People are lining up in front of UNIQLO. Source: Internet
Superdry: Exiting the market before being known
On June 24, British fashion brand Superdry announced its withdrawal from the Chinese market due to the impact of the COVID pandemic through its official Chinese social media account, adding another member to the list of international brands that quit Chinese market. Prior to this, multiple brands such as New Look, Forever 21, Topshop and Old Navy have announced their withdrawal from China.
Other than the shock brought by the pandemic, the reasons behind the move might be that Superdry was structuring the deployment of Chinese market too slowly and there is always a lack of brand awareness among consumers.
Superdry opened its first store in mainland China in 2016 at Disneytown in Shanghai, with the ambition to seize the massive foot traffic of Shanghai Disney Resort. Instead of sales performance, the store focused more on brand image promotion, but the meager profit has made it difficult to balance its high rent. On the digital side, the brand did not launch its Tmall flagship store until 2017.
Apart from inviting celebrities to store opening events and the previous collaboration with Edison Chen’s streetwear label CLOTtee by CLOT, Superdry did not come up with too many effective marketing initiatives, failing to truly establish the image of a British fashion brand in the hearts of Chinese consumers – many of which still perceive that Superdry originated in Japan.
How fast fashion giants are doing overall?
According to Nikkei Chinese News, in the context of a sudden drop in demand in the European and American markets, the total market value of Japan’s Fast Retailing Group, parent company of UNIQLO, is approaching the market value of Inditex, making the market value gap between the two narrowed from about 4 times in the summer of 2017 to about 1.4 times.
Besides the market value, Fast Retailing Group’s revenue generating capability has been comparable to that of H&M Group, the second largest retailer of mass apparel since last year. According to LADYMAX, in 2019, the sales of the Fast Retailing Group reached approximately €19 billion, while the H&M Group’s sales were about €22.1 billion, the difference of which narrowed to only 3 billion euros and following Inditex Group that topped the list with sales of €28.3 billion.
Compared with Fast Retailing Group, its competitors which rely more on the US and Europe market such as Gap, Inditex and H&M are passively facing a longer recession period.
Seizing Asia’s fast rebound
Honor Strachan, retail analyst at research company Global Data, predicts that in terms of consumer willingness, Asia will rebound much faster, which will benefit companies with substantial business in Asia. However, the recovery in markets such as Europe and North America is expected to be long. Global Data estimates that the global apparel market will lose $297 billion in revenue this year due to the pandemic, with the United States accounting for 42% of the loss.
The Chinese market has taken the lead in recovering from the COVID-19 crisis, which has become an important driver of the Fast Retailing Group’s share price. By June 24th, the market value of the Fast Retailing Group is JPY 6.68 trillion (€55.4 billion), and the stock price has risen 41% in the past three months. Seven new stores will be opened in China by the end of the year, contrasting the fact that many fast fashion companies are planning to close existing stores.
Grabbing the opportunities of Asia’s rebound is essential to fast fashion companies to recover and the case of UNIQLO is worth noting.