Have you heard? Zara is pulling out of China!"
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I believe that many friends were shocked by the Weibo hot search of #Zara withdrew from the Chinese market # yesterday. Zara, a world-class fast fashion giant, has not been able to gain a foothold in China, and is it about to withdraw?
It is reported that the source of the news comes from Zara's closure of 9 Chinese stores in just 2 months. In addition, in January last year, Zara had already closed its proud first store in China.
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At its peak, Zara operated 183 stores in China. However, in just six years, that number has decreased by nearly a hundred.
In addition, its three sister brands, Bershka, Pull&Bear and Stradivarius, have also withdrawn from the Chinese market one after another.
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This series of actions aroused widespread attention and speculation among netizens, and for a while, the wind was everywhere. Several topics centered on "Zara's withdrawal from China" were sent to the hot search.
#zara中国180多家门店已关闭过半#,
#昔日中国版zara总部基地被拍卖#,
#zara中国门店5年减少60家#...
Many loyal fans of Zara rushed to the offline store to urgently sweep the goods, "I haven't bought the same stray bag of the same style in Nakamura Kazuha yet! Why are you closing!"
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The reactions of netizens to this news were also very polarized.
Some netizens beat their chests and stomped their feet, and they all R.I.P. I lamented that my "affordable wardrobe" was closed, where would I go to buy clothes in the future?
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Some netizens believe that domestic clothing brands are more cost-effective, and the decline of foreign fast fashion brands is the general trend, and being eliminated is the choice of the market.
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As the rumors intensified, Zara officials had to come forward to issue a statement.
Zara said: "The online rumor that ZARA withdrew from China is false news. The figure of nine stores closed in more than two months is also inaccurate, and ZARA has closed three stores in Huizhou, Dongguan and Baoshan in Shanghai in the past two months. ”
"We are constantly optimizing and upgrading our stores to bring a more integrated digital experience to Chinese consumers by opening larger stores and equipping them with efficient digital innovations," ZARA added. ”
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Translated, it probably means: we are not withdrawing from China, we are just closing offline stores, and we will focus more on online business in the future.
In fact, Zara's strategy is not improvised, but has been progressing step by step for a long time.
Over the past few years, Zara's parent company, Inditex, has been downsizing its stores globally, optimizing sales and margins by focusing on flagship stores in major cities and increasing online sales.
According to Inditex's annual report, Zara had a net global net closure of 123 stores last year, 50 of which were located in China.
As early as 1 month ago, Reuters reported Zara's strategy of "turning offline to online" and "focusing on big stores" in China.
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"Over the years, Inditex has adopted more of a digital-first strategy in China, given the structural trends of the market there and the importance of e-commerce," RBC analysts said.
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And this strategy is paying off.
Zara's "big store" strategy is seen as a step backwards in order to move forward. Despite the closure of the store, Zara's focus on online sales has kept its revenue growing steadily.
Inditex launched a weekly Douyin video platform livestream experience in China late last year, showcasing clothing and behind-the-scenes content to boost online sales.
Inditex's pre-tax profit in China for the 2023 fiscal year ended Jan. 31 more than doubled to €241 million ($263 million).
The success of the Chinese market has also given Inditex more experience, and they plan to launch live programming in the same way this year for their core brand Zara in the US and UK.
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Inditex's performance in the U.S., its second-largest market for sales, was very different from its performance in China, where Zara's pre-tax profit fell 7 percent last year, according to the annual report.
This may also be the reason why they want to launch live broadcasts in the European and American markets. It is expected that Zara will close more stores in the future and carry out digital transformation in the remaining stores.
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In fact, behind the rumor that "Zara is going to withdraw from the Chinese market" also reflects the "decline" of international brands in China.
With the rise of many domestic brands in recent years, international brands are bound to be uncomfortable if they do not adapt to the strategies of local consumers and keep up with the pace of digitalization.
North American beauty brand Benefit is a prime example.
On January 28 this year, Benefit Cosmetics' online flagship stores in China, including Tmall, JD.com and Douyin, were all closed, and after that, it was only sold in Sephora stores in China. It can be said that it has completely bid farewell to the Chinese market.
"The brand's decline has been evident for some time," said Allie Rooke, an expert on the Chinese beauty market. "Although certain products sold well, such as dandelion powder, pore primer, and eyebrow pencil, the brand failed to adapt to the changes in the market. ”
Benefit was a late step when it joined Tmall and Douyin. In addition, China's local beauty brands are growing rapidly, "devouring" and expelling brands that do not meet the needs of Chinese consumers.
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Benefit is not alone, as many international beauty brands have been slow to join Douyin, resulting in local Chinese makeup brands dominating the platform and gaining more popularity among Chinese consumers.
On the contrary, e-commerce brands from China are rapidly encroaching on the North American market.
One of the reasons for Zara's sharp decline in profits in the North American market is the fast fashion brand shein from China.
In 2022, Shein accounted for nearly a fifth of the global fast fashion market, surpassing Zara and H&M.
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Overseas Pinduoduo Temu is also growing rapidly, threatening the industry position of Amazon and eBay.
Let's just say that no matter where the market is, consumers are the most practical, and under the competition, it is the choice of the market that can stay.
Good products and good prices can naturally impress consumers and go further.