CHINA APPAREL MARKET UPDATE 2019 PART 1: MARKET OVERVIEW AND COMPETITIVE LANDSCAPE ANALYSIS
Asia Distribution and Retail Jun 2019 TABLE OF CONTENTS
Key Takeaways……………………………………….p1
Market Overview…………………………………p2
Movement of Local Apparel Brands………..p13
Movement of Foreign Apparel Brands….p27 KEY TAKEAWAYS
China’s apparel market faces headwinds Specialist retailers, department stores take hold in China Market share of • The apparel market continued its uptrend in 2018, apparel distribution top 5 apparel brands, 2018 posting the highest yoy growth since 2014 • Apparel sales at department stores have been falling 1. Adidas, 1.9% • However, mounting economic uncertainty is posing over the years amid stiffer market competition and significant challenges for the apparel market challenges from e-commerce players 2. Nike, 1.9% 3. HLA, 1.1% • Sales growth of the market is estimated to decelerate to • Internet retailing has kept delivering strong growth in 3.5% and 3.2% in 2019 and 2020 respectively recent years, making it the fastest-growing retailing 4. Uniqlo, 1.0% channel in China’s apparel market 5. Anta, 1.0%
Womenswear remains the largest sub-sector ; childrenswear and sportswear show vast growth Local apparel brands accelerate Foreign apparel brands seek potential expansion at home and abroad opportunities in China; yet, some • Both womenswear and menswear sectors have shown • Diversifying product lines to struggle to make headway some improvements in sales after several years of increase market size to invigorate • Foreign players continue to crack decline led by growing saturation brand values the lucrative China market • Childrenswear has delivered strong growth momentum • Launching flagship stores and • A number of players have following the full implementation of two-child policy concept stores to boost brand expanded local store networks starting January 2016 image and launched their first/ largest • Sportswear posts the highest sales growth among all • Entering new markets and global flagship store in the other key apparel sectors expanding store networks country • • But due to overall macro uncertainty, sales growth of all overseas to ramp up Yet, some failed to make a profit apparel sub-sectors is expected to decline in 2019. international presence and finally exited the market
1 Market Overview
2 MARKET OVERVIEW - CHINA’S APPAREL MARKET FACES HEADWINDS
Sales of apparel in China, 2014-2020 China’s apparel sales reached 2,077.4 billion yuan in 2018, increasing at a rate of 7.8% yoy, the 2,500 9% highest yoy growth since 2014. 7.8% 8%
2,000 6.5% 7% Driven in part by the consumption upgrading 6.2% trend and stable demand among local consumers 5.6% 5.6% 6% 1,500 with improved living standard and higher income 5% growth, the apparel market regained its growth
3.5% 4% momentum in 2017 and continued the uptrend in 1,000 3.2% 2018. 3%
2% 500 However, mounting economic uncertainty is 1% posing significant challenges for the apparel 1,622.8 1,714.1 1,810.0 1,927.9 2,077.4 2,149.9 2,217.8 0 0% market. Sales growth of China’s apparel market is 2014 2015 2016 2017 2018 2019e 2020e estimated to decelerate to 3.5% and 3.2% in 2019 billion yuan yoy growth and 2020 respectively
Source: Euromonitor International; compiled by Fung Business Intelligence
3 SALES OF KEY SUB-SECTORS
Sales of key sub-sectors of China’s apparel market, 2014-2020
1200 25% By category, womenswear remained 1025.7 1048.8 999.1 the largest sub-sector of China’s 1000 928.5 20% 873.8 apparel market in terms of sales in 828.9 783.8 2018. 800 15% 572.6 583.5 592.8 Both sportswear and childrenswear 600 537.7 491.7 512.0 billion billion yuan 470.3 saw double-digit yoy sales growth in 10% 2018, outperforming that of 400 264.8 286.7 310.4 261.0 womenswear and menswear. But 221.5 234.7 190.4 209.1 5% due to overall macro uncertainty, 200 148.3 166.9 157.1 180.0 127.1 140.0 sales growth of all apparel sub- sectors is expected to drop 0 0% 2014 2015 2016 2017 2018 2019e 2020e significantly in 2019.
Sales of womenswear Sales of menswear Sales of childrenswear Sales of sportswear yoy growth of womenswear yoy growth of menswear yoy growth of childrenswear yoy growth of sportswear
Source: Euromonitor International; compiled by Fung Business Intelligence
4 SALES OF KEY SUB-SECTORS - WOMENSWEAR: YOY GROWTH PICKS UP IN 2018
Sales of womenswear in China’s apparel market, 2014-2019 Market share of womenswear in China’s apparel market, 2018
1,200 20% 999.1 1025.7 1,000 928.5 873.8 828.9 15% 783.8 800
600 10%
7.4% 48.1% billion billion yuan 400 6.3% 7.6% 5% 5.8% 5.4% 2.7% 200
0 0% 2014 2015 2016 2017 2018 2019e Sales of womenswear yoy growth of womenswear
Source: Euromonitor International; compiled by Fung Business Intelligence Source: Euromonitor International; compiled by Fung Business Intelligence
After several years of decline as a result of growing saturation, the womenswear sector picked up pace in 2017 and 2018 with sales growth rising to 6.3% yoy and 7.6% in 2017 and 2018 respectively. That said, due to the overall market uncertainty, sales growth of womenswear is estimated to drop significantly to 2.7% in 2019.
5 SALES OF KEY SUB-SECTORS - MENSWEAR: SHOWS SOME SIGNS OF IMPROVEMENTS IN 2018
Sales of menswear in China’s apparel market, 2014-2019 Market share of menswear in China’s apparel market, 2018
1000 20%
800 15%
572.6 583.5 600 537.7 491.7 512.0 470.3 10%
billion billion yuan 400 27.6%
3.8% 5% 200 6.5% 4.6% 5.0% 2.8% 1.9% 0 0% 2014 2015 2016 2017 2018 2019e
Sales of menswear yoy growth of menswear
Source: Euromonitor International; compiled by Fung Business Intelligence Source: Euromonitor International; compiled by Fung Business Intelligence
Menswear has the second largest market share in China’s apparel market, just behind womenswear. In 2018, sales of menswear represented 27.6% of the total apparel sales in China. Similar to the womenswear sector, the menswear sector has also become increasingly saturated. It showed some improvements in sales in 2017 and 2018. However, as with the womenswear sector, sales growth is expected to drop significantly this year due to the uncertain market economic environment. 6 SALES OF KEY SUB-SECTORS - CHILDRENSWEAR: TWO-CHILD POLICY SHORES UP GROWTH MOMENTUM
Sales of childrenswear in China’s apparel market, 2014-2019 Market share of childrenswear in China’s apparel market, 2018
1000 20% 16.2% 800 14.6% 15% 12.2% 600
9.2% 10% 7.9%
billion billion yuan 400 6.0% 10.1% 209.1 234.7 140.0 5% 157.1 180.0 200 127.1
0 0% 2014 2015 2016 2017 2018 2019e
Sales of childrenswear yoy growth of childrenswear
Source: Euromonitor International; compiled by Fung Business Intelligence Source: Euromonitor International; compiled by Fung Business Intelligence
Although childrenswear took up only 10.1% share in China’s apparel market, the sector has delivered strong growth momentum following the full implementation of two-child policy starting January 2016. The National Health and Family Planning Commission predicted that the number of newborns to reach 17.5 – 21.0 million annually during the 13th FYP period (2016 – 2020), up from the annual births at around 16 million between 2003 and 2013. Baby and toddler wear is expected to be the main powerhouse for the childrenswear sector. 7 SALES OF KEY SUB-SECTORS - SPORTSWEAR: STRONGEST SALES GROWTH AMONG OTHER KEY SUB-SECTORS IN 2018
Sales of sportswear in China’s apparel market, 2014-2019 Market share of sportswear in China’s apparel market, 2018
1000 20% 19.5% 800 16.3% 15%
14.1% 600 10.1% 12.5% 10% 8.3% 12.7% billion billion yuan 400 264.8 286.7 221.5 190.4 5% 200 148.3 166.9
0 0% 2014 2015 2016 2017 2018 2019e
Sales of sportswear yoy growth of sportswear
Source: Euromonitor International; compiled by Fung Business Intelligence Source: Euromonitor International; compiled by Fung Business Intelligence
Sportswear registered sales growth of 19.5% yoy in 2018, well above the total apparel sales growth of 7.8% yoy. Sportswear also posted the highest sales growth among all other key apparel sectors, indicating its vast growth potential.
8 SALES OF KEY SUB-SECTORS - SPORTSWEAR: STRONGEST SALES GROWTH AMONG OTHER KEY SUB-SECTORS
Sportswear (apparel and footwear) sales by category, 2018 By category, sports-inspired footwear and sports- inspired apparel are the two largest segments in Performance Sports- China’s sportswear market. The combined sales of the apparel , 14.8% inspired two segments totaled 144.5 billion yuan in 2018, or footwear, around 54.5 % of the total sportswear sales in China. 33.0% Outdoor apparel , The propelling growth in the sportswear sector is 7.5% mainly driven by the following factors: 264.8 billion yuan, • Rising levels of health and well-being awareness up 19.5% yoy and increased sports participation. Outdoor • Government policies to promote national health footwear , and sports participation serve as a boost to the 3.8% sports industry. Recent policies include the “2016- 2020 National Fitness Plan” released in June 2016; Performance Sports-inspired the “13th Five Year Plan for the Development of footwear , apparel , 21.5% 19.3% Sports Industry” released in July 2016; and the “Guiding Opinions of the State Council on
Source: Euromonitor International; compiled by Fung Business Intelligence Speeding up the Development of the Competitive Sports Industry” released in December 2018.
9 DISTRIBUTION CHANNELS - SPECIALIST RETAILERS, DEPARTMENT STORES TAKE HOLD IN CHINA APPAREL DISTRIBUTION
Market share (retail sales) by distribution channel for apparel and footwear in China, 2014-2018
(in %) 2014 2015 2016 2017 2018 Apparel sales at department stores have Store-based retailing 87.5 81.5 76.2 71.4 68.1 been falling over the years amid I. Grocery retailers 4.8 4.0 3.3 2.6 2.1 intensifying market competition and II. Non-grocery retailers 44.1 42.2 41.1 39.8 39.6 challenges from e-commerce players. • Clothing and footwear specialist retailers 20.8 20.7 20.5 20.2 20.0 • Leisure and personal goods specialist retailers 11.8 11.5 11.8 12.1 12.6 • Other non-grocery retailers 11.5 10.1 8.7 7.5 7.1 Internet retailing has kept delivering
III. Mixed retailers 38.6 35.3 31.9 29.0 26.4 strong growth over the past few years, • Department stores 38.6 35.3 31.9 29.0 26.4 making it the fastest-growing retailing Non-store retailing 12.5 18.5 23.8 28.6 31.9 channel in China’s apparel market. The
IV. Home shopping 0.1 0.1 0.1 0.1 0.1 channel is predicted to keep growing at a faster rate in the coming years. V. Internet retailing 12.4 18.4 23.7 28.5 31.8
Total 100 100 100 100 100 Source: Euromonitor International; compiled by Fung Business Intelligence
10 COMPETITIVE LANDSCAPE - TOP 10 APPAREL BRANDS IN CHINA
Market share of Top 10 apparel brands in China, 2018
Market share Market share Major category (yoy change, ppt)
1.Adidas 1.9% ↑ 0.3 Sportswear 2. Nike 1.9% ↑ 0.3 Sportswear 3. HLA 1.1% ↑ 0.1 Menswear
4. Uniqlo 1.0% ↑ 0.1 Womenswear, menswear, childrenswear 5. Anta 1.0% ↑ 0.2 Sportswear 6. Li Ning 0.6% -- Sportswear 7. Skechers 0.6% ↑ 0.2 Sportswear 8. Balabala 0.5% ↑ 0.1 Childrenswear 9. Jack & Jones 0.5% -- Menswear 10. Xtep 0.5% ↑ 0.1 Sportswear
Source: Euromonitor International; modified by Fung Business Intelligence 11 COMPETITIVE LANDSCAPE - TOP 10 APPAREL BRANDS IN CHINA
Top 10 listed apparel companies in China (by market cap), 2018
Average market cap in Operating income in 2018 2018 Major category (billion yuan) (billion yuan)
1.Anta 90.43 23.41 Sportswear 2. HLA 47.81 19.09 Menswear Menswear, womenswear, 3. Semir 27.72 15.75 childrenswear 4. Li Ning 15.40 10.51 Sportswear 5. Dazzle Fashion 12.68 2.10 Womenswear 6. Hongdou Group 12.63 2.48 Menswear 7. Peacebird 12.44 7.71 Menswear, womenswear 8. Bosideng 9.16 11.99 Down wear 9. Xtep 8.87 6.20 Sportswear 10. Lilanz 8.46 3.60 Menswear
Source: iiMedia; modified by Fung Business Intelligence 12 Movement of local apparel brands
13 LOCAL BRANDS ACCELELATING EXPANSION IN CHINA Diversifying product lines to increase market size to invigorate brand values – selected cases
14 Diversifying product lines to increase market size to invigorate brand values COMPETITIVE LANDSCAPE – JNBY unveils new fashion brands starting from April 2018 - MOVEMENT OF LOCAL APPAREL BRANDS (EXPANSION)
In June 2018, JNBY announced In February 2019, JNBY rolled In April 2018, JNBY launched the launch of a new out a new menswear designer SAMO, a designer fashion sustainable fashion brand brand “A Personal Note 73” . brand targeting professional “REVERB” in China. Targeting The brand targets young and male customers in China. The young and fashionable aspirational consumers with philosophy of the new millennials, the brand puts knowledge about fashion and menswear brand is “simplified, strong focus on social design. but better”. SAMO’s design responsibility and sustainability. focuses on elegance, simplicity, Italian fashion designer Andrea charming and versatility. REVERB embraces “circular Pompilio, will design two fashion” as its brand collections a year for the new philosophy, focusing on the brand, with the first collection design concepts of “Athleisure, available in fall 2019. JNBY Genderless and Sustainability”. plans to open 10 stores in 2019, All apparel items from REVERB with one-third of them in tier-1 uses natural materials with cities. organic certification and high- tech materials certified by
SAMO’s promotional material Swiss Bluesign Standard.
Source: News, Companies’ websites; compiled by Fung Business Intelligence 15 Diversifying product lines to increase market size to invigorate brand values COMPETITIVE LANDSCAPE – JNBY to launch multi-brand store “LA SU MIN SO LA” in December 2018 - MOVEMENT OF LOCAL APPAREL BRANDS (EXPANSION)
In December 2018, JNBY announced to launch a multi-brand store “LA SU MIN SO LA” for designer brands in China, a move to align with the company’s multi-brand strategy and expand its businesses though horizontal diversification.
LA SU MIN SO LA will serve as a platform for designer brands to showcase their products. Adopting the concept “Better Design, Better Life”, the store will operate as an incubator for designer brands and help international designer brands adapt to local operation.
LA SU MIN SO LA’s product lines cover various categories, including clothing, footwear, handbag, accessories and lifestyle products.
LA SU MIN SO LA’s marketing material
Source: News, Companies’ websites; compiled by Fung Business Intelligence 16 Diversifying product lines to increase market size to invigorate brand values COMPETITIVE LANDSCAPE – HLA's womenswear brand OVV and menswear brand AEX open first physical store - MOVEMENT OF LOCAL APPAREL BRANDS (EXPANSION)
In January 2018, OVV and AEX, womenswear brand and menswear brand under HLA opened its first physical store, which signifies further landing of the Group's multi-brand strategy.
Currently, OVV and AEX’s target markets are mainly the tier-2 and tier-3 cities. Since 2017, HLA has accelerated its multi-brand, multi-category and multi-channel investment to build up its youthful image, hoping to widen the customer base of the Group.
OVV x AEX’s flagship store in Huaihai Road Middle, Shanghai
Source: News, Companies’ websites; compiled by Fung Business Intelligence 17 LOCAL BRANDS ACCELELATING EXPANSION IN CHINA Launching flagship stores – selected cases
18 Launching flagship stores COMPETITIVE LANDSCAPE – Semir launches first fresh image, stylish concept store in Shanghai - MOVEMENT OF LOCAL APPAREL BRANDS (EXPANSION)
In October 2018, Semir opened its first fresh image, stylish concept store at Shanghai Jiading CITIC Pacific Wanda Plaza.
The store is an experiential concept store that aims to meet the needs of the young consumer group. Its design philosophy is to create a “scenario + interactive” shopping experience for customers. Semir has created a special “KOL leisure zone”, where shoppers can take photos and interact with each other while shopping at the store
Semir’s first flagship store at Shanghai Jiading CITIC Pacific Wanda Plaza
Source: News, Companies’ websites; compiled by Fung Business Intelligence 19 Launching flagship stores COMPETITIVE LANDSCAPE – FILA opens two flagship stores in Shanghai in May 2018 - MOVEMENT OF LOCAL APPAREL BRANDS (EXPANSION)
In May 2018, sportswear brand FILA which is owned by ANTA Sports opened two flagship stores in Nanjing Road East and Huaihai Zhong Road in Shanghai. The two stores offer a full range of FILA’s products including childrenswear.
According to the annual report of ANTA Sports, by the end of December 2018, there were 1,652 FILA stores (including the independent stores of FILA KIDS and FILA FUSION stores) in the Greater China region.
Opening ceremony of the flagship store in Nanjing Road East, Shanghai
Source: News, Companies’ websites; compiled by Fung Business Intelligence 20 LOCAL BRANDS ACCELELATING EXPANSION OVERSEAS
21 Expanding footprints overseas COMPETITIVE LANDSCAPE – HLA opens stores in Singapore in May 2018 - MOVEMENT OF LOCAL APPAREL BRANDS (EXPANSION)
In May 2018, HLA opened its first store in Singapore in Suntec City Mall. With an area of 350 sqm, the store has entirely different design compared to HLA’s other stores – the storefront only shows the HLA brand logo in white, instead of showing the usual brand logo with both Chinese and English characters. As of to date, HLA has opened a total of three stores in Singapore.
Indeed, HLA opened its first overseas store in Kuala Lumpur, Malaysia in July 2017; and it has more than 20 stores in the nation.
According to HLA, the brand will further expand in Singapore, Malaysia and Thailand in the next three years.
HLA’s store in Singapore, Jurong Point Shopping Center
Source: News, Companies’ websites; compiled by Fung Business Intelligence 22 Expanding footprints overseas COMPETITIVE LANDSCAPE – Bosideng re-launches flagship store in London in September 2018 - MOVEMENT OF LOCAL APPAREL BRANDS (EXPANSION)
In July 2018, Bosideng announced to re-launch its flagship store in London in September 2018. At the same time, the Group will rejuvenate its main brand “Bosideng” by focusing on down jackets business, and spinning off other non-down jacket businesses including menswear, home wear and childrenswear. It will also close around 70% to 80% of Bosideng’s nonprofitable stores over the next three years.
Bosideng’s flagship store in London
Source: News, Companies’ websites; compiled by Fung Business Intelligence 23 Expanding footprints overseas COMPETITIVE LANDSCAPE – Lily opens first store in Europe in Barcelona, Spain in January 2019 - MOVEMENT OF LOCAL APPAREL BRANDS (EXPANSION)
In January 2019, Chinese apparel brand Lily announced that it has opened a flagship store in Barcelona, Spain, which is also its first store in Europe. The flagship store in Barcelona will showcase the new collections for each season at the same time as their stores in China.
Following Barcelona, Lily also plans to open new stores in other major business areas such as Madrid, as well as enter 20 department stores in Spain in the next three years.
Lily’s promotional materials online
Source: News, Companies’ websites; compiled by Fung Business Intelligence 24 Expanding footprints overseas COMPETITIVE LANDSCAPE – HLA taps into the Thailand market in April 2019 - MOVEMENT OF LOCAL APPAREL BRANDS (EXPANSION)
HLA introduced its fast fashion brand HLA JEANS and mid- to high-end womenswear brand OVV to the Thailand market in April 2019. As the first two Chinese brands entering a tier-1 commercial hub in Storefront of HLAJEANS at Central World, Bangkok the Southeast Asian region, HLA JEANS and OVV are launched in Central World shopping mall, which is located in Thailand’s core commercial district and also one of the largest shopping malls in the region. Heilan Home has also adjusted their product lines in Thailand to better fit with local tastes and weather, with a focus on developing T-shirt and light jacket products. HLA enters the Thailand market by introducing OVV and HLA Jeans Prior to its launch in Thailand, the company also opened its first local store in Singapore and Malaysia in May 2018 and July 2017 respectively.
Marketing material of HLA Jeans Source: News, Companies’ websites; compiled by Fung Business Intelligence 25 Expanding footprints overseas COMPETITIVE LANDSCAPE – Balabala opens two stores in Hong Kong in June 2018 - MOVEMENT OF LOCAL APPAREL BRANDS (EXPANSION)
In June 2018, Semir's kidswear brand Balabala officially entered the Hong Kong market by opening its first two stores in Olympian City III and Hollywood Plaza.
Balabala revealed that the brand plans to open approximately 20-30 stores in Hong Kong over the next three years. It hopes to use Hong Kong as a stepping stone to execute the company’s global expansion plan in terms of acquisition, joint venture and overseas franchising.
Balabala’s store at Olympian City III
Source: News, Companies’ websites; compiled by Fung Business Intelligence 26 Movement of foreign apparel brands
27 FOREIGN BRANDS ENTERING THE CHINA MARKET – Selected cases
28 Foreign apparel brands entering China market COMPETITIVE LANDSCAPE – German luxury skiwear brand Bogner enters the China market - MOVEMENT OF FOREIGN APPAREL BRANDS (ENTRY)
In November 2018, German luxury skiwear brand Bogner opened its first store in China. With a floor space of 164 sqm, the store is designed based on the concept of “Modern Natural” and will operate seven days a week. The store is located at Thaiwoo Ski Town at Chongli County, Zhangjiakou City, Hebei Province – Chongli County is said to be the best skiing destination in China and Thaiwoo Ski Town will be the main stadium for skiing in the Winter Olympic Games in 2022.
Currently, Bogner has 19 self-operated stores, 33 partner stores and more than 6,500 sales outlets in more than 50 countries, and it has more than 100 partners in the Asia-Pacific region (China, Japan, South Korea, Taiwan, Mongolia and Australia).
Bogner’s store at Thaiwoo Ski Town
Source: News, Companies’ websites; compiled by Fung Business Intelligence 29 Foreign apparel brands entering China market COMPETITIVE LANDSCAPE – Japanese men’s shirt brand Kamakura shirts enters China via Tmall - MOVEMENT OF FOREIGN APPAREL BRANDS (ENTRY)
In January 2019, Kamakura shirts officially launched its flagship store on Tmall, offering more than 600 SKUs, which include the brand’s signature products 200 count extra fine yarn shirts and 300 count extra fine yarn shirts.
Founded in 1993, Kamakura shirts, together with luxury brands Gucci, Balenciaga and Chanel, were among the most popular search terms on Tmall in 2018. Furthermore, Kamakura shirts is also one of the brands with the highest growth rate when it comes to the keyword ranking within Tmall’s search engine.
Source: News, Companies’ websites; compiled by Fung Business Intelligence Kamakura shirts’ online flagship store on Tmall 30 Foreign apparel brands entering China market COMPETITIVE LANDSCAPE – American footwear brand Allbirds debuts in China - MOVEMENT OF FOREIGN APPAREL BRANDS (ENTRY)
American footwear brand Allbirds has entered the China market by launching its first local store at HKRI Taikoo Hui, Shanghai in April 2019 and its second store at Taikoo Li in Beijing in May 2019.
Meanwhile, Allbirds has also launched its official website (https://www.allbirds.cn/) and its online flagship store on Tmall. Moving forward, the brand Allbirds’ store at Taikoo LI, Beijing plans to open specialty stores in Beijing and Chengdu.
Founded in 2014, Allbirds is well-known for its two signature products – machine-washable wool sneakers Runner and Lounger, with each pair priced at US$95.
Allbirds’ signature products – Wool Runner and Wool Lounger
“Peking Opera” – Limited edition of Wool Runner to Source: News, Companies’ websites; compiled by Fung Business Intelligence celebrate the opening 33of its Beijing store 31 FOREIGN BRANDS ACCELELATING EXPANSION IN CHINA Store openings – selected cases
32 Store opening COMPETITIVE LANDSCAPE – Champion accelerates expansion in China in December 2018 - MOVEMENT OF FOREIGN APPAREL BRANDS (EXPANSION)
American trendy fashion brand Champion is accelerating its store expansion in China. The brand added eight new stores in China in December 2018, taking its total store count in the country to 41, according to the brand’s official WeChat account. The massive expansion was mainly driven by the shrinking domestic demand in the U.S. and the huge consumption potential in China.
Celebrity Yang Mi wearing Champion’s hoodie
Source: News, Companies’ websites; compiled by Fung Business Intelligence 33 Store opening COMPETITIVE LANDSCAPE – Zadig & Voltaire accelerates pace of store openings in Greater China in March 2019 - MOVEMENT OF FOREIGN APPAREL BRANDS (EXPANSION)
French apparel brand Zadig & Voltaire has expanded its presence in Asia, especially Greater China. The brand partnered with local retailer IT Group, the brand’s distribution partner to open two new stores in Beijing and Shanghai in March 2019.
Currently, Zadig & Voltaire has 378 stores worldwide, 118 of which are located in France. The Asia market, mainly Japan and South Korea, now accounts for 5% Zadig & Voltaire’s first fashion show in China in 2017 of Zadig & Voltaire's total sales; the brand reportedly operates three stores in Beijing, one in Shanghai and another in Shenzhen. The brand targets to open 45 stores in the region, and generate between 10% and 15% of global revenue in the next five years.
Zadig & Voltaire’s “Chinese New Year Capsule Collection”
Source: News, Companies’ websites; compiled by Fung Business Intelligence 34 FOREIGN BRANDS ACCELELATING EXPANSION IN CHINA Launching flagship stores – selected cases
35 Launching flagship store COMPETITIVE LANDSCAPE – Nike opens its first concept flagship store in Shanghai in October 2018 - MOVEMENT OF FOREIGN APPAREL BRANDS (EXPANSION)
In October 2018, Nike unveiled its first House of Innovation concept store “Shanghai 001”. Located at the shopping district of Nanjing East Road in Shanghai, this cross-category flagship store has four levels and an area of 3,822 sqm.
Nike Shanghai 001 brings Nike products and services to consumers through the integration of digital and offline services as well as its experiential shop design. The digitall-enabled “Center Court” for workshops and trailing sessions Other than being the first Nike store in China to fully adopt mobile payments, the store has a number of unique features to enhance customers’ experiences such as “Center Court” for digitally-led trialing sessions; while for its NikePlus members, “Nike By You” sneaker customization and “Nike Expert Studio” personalized product selection in private sessions are available.
“Nike By You” sneaker customization Source: News, Companies’ websites; compiled by Fung Business Intelligence 36 Launching flagship store COMPETITIVE LANDSCAPE – COS opens first global menswear store in Beijing in December 2018 - MOVEMENT OF FOREIGN APPAREL BRANDS (EXPANSION)
H&M’s sister brand COS launched its first global menswear store in Beijing’s Sanlitun in December 2018. With a store size of 174 sqm, the store features customized furniture for shoppers to relax and provides various books on arts, photography, as well as building and design.
Recently, COS has accelerated its expansion in the China market by opening more physical stores and launched its online flagship store on Tmall. According to COS, it will further open physical stores in Beijing, Xiamen and Guangzhou. COS entered the China market in 2012 for the first time and has around 30 stores nationwide. COS’s website in Chinese
Source: News, Companies’ websites; compiled by Fung Business Intelligence 37 Launching flagship store COMPETITIVE LANDSCAPE – Skechers opens the brand’s largest store in Shenyang in January 2019 - MOVEMENT OF FOREIGN APPAREL BRANDS (EXPANSION)
In January 2019, Skechers opened its 3,000th store in the world at Star Mall Shenyang Plaza, China, which is also the brand’s largest store. In the 2,982- sqm mega store, products are categorized and showcased in different zones, including D’Lites, Lifestyle, Performance, Kids, etc.
Founded in 1992, Skechers is reportedly available in 170 countries. Currently, Skechers has the largest number of stores in China (941), followed by the U.S. (472), and India (222).
Storefront of Skechers’ mega store in Shenyang
Source: News, Companies’ websites; compiled by Fung Business Intelligence 38 Launching online flagship store COMPETITIVE LANDSCAPE – Mango launches online flagship store in China in June 2019 - MOVEMENT OF FOREIGN APPAREL BRANDS (EXPANSION)
In June 2019, Spanish fast fashion brand Mango signed a cooperation agreement with Hangzhou Jingzhe Clothing Co., Ltd. to accelerate its development in Asia, especially in the China market.
Under this cooperation agreement, the brand will further develop both online and offline channels – it plans to open 16 physical stores in China by the end of 2019, and launch online stores via major e- commerce platforms at the same time
Mango’s China website
Source: News, Companies’ websites; compiled by Fung Business Intelligence 39 FOREIGN BRANDS EXITING CHINA MARKET - Selected cases
40 Exiting the market COMPETITIVE LANDSCAPE – Nine West withdraws from the China market in September 2018 - MOVEMENT OF FOREIGN APPAREL BRANDS (EXIT)
In September 2018, U.S. footwear brand Nine West closed its last Beijing store at Hanguang Department Store after shutting down its online flagship store on Tmall and dissolving its Dongguan headquarters earlier. Indeed, the company enjoyed tremendous growth ever since its entry in the China market in Storefront of a NINE WEST store in China 1994; however, it was reportedly struggling from increasing competition and continual declines in revenue and profits in recent years.
Before exiting the China market, the company withdrew from Taiwan and Hong Kong after filing for bankruptcy in April 2018. After completing its financial and operational restructuring, the footwear brand exited from bankruptcy in March 2019, by renaming itself as Premier Brands Group.
“Goodbye” message from NINE WEST
Source: News, Companies’ websites; compiled by Fung Business Intelligence 41 Exiting the market COMPETITIVE LANDSCAPE – New Look exits the China market by end of 2018 - MOVEMENT OF FOREIGN APPAREL BRANDS (EXIT)
In October 2018, British fast fashion brand New Look decided to withdraw from the China market and close all of its 120 stores in China by end-2018 to focus on restructuring its business in its home country. Industry experts revealed that lack of local knowledge, increased competition from Chinese brands and the sheer size of investment required are the key reasons for New Look’s withdrawal.
New Look entered the market in 2014 and has closed 20 stores in China since the beginning of 2018.
“Goodbye” message from NEW LOOK Source: News, Companies’ websites; compiled by Fung Business Intelligence 42 Exiting the market COMPETITIVE LANDSCAPE – Forever 21 closes online store in China; confirms to exit the market in April 2019 - MOVEMENT OF FOREIGN APPAREL BRANDS (EXIT)
In April 2019, U.S. fast fashion brand Forever 21 closed its online flagship stores on Tmall and JD.com. Earlier in the same month, the fast fashion apparel brand confirmed that it has decided to exit the China market entirely in the near future although it has yet to issue a formal statement.
Indeed, Forever 21 closed the stores in Tianjin, Hangzhou, Beijing and Chongqing, etc. since the end of 2018. Currently, Forever 21 has four remaining stores in the nation.
Forever 21 entered the China market by opening the first store in Changshu in 2008.
The announcement of closing its online flagship store on Tmall
Source: News, Companies’ websites; compiled by Fung Business Intelligence 43 Exiting the market COMPETITIVE LANDSCAPE – 10 Corso Como closes Shanghai branch in June 2019 - MOVEMENT OF FOREIGN APPAREL BRANDS (EXIT)
Italian fashion concept store 10 Corso Como shut down its Shanghai branch in June 2019, due to the expiration of its lease and the end of its partnership with its Chinese partner Trendy Group.
Following its entry into China in 2013, 10 Corso Como opened two local stores respectively in Shanghai and Beijing’s SKP shopping mall; yet, the store in Beijing was closed in February 2017.
Founded in 1999, Trendy Group is a fashion conglomerate which operates more than 3,000 retail locations in nearly 300 cities worldwide, and holds brands such as Ochirly, Five Plus, Coven Garden, Trendiano and Miss Sixty.
10 Corso Como store in Shanghai
Source: News, Companies’ websites; compiled by Fung Business Intelligence 44 Coming soon… UPCOMING ISSUES
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Renne Chan
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