Fast Fashion Brands Expand in China

Fast fashion, which provides affordable versions of new styles that can be brought from the catwalk into stores in two weeks at the shortest, are tapping into China's market. Fast fashion stresses quick turnover of stocks and reasonable prices. Swedish brand H&M, Spanish brand Zara, Japanese brand Uniqlo and US brand Gap, are often categorized as the "fast fashion brands“(FFBs). According to Uniqlo, the target customers of these FFBs are generally between 20 and 35.

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Over the past decade, FFBs have been expanding rapidly and have become more aggressive since Store numbers for the four major FFBs, UNIQLO, ZARA, H&M and C&A, reached 523 by June Of these, 40% were opened in the past 18 months. In terms of store numbers, China has already become the most important international market for major FFBs – the largest international market for ZARA and UNIQLO, and largest Asian market for H&M and C&A.

With their branding characterized as having the appeal of "quick trend adoptability, fashionable design, reasonable price labeling, high quality and limited edition product lines", FFBs have gained increasing popularity among Chinese consumers, in particular the younger generation. By June 2013, among the 523 stores of the four key FFBs, 35.4% are located in tier-1 cities, a drop of 5.8 percentage points compared to December In contrast, the proportion of stores in tier-2 and tier-3 cities expanded by 1.9 and 3.9 percentage points to 36.7 percent and 27.9 percent, respectively.

Provincial capital cities (excluding tier-1 cities) are the focus for new store openings. Tier-2 cities have become the new key battlefield for international FFBs. Over the past 18 months, international FFBs opened 207 new stores in China and around 40% are located in tier-2 cities. The proportion for tier-1 cities declined to 26.6 percent, with the remaining 33.8 percent coming from tier 3 cities. The number of stores in tier- 2 cities overtook those in tier-1 cities in June.

Meanwhile, FFBs are also engaging in e- commerce to grasp the enormous opportunities in China, the world’s largest online shopping market. Gap, Zara, H&M have established their official stores at Tmall.com, China’s leading B2C online retailer. Their apps are already available at AppStore and Android Market.

While shoppers are rushing into online stores around Nov 11, major physical retailers have begun in various ways to cope with the impact of online stores, trying to get rid of their awkward positions of being used just as product galleries and fitting rooms.

Questions 1) China has become the world’s leading online shopping market, why is online shopping so popular in China? 2) Why are FFBs opening so many costly stores in more Chinese cities when expanding business online? 3) How should FFBs balance online shopping and offline expansion?