Behind the prosperity: the crisis faced by fast fashion
(I) Intensified market competition
Behind the booming fast fashion market, the undercurrent of competition is surging. In recent years, market competition has become increasingly fierce, and many fast fashion brands are facing severe challenges, among which the rise of local brands and the impact of e-commerce are particularly significant.
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Local fast fashion brands have quickly seized market share with their in-depth understanding of the local market and their ability to respond quickly. Take UR as an example. This fast fashion brand, born in Guangzhou, China, has developed rapidly since its establishment in 2006. As of 2024, UR has more than 400 stores in China and is actively expanding overseas markets, opening 9 stores in countries such as Singapore and Thailand. UR can accurately grasp the body characteristics and fashion preferences of Asian consumers. The color matching and skirt cut of its floral design perfectly meet the needs of Asian consumers and are deeply loved by consumers.
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The rise of e-commerce platforms has also brought a huge impact on traditional fast fashion brands. As a leader in the cross-border e-commerce fast fashion field, Shein has quickly emerged in the global market through digital operations and efficient supply chain management. In 2023, Shein's net sales in Europe reached 8.8 billion US dollars, far exceeding European local brands H&M and Zara. E-commerce platforms have broken geographical restrictions, providing consumers with a more convenient shopping experience and rich product choices, making the competition among fast fashion brands more and more fierce.
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In the context of intensified market competition, fast fashion brands are having a harder time, and store closures are frequent. According to the financial report of ZARA's parent company Inditex Group, the number of ZARA stores in mainland China reached a peak of 183 in 2018, but as of January 31, 2024, there were only 96 stores left. The number of stores of the H&M Group has also decreased from 5,076 at the end of fiscal year 2019 to 4,369 at the end of fiscal year 2023. These brands, which once enjoyed great success in the fast fashion industry, now have to face the cruel reality of having their market share squeezed.
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