Article by Yaomiao
Recently, the world’s fashion giant Versace announced the closure of a number of its stores in Japan, and expressed the desire to gradually reduce its presence in the Japanese market. Meanwhile, Prada and Chanel announced layoffs, and Gucci’s Yves Saint Laurent and Alexander McQueen stores were closed in Japan, Russia, and some other important markets. The LV Group, through its small brand Celine, is not opening new stores to achieve cost control. In contrast, H & M, ZARA, and other low-cost fashion brands are triumphing in vast markets, including China. We cannot help asking: how the traditional luxury goods industry is navigating the dynamic landscape of Luxury Fast Fashion?
Luxury Fast Fashion: An Industry in Transformation
Luxury Brands Are Shrinking
Since the international financial crisis, the world of fashion began to experience erratic winds.
Well-known luxury brand Versace, identified by its Medusa head mark, is familiar to many. The company recently announced a restructuring plan to cut 350 jobs over two years, equivalent to 1/4 of its total employees. Under this plan, it will reconsider its worldwide store network, reducing its presence in Japan. This cost-cutting plan clearly indicates a decline in global luxury expenditure, hitting small family businesses the hardest. Meanwhile, a spokesman for Prada stated that among its 3,000 Italian employees, 210 hours of work were cut last week, though full-time work has now resumed for some. Chanel also cut 200 jobs, equivalent to 10% of its total factory workers.
Larger, multi-brand groups within the industry, such as Moet Hennessy – Louis Vuitton and PPR’s Gucci Group, are paying more attention to reducing fixed costs by sharing resources. Although Gucci achieved modest profit growth in the first half of this year, this was based on the closure of its Yves Saint Laurent, Stella McCartney, and McQueen brand shops in key markets like Japan and Russia. A senior official from Moet Hennessy – Louis Vuitton Group showed reporters data on a laptop, detailing their brand advertising in China and tracking 15 media outlets. They are increasingly focused on the practical value of these inputs and achieving cost control by integrating procurement and marketing.
The resemblance between these two types of groups lies in their structure: there are one or two flagship luxury brands that are profitable and performing well in the market. These are then followed by a group of less profitable niche luxury brands, whose existence is becoming increasingly precarious, much like a ‘chicken’ that is neither fully valuable nor easily discarded.
“Fast Fashion” Gains Popularity
While luxury brands are in decline, companies like H & M and ZARA, represented by their sale of cheap and trendy clothing, are triumphing. You don’t need to travel far to see their impact. In the Xidan commercial district, these two fashion stores bear the brunt of public attention.
Even the H & M store at Xidan’s entrance seems to have become the main gateway to Greater Joy. Many fashionable white-collar workers have developed a habit of first visiting H & M, then entering Joy City through its internal channel. The cash registers at both stores are always lined with long queues, a scene more bustling than the famous Yang Xiezai restaurant in winter.
Reporters observed for several days that these “fast fashion” brands, a concept originating in Europe, offer consumers new items almost every day. They reinterpret the latest trends released by luxury brands over the past four fashion weeks, using relatively inexpensive yet decent fabrics and workmanship. These items are then priced for quick sales to the public.
These stores often operate without a traditional treasury; all costumes are counted individually and sold as soon as they’re stocked. This method saves costs and significantly speeds up inventory transfer. Now, they are even more fashion-forward, with H & M having launched a co-branded series with internationally renowned designer Jimmy Choo, which has already appeared in their Beijing stores. They have moved beyond a mere “me too” phase, initiating a direct dialogue with luxury brands at the design level.
In Xidan, a girl took a fancy to a scarf at an H & M store but didn’t immediately buy it, opting to check the 2nd floor for more options. By the time she decided to return for the purchase, the scarf was already out of stock. The shopping guide told her that new items would arrive tomorrow, but whether this particular design would return was unknown.
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