Looking back at 2018, the fashion industry is in a downturn and scandal

The fashion industry is always the place where commercial slaughter and gossip are staggered. Every once in a while, it will experience ebb and flow. In 2018, it was a year of continuous growth of Chinese luxury goods. However, due to the influence of the international political and economic situation, some problems began to appear, causing the decline in the performance of some fashion companies.

We summed up the story of several brands that were frustrated. Among them, some lost important markets and word of mouth due to accidents, some paid for the mistakes of the past, and the brand was dragged down by the old strategy that lasted for several years, but it was difficult to turn around... It seems that the reasons for failure are varied, but in the end, They all fall on the common reasons of lack of innovation, neglect or lack of localization ability.

The most dramatic street - Dolce & Gabbana

Dolce & Gabbana is not doing well this year. Not only the Spring Festival, but also the peak season of global festivals such as Christmas and Valentine's Day, it may be difficult to reach the performance level of the previous season.

The source of everything comes from the insulting speech that brand founder Stefano Gabbana was exposed in November this year, and Dolce & Gabbana has been resisted by many Chinese. In the case that the Chinese are already the strongest group of luxury goods in the world, for luxury brands, nothing is more catastrophic than being disgusted by the Chinese.

After the negative public opinion about Gabbana was set off, nearly ten Chinese head e-commerce companies such as Tmall, Jingdong, Netease Koala and Suning Tesco quickly responded and all Dolce & Gabbana products were released. Soon, Farfetch, Yoox Net-A-Porter, two international luxury e-commerce companies that have worked closely with JD and Alibaba, have also removed the brand's products, and the fashion department stores that buy goods from Dolce & Gabbana every year. The Buddha followed.

More dramatic, when the insulting speech was exposed, Dolce & Gabbana was preparing for the biggest show of the year in Shanghai. From the cost of manpower and material resources, this show is rare in the history of luxury brands. scale.

Under the pressure of public opinion, this big show was finally cancelled. In a few hours, from the hot rehearsal scene to the desolate stage where people went to the sky. The venue built Fangchuanli APAX spent 8 million yuan, participating in the catwalk model and guests a total of 360 people, acrobatics, song and dance, makeup, security, etc. The number of people preparing for and serving the big show is nearly a thousand, the preparation time is more than half a year... With the cancellation of the big show, it was a futile.

To date, the issue of compensation for Dolce & Gabbana and these Chinese suppliers remains unresolved.

Gabbana's rumors about China are because the brand's promotional video was questioned by netizens about racial discrimination. He couldn't figure out why he couldn't accept the scene of "eat pasta with chopsticks". The Chinese narration and awkward lines in the video are only artistically treated. Recently, Vogue International fashion critic Suzy Menkes also expressed the same opinion as him, and he apologized after being yelled at by netizens.

This cognitive difference reveals the long-standing common problem of the luxury goods industry - Eurocentrism.

Almost all of the most well-known luxury brands are born in Europe today. For centuries, their design standards, creative output and influence have always been in the leading position in the industry. And when European luxury brands expand their market landscapes to places like Asia and Africa, they still demand absolute control over distant markets. This has led to the fact that even local people in the local market management team cannot influence the decisions of European headquarters.

Take the Dolce & Gabbana Shanghai big show as an example. The contract with the supplier needs to be signed by the Chinese team and returned to the Italian headquarters for confirmation. The headquarters is also flying to Shanghai to select models and contact suppliers. Between time to time, it has invisibly added a lot of time costs, and even delayed the timing of the brand's delivery of supplier compensation according to industry practice.

When such a practice is embodied in the localization strategy, it rises to the level of cultural differences. The video that the brand wanted to make for the Chinese people was banned by European stereotypes about the East. The most embarrassing thing is that the managers of luxury brands don't care, they still do their own thing.

They spent their energies on asking stars and doing activities, using the phrase "XX Love China" to show off, but ignoring what really resonates with the Chinese. People have to question that European brands are only for the big cake in the Chinese market, and they have not really paid attention to the hearts of consumers.

What is frustrating is that as long as the pattern of the fashion industry remains unchanged, this situation will still exist for a long time in the future. Whether Dolce & Gabbana's painful experience can make other luxury brands face up to "cultural differences" will take time to test.

Dolce & Gabbana founder apologizes

The most unresolved street - Victoria's Secret (Victoria's Secret)

When the "big flower quilt" appeared on the 2018 Wei Mi show, the audience realized that its "dream trip" was coming to an end. The ratings are lower than one year, the old angels are leaving, the net red models are getting more and more, and the Fantasy Bra cost of the big show has shrunk to $1 million. A meaningful high-level change was that two days after the end of the 2018 Vimy show, CEO Jan Singer left.

Even so, this is still the most beautiful day in the 365 days of Wei Mi, because it is facing a more brutal performance crisis than the big show.

2018 Wei Mi show

Since 2018, the share price of the company's parent company L Brands has been falling, and the market value has evaporated more than half. In the first three quarters of this year, L Brands' profit fell 76.5% to $54.4 million, and the net loss was about 300 million yuan.

This is inseparable from the decline of its own brand, Wei Mi. The brand's sales during the period fell 0.7% year-on-year to US$1.53 billion, comparable sales fell 2%, and operating profit fell 89% to US$14.2 million. This decline has been going on for at least five quarters.

During this time, L Brands' growth leader has changed from Victoria to a body care brand.

Now, L Brands is taking some radical strategies to seek stop loss, such as quickly adjusting the group's brand portfolio, closing Henri Bendel, a high-end womenswear brand, and La Senza, a lingerie brand. Vimy is closing some stores, reinventing the Pink series, etc. The new CEO John Mehas will also bring some new reforms.

But Randal Konik, an analyst at Jefferies, a Wall Street investment bank, said that the value of the brand's brand is now running low.

One of the problems with Wei Mi is that he has made mistakes in business.

At the beginning of 2016, the filming of the Vimy Spring and Summer Swimwear Show was just completed in Bora Bora. It was announced that it would stop the swimwear line created in 1994 and strengthen sportswear.

Although the turnover of the swimwear business in 2015 was about 500 million US dollars, accounting for only 6.5% of the total turnover, swimwear has become the fastest growing category of Wei Mi, surpassing underwear. And for the Victorian flag, the swimsuit plays an important role in increasing profitability and strengthening the brand image. In particular, the swimsuit show launched in 2014, like the underwear show, can bring a good public effect to the brand. At that time, Wei Mi saw the rise of the sportswear market and pursued new growth points.

But in the past few years, Lululemon and other brands with sportswear as DNA have risen rapidly. Compared with Wei Mi, consumers who seek professionalism are more willing to choose them. Wei Mi lost a "dark horse" because of the lack of long-term prediction of the market and its own advantages. With the decline of the main business underwear, Wei Mi began to miss the good results brought by the swimsuit in those years.

In November this year, Wei Secret announced that it would regain its swimwear business. In addition, L Brands Chief Financial Officer Stuart Burgdorfer said that Wei Mi will continue the brand reform. This includes reducing the number of small-scale stores in China and North America, and selling UGG boots, glasses and other licensed products in stores.

However, Wei Mi's reform strategy has not touched the fundamental problem so far - the image of "sexy" underwear can no longer adapt to the market demand, and Wei Mi's insistence on brand DNA has reversed his image.

It cannot be denied that there are still many women pursuing good-looking, sexy and feminine underwear, which is the mainstream aesthetic that Vimy once relied on to survive. Many models have made a name for themselves with the Vimy big show. Their beautiful faces, perfect body, and the wings made by Wei Mi are just the angels that girls want to be.

But this is a "dream" after all. In the real life, ordinary people still have to face their imperfect face and body. In daily consumption, they still have to buy suitable clothes. Especially when social media has amplified people's voices, the right to speak has flowed from the brand to the consumers. The mainstream concept has changed from “pursuing the same aesthetic” to “recognizing one's imperfections”.

American new-generation underwear brands such as Third Love, singer Rihanna's Savage X Fenti, True & Co, Knix, and the successful transformation of the old brand Aerie, etc., their brand philosophy is contrary to Wei Mi, expanding the underwear code range, Even for large-size women, the models are often used for display in different types of people and models. It turns out that this more grounded brand image will be more popular with current consumers.

However, Wei Mi seems to be reluctant to change.

Vogue recently mentioned this issue when interviewing Edmy's chief marketing director Ed Razek. Razek said: "This question is like asking 'why is your fashion show like this? Shouldn't you ask a few transgender people? On the show? 'No. No, I don't think we should do this. Why not? Because our big show is going to bring people a dreamlike feeling."

This kind of thought has brought some negative public opinion to Wei Mi. Netizens think that this reflects the idea that Wei Mi only serves the so-called "senior" women. Obviously, this idea runs counter to the current situation of Wei Mi. The Wei Mi Men Store continues to carry out promotional activities, and the big show begins to invite the Net Red Model to go on the show. This is an attempt to gain more consumers.

In the face of the predicament of reality, Wei Mi can not only be addicted to "dreaming", otherwise the current situation will never be solved.

The most smashing street - Topshop

In August 2018, British fast fashion brand Topshop announced that it had terminated its cooperation with Chinese agent Shangpin.com, which should be responsible for a series of plans for brand opening, operation and publicity in China. I thought Topshop would continue to look for Chinese partners. I didn't expect that on November 1, I announced that I was going to close the Tmall flagship store and start clearing. At the same time, the brand began to clear all the stocks in Shangpin.

For a time, Topshop's most popular jeans were almost robbed, and netizens pushed the news on Weibo. "I thought it was a new routine for the Double Eleven!" Closed the Tmall store and the Shangpin. After the channel of the network, Topshop has already withdrawn from the Chinese market, because it has not opened a physical store since it entered the Chinese market in 2016.

The trick is that it has an ambitious plan for the Chinese market. And looking at the brand's popularity and strength, there is actually a lot of room for development. Especially for jeans with size and Pants, it has always been very popular. It can be seen from the fact that many styles have been robbed after the clearance news, which is a somewhat regrettable expansion failure case.

Topshop's trip to China is over, and it is a failed attempt compared to brands such as Zara, H&M and Uniqlo, which are making great strides in China. The competitive environment, the mismanagement of the parent company and partners, and the turmoil in the global retail market have had a negative impact on it.

In 2016, Topshop plans to cooperate with Shangpin.com to open the Chinese market. When Zhao Shicheng, the founder of Fashion Network, told the interface news: "This will be a long-term cooperation." - Since 2017, it has officially opened a physical store in mainland China, opening more than 100 stores in 5 years, Shanghai or 2018 Beijing wants to produce the first flagship store. At the beginning of 2018, the location of the first flagship store was exposed, which was in Shanghai Huaihai Middle Road.

At that time, the decision to choose Shangpin.com as a partner had certain risks, because Shangpin.com, which has never been in the store operation experience, has always been cautious in the expansion of Topshop parent company Arcadia Group. It is confusing. Judging from its past practices, the British company is more interested in finding traditional physical retailers to expand their business.

Among many competitors who want to work with Topshop, Zhao Shicheng finally won the competition by directly calling the phone on the Topshop website. He found the assistant of Arcadia Group Chairman Phillip Green through the headquarters transfer. With 2012 to 2016, Topshop and Miss Selfridge obtained the opportunity to talk with Arcadia Group on the business data of Shangpin.

Even so, the task of helping Topshop open a physical store is still full of challenges. On the one hand, Zara has been in China for more than ten years. H&M and Uniqlo stores have been located in the core business districts of key cities in China. As a newcomer, Topshop is bound to spend a lot of money to seize the market and expand rapidly. But at that time, the performance of Topshop has begun to decline, and the performance of the home in the UK is not satisfactory. Therefore, the plan to open a store has been unsuccessful.

In fiscal 2017, Topshop lost 10.9 million pounds. Arcadia Group's sales fell 5.3% year-on-year to 1.9 billion pounds, while profits plummeted 42% to 124 million pounds. In May 2017, Topshop declared bankruptcy in Australia and closed all stores.

To make matters worse, in 2018, Shangpin.com was caught in the whirlpool of capital operation. First, it was acquired by Hemei Group without including Topshop business. Later, in a series of equity changes, it changed from a company focusing on retail and international brand agency business to a technology-oriented company. This makes people question whether Zhao Shicheng still has the ability to help Topshop achieve online and offline expansion in China as originally planned. Sure enough, the Arcadia Group finally chose to part with it.

In addition to the impact of expansion strategies and capital operation, some Chinese consumers pointed out that Topshop's products on the shelves in China have a meaning of fooling people, and there are too many differences with the British official website. It is not considered for local consumers, and the price is not cheap. To add insult to injury, not long after exiting the Chinese market, Arcadia Group Chairman Philip Green was caught in a sexual assault scandal and was accused of “unlawful sexual and racial discrimination” against employees.

At present, Topshop is adopting a transformation strategy that promotes the moderateness of digitalization and moderate price reduction, but its effectiveness is not good. Originally expected to save performance by relying on overseas markets, but did not seize the opportunity. When it enters China next time, the fast fashion pattern is definitely another scene. It will take more effort to catch up with other brands.

The least unexpected street - New Look

In October 2018, British fast fashion brand New Look announced its withdrawal from the Chinese market. It will close 120 stores in the Chinese market by the end of the year and close the brand Shanghai office in January 2019.

“After reviewing the Group’s performance and the large amount of investment required for subsequent operations, we made a tough decision to exit the Chinese market. The Group’s first priority was to support those affected.” A Lookair McGeorge, CEO of New Look Group Say.

China is New Look's largest overseas market, but since 2016, New Look has developed unsuccessfully both overseas and in the UK. Compared with the previous brands, New Look's decline may be the closest to the retail industry's economic downturn.

The UK retail industry has been welcoming the cold wave since 2016 due to reduced passenger traffic and e-commerce shocks. New Look was also affected by the cold wave, and parent company Wiese also broke the loan scandal at the end of 2017.

In FY2017, New Look UK market sales fell 6.8%, and total pre-tax profit lost 16.6 million pounds. At the beginning of 2018, Alchemy Partners, an investment company that sold New Look shares in 2013, and some buyers considered buying at a low price. Even so, it failed to save New Look.

In March 2018, New Look signed a voluntary bankruptcy agreement to close 60 stores in the UK market, thereby reducing rental costs. At this time, New Look's overseas business lost more than 37 million pounds, which worsened its business conditions, and the group suffered internal and external problems.

Obviously, New Look's business capabilities have not been able to withstand the retail winter and competitive pressures. In view of the more active fast fashion brands in the world, the presence of New Look products is not strong, and the brand localization strategy is not obvious. Maureen Hinton, a global data retail analyst, said that New Look may close most of its direct overseas stores except Ireland. “Companies need to cut costs. In addition, these small overseas businesses are both distracting and costly when companies need to focus on building differentiated strategies.”

In addition to these five fashion brands that were obviously frustrated in 2018, there are still some brands that are not well developed. Their 2019 task is also arduous.

Pandora

In 2018, Pandora's "magic box" failed, and the Danish jewellery brand's head product "beading" no longer attracted consumers.

The winds have become too fast. In the first quarter of 2017, Pandora’s sales in China also recorded a record 127% surge. However, overall sales growth in FY2017 began to slow down, and net profit decreased by 4.3% year-on-year to US$966 million. In the second quarter of 2018, sales of the brand's iconic beaded products fell by 7%, and Pandora had to cut its full-year financial forecast.

The decline in head products means that the recession will not be temporary. Pandora is clearly aware of the seriousness of the problem. In the early 2018s, he developed a four-year development strategy to increase the proportion of other products such as earrings, rings, necklaces, etc. In 2018, another 100 new products were added. At the same time, we will continue to open new stores and plan to open another 200 this year. It is hoped that the growth rate of turnover will increase from 7% to 10% between 2018 and 2022, and maintain a profit margin of 35% from 2018.

However, before the implementation, this strategy maker, Colding Friis, handed in his resignation in August 2018. The industry believes that he is resigning. This is also the biggest high-level personnel change in Pandora in recent years.

Friis once said that Pandora's beading is indeed less attractive to consumers, and that insufficient stocks in wholesale channels also affect income. “No matter the new or old series, the sales of beaded products are not as good as we think,” he said. “Consumers now prefer fewer beads on the bracelet.”

At the peak of Pandora, consumers like to pick the favorite beaded style, stringing 9 or 10 on a bracelet. Originally, the price of a bead was several hundred pieces. As a result, the price of a bracelet totaled almost 10,000. The fun of this DIY is the driving force behind Pandora's growth.

And when consumers are no longer obsessed with beading games, Pandora's selling point becomes its pain point. Evergrowing research estimates that the proportion of beading and bracelets in Pandora will continue to fall, accounting for 74% at the end of 2017 and may only account for about 50% in 2020. If Pandora does not accelerate the adjustment of the proportion of the product, it may also suffer from beading.

Armani facing aging

Giorgio Armani terminated cooperation with its Chinese agent Hemei Group at the end of November 2018. The latter plans to sell some of its branded inventory and related fixed assets to Giorgio Armani Group's subsidiaries at a transaction price of no more than RMB 210 million. Shanghai Armani.

The "love" of the Giorgio Armani group and Hermione is actually very short. In 2017, Hemei Group took Shanghai Ou Lan and Qiu Qiao fashion into the arms through capital increase and acquisition. Shanghai Ou Lan has been operating the international apparel brand since 2003 and is the first agent of Armani in mainland China. Qiu Qiao Fashion is responsible for the operation of the six series of Georg Armani Group in Shenzhen, Chongqing and Guangzhou. ,Sales. On November 28th, the international brand operator Shenzhen Hemei Group announced that its subsidiaries Shanghai Oulan and Qiuqiao Fashion intend to sign the Asset Acquisition Agreement with Giorgio Armani (Shanghai) Trading Co., Ltd. (hereinafter referred to as Shanghai Armani). It plans to sell some of its branded inventory and related fixed assets to Shanghai Armani at a transaction price of no more than RMB 210 million.

The reason for terminating the cooperation is that Armani is not profitable. Shanghai Armani brought 473 million yuan in revenue to Hemei Group from January to September 2018, but the net profit was about 18.47 million yuan. For the Hemei Group, which has had poor performance in the past two years, Armani has become a heavy burden.

Not only in China, the sales of Giorgio Armani Group in the world are not optimistic, and it is difficult to turn over after the first decline in 2016 to 2.51 billion euros in ten years. In FY2017, the group's sales fell by 7% year-on-year to 2.33 billion euros, and net profit fell 10.5% year-on-year to 242 million euros.

In fact, Armani began reforms in early 2017.

At the end of February 2017, the Armani Collezioni and Armani Jeans collections merged into the Giorgio Armani, Emporio Armani and A | X Armani product lines, streamlining the Group's original five product lines to three. In addition, the Emporio Armani series was also the top priority, and the men's and women's new products conference was merged.

“There are too many brands in the brand that will confuse consumers,” designer Giorgio once told the Women’s Daily. “The times are growing and we should keep up with the times.” After Armani announced plans to streamline the brand structure, Senior executives at retailers such as Barneys and Neiman Marcus have expressed their optimism about these new strategies.

However, according to Armani Group's forecast, the group's earnings may have to wait until 2020, so Armani will continue to struggle in 2019, waiting for the situation to reverse.

Unfavorable Nyden

Nyden, the new brand that H&M Group unveiled in April 2018, began restructuring. This brand is different from traditional clothing brands. It does not rely entirely on the creative style of the creative director. Instead, it takes turns to be the main designer from different identities and different fields, and continuously launches a series of non-seasonal capsules.

This is a new attempt by the H&M Group, but in July, Nyden founder, CEO and creative director Oscar Olsson announced that he would leave the project and continue to serve as the head of the H&M Group Creative Lab. Within a few months, H&M Group announced that it would sell Nyden on the H&M Group's official website. It seems that Nyden's own appeal alone cannot get much attention. The restructuring plan resulted in the layoff of 12 Nyden employees in Los Angeles.

It can be seen that some of these brands have lost important markets and word of mouth due to accidents, some have paid for the mistakes of the past, and the brand has been dragged down by the old strategy that has been going on for several years, but it is difficult to turn around, even after it was born. The brand has not been able to sing and decline... It seems that the reasons for failure are varied, but in the final analysis, they all fall on the common reasons of lack of innovation, neglect or lack of localization.

The network has accelerated the speed of transactions and information dissemination, and has also shortened the trend cycle. If fashion brands don't play 100,000 points, they can't predict the next wind direction, and only wait for them to be eliminated by the market.

For luxury brands in 2018, China, which drives global luxury goods growth, must be the focus of development.

Although in October 2018, due to the current political and economic policy fluctuations in China, the United States and Europe, some problems began to appear, causing some luxury goods companies to fall. For example, how to impose tariffs on high-end products, RMB depreciation, etc. Some analysts believe that once China faces greater pressure, the luxury goods industry is likely to be implicated.

However, according to the "China's Luxury Market Consumer Digital Behavior Report" jointly released by Boston Consulting and Tencent, the compound annual growth rate of China's personal luxury goods market will reach 6% by 2024, compared to China's luxury from 2015 to 2017. The 4% growth rate of the product market is even higher.

Therefore, every move of luxury brands in China is crucial for brand development.

Other fashion-oriented fashion companies still face fierce market share competition in China, especially fast fashion. On the one hand, the European fast fashion brand has not yet left the turmoil of the retail industry, and seeks development overseas. On the other hand, although the Chinese market is large, it has also been occupied by many fast fashion brands. It is difficult for the latecomers to share food, and the overall trend is slowing down.