43% to US$2.1 billion, with operating losses reaching US$1.2 billion. Sales of all brand offline stores fell by more than 50%.
Ding Shijie, textile and apparel industry analyst at Guosen Securities Economic Research Institute: From the situation of domestic listed companies, we can see that the entire textile industry Apparel industry, includingLooking at the entire industry chain of manufacturing and brand sales, currently 28 A-share companies have disclosed interim performance forecasts, and their net profits have basically fallen sharply compared to the same period last year. Among them, 9 companies have pre-empted losses, and this proportion is about 32%.
A research report by Global Data, an international research and consulting company, pointed out that due to the impact of the new coronavirus epidemic, the global apparel market will suffer a total loss of US$297 billion in 2020. The biggest losses will be in the most mature markets. More fashion companies are expected to file for bankruptcy in the coming months.
03 How can the garment industry ride the wave of the epidemic?
Layoffs, salary cuts, and suspension of production and business operations are the first three steps for garment companies to save themselves. Now, with the help of new retail and 5G technology opportunities, transformation and upgrading have become a new hope for the clothing industry. According to data from the National Bureau of Statistics, in the first five months of this year, China’s retail sales of clothing, shoes, hats, and knitted textiles totaled 406.7 billion yuan, a year-on-year decrease of 23.5%.
On the contrary, the clothing brand Uniqlo, whose sales have continued to decline, achieved sales in Greater China in May. Single-month revenue and profit both increased year-on-year, and performance rebounded significantly.
Ma Ying, Secretary General of the Garment Branch of China Chamber of Commerce for Import and Export of Textiles: Judging from the consumption trends after the epidemic, consumers are more likely to With limited consumption funds, we pursue the ultimate product cost-effectiveness without reducing our consumption level and quality of life.
Domestic brands represented by cost-effectiveness also gained growth momentum during this crisis. According to data from the Alibaba Research Institute, among the brands with cumulative sales of more than 100 million yuan on Tmall in the first quarter, domestic brands accounted for more than 70%.
On February 14, women’s clothing brand Gloria’s mini program live broadcast achieved a transaction volume of nearly 4 million in a single day.
Peacebird, a domestic apparel group, uses WeChat flash sales, mini program distribution, and rotating live broadcasts in different cities or regions. Although during the epidemic Half of the stores are temporarily closed, but the average daily retail sales still exceed 10 million yuan. Men’s clothing brand Common Gender has adopted an online and offline integration and omni-channel sales model since its launch.
With the recovery of logistics, operations of clothing brands sold online have returned to normal. Adidas’ financial report shows that the brand’s e-commerce channel sales increased by 35% in the first quarter, and the growth rate in March alone reached 55%. The financial report also specifically pointed out that it is accelerating investment to support e-commerce business.
Financial expert Ye Tan: Today’s business channels and models have undergone great changes. If online marketing can be combined with dealers, the transformation can be successful and the company can stand out. If online marketing and offline marketing cannot be connected for a long time, such companies will be swallowed up.
As those born in the 1990s and 2000s have become the main force of consumption, their preferences, habits and needs have attracted much attention. Focusing on personalized consumption experience has become a characteristic of young people. In this wave In today’s clothing industry, changes are quietly coming.
Ma Ying, Secretary General of the Garment Branch of China Chamber of Commerce for Import and Export of Textiles: As an enterprise, we must first improve our core competitiveness. Continuously responding to changes in the market and consumers is the magic weapon for success. </p
