FW
"China, once known as the hotbed for cheap imitations of world-class designers, now prides itself for string of local brands such as Ms Min, Ming Ma and Angel Chen. These young designers, educated at the prestigious schools like the London College of Fashion and Central Saint Martin are challenging Western brands on quality and design. These homegrown Chinese designers are also reaching out to everyday shoppers in department stores across the country, while affordable fashion lines are venturing overseas with the help of trendy designs and online influencers."
China, once known as the hotbed for cheap imitations of world-class designers, now prides itself for string of local brands such as Ms Min, Ming Ma and Angel Chen. These young designers, educated at the prestigious schools like the London College of Fashion and Central Saint Martin are challenging Western brands on quality and design. These homegrown Chinese designers are also reaching out to everyday shoppers in department stores across the country, while affordable fashion lines are venturing overseas with the help of trendy designs and online influencers.
The rise of these designers -from affordable to high end -is adding to the pressure faced by the international
brands as domestic brands are using their authenticity to tell brand stories.
Growing appreciation for local designs
Chinese President Xi Jinping's effort to trump up national pride has sparked an appreciation amongst young consumers for local designs. A recent research by Ruder Finn and CSG noted, nearly 45 per cent Chinese consumers expressed their intentions to buy more domestic fashion brands in future. These brands are gaining popularity even at the Lane Crawford department store in Shanghai.
One such brand Icicle had to initially lower its prices to entice young people fresh out of school. However, as fashion courses started taking off at the Chinese Universities, the company benefited from the country’s expanding consumer market and has now established 260 stores across China. It also generates an annual operating income of 1.3 billion yuan ($188 million). In future, the company plans to upgrade its luxury offerings, which currently include T-shirts priced at about 700 yuan and a 40,000 yuan cashmere coat. In 2012, the company set up a design office in Paris to attract European talent, and last year, it acquired French brand Carven for $7.4 million.
With stores across China, Icicle now eyes the international market. The brand plans to open a flagship in Paris this September, followed by outlets elsewhere in France. According to Shouzeng Ye, Chairman of the company, quality is the key to competing with international brands like MaxMara and Burberry. The company has factories with skilled workers near Shanghai. It has also acquired sewing and knitting factories owned by foreign companies who were struggling to make profit.
Another factor Chinese brands need to consider while competing with the European brands is volume of sales. These brands need to generate about $550 million in sales to reach a comparable level to European brands.
Focusing on the middle class
While Icicle aims to target luxury shoppers, its compatriot S Deer plans to focus on the middle class customer who spend upto $70 on an average, though some items can cost over $100. Based in Nanjing, S Deer was founded in 1994 by former architect Cai Gonghe. The brand has 1,300 outlets in China, offering design oriented clothing with pleats, rough materials and embroidery. It also has three stores in Paris. It is likely to take customers away from top luxury brands towards cheaper fast fashion brands.
Though Western brands are still popular in China, consumers are emphasising more on their product’s design and quality rather than brand name. Consumers feel, local brands can balance quality and price in a better way besides increasing its sales.
Chinese brands target Western markets
However, this is also creating a stiff competition amongst the local and international brands in the Chinese market. To counter this, many Chinese brands are focusing on Western markets through a combination of online marketing and affordability. These brands are also leveraging China's supply chain to shorten their production cycles and keep up with latest trends. Shein, a Nanjing-based fast fashion e-tailer that sells exclusively to overseas markets, boasts of millions of followers on its main account on Instagram, triple that of Japan's Uniqlo.
The company, whose products sell mostly under $20 and sometimes as low as $5, has amassed 50 million customers worldwide from 224 countries. Revenue surpassed 10 billion yuan (about $1.5 billion) in 2018 -- nearly half of that of American clothing chain Urban Outfitters -just two years after hitting the 1 billion yuan mark in 2016.
A 2018 survey by consultancy PwC Lopez shows, Chinese consumers are being inspired by social media in their purchases. Globalegrow E-Commerce, the Chinese company behind Shein rivals Zaful and Rosegal, reported sales over 10 billion yuan last year. These brands are also embarking on international expansion plans just as Alibaba has announced plans to expand its partnership with New York Fashion Week to promote top and emerging Chinese designers.
However, these are just a few cases. In last 10 years, the Chinese market has been witnessing a reverse trend with aspiring Chinese fashion designers being content to stay home.
Summer Market Outdoor Retailer was held in the US in June 2019. This is North America’s largest trade show on the outdoor industry, drawing attendees from around the world. Summer Market is all about face-to-face—it’s where products are shown, orders are written, new accounts are found, connections are made and brands are launched. This show is about buying, sourcing, strategic meetings, trend, education and networking with decision makers, influencers, stakeholders, key buyers and athletes that influence the outdoor market. On display were an array of new developments targeting the apparel supply chain.The show is a great opportunity to connect with outdoor brands. A lot of them have sustainability and chemistry programs. There is concern about chemicals and how they show up in products.
Cordura showed its softer side. The brand has traditionally been known in bags, packs and luggage but in recent years has come out with an extensive collection of blends with natural fibers and a wide range of knits and knits that are blended with cotton. Cordura has a strong portfolio of not only mills but fabrics from those mills that focus on the softer side of durability. For Unifi, Outdoor Retailer was a great platform on which to launch new products.
In 2018, the revenue of US knit fabric rose 2.6 per cent.US knit fabric production in 2018 rose 2.4 per cent against the previous year. Knit fabrics exports from the US declined 5.9 per cent against the previous year. In general, knit fabric exports continue to indicate a dramatic slump. Nicaragua, Honduras and Guatemala are the main destinations of knit fabric from the US they together account for 50 per cent of total US knit fabric exports. Mexico, France, El Salvador, the Dominican Republic, Colombia, Australia, Chile and China together account for a further 33 per cent. From 2013 to 2018, the most notable rate of growth in terms of exports, among the main countries of destination, was Australia. In value terms, Honduras, Nicaragua and Mexico are the largest markets for knit fabric exports from the US, with a combined 43 per cent share. These countries are followed by Guatemala, El Salvador, Colombia, the Dominican Republic, Australia, France, China and Chile, which together account for a further 35 per cent.
Over the last five years, the average knit fabric export price has increased at an average annual rate of 8.8 per cent. The growth pace was the most rapid in 2014 when the average export price increased by 22 per cent.
In the first seven months of 2019, US fabric imports from China fell 22.36 per cent in value compared to the same period last year.For the 12 months through July, China’s market share of fabric imports was down to 27.34 per cent as shipments were 7.52 per cent below the previous year. China’s textile exports to the US have gone through a major decline in the last 20 years. Chinese yarn imports into the US dropped 33 per cent year to date through July. Yarn imports for the 12 month-period from China were down 6.13 per cent, leaving China with a 16.79 per cent market share.
Chinese mills seem to have fallen on tough times. Domestic demand is weak, overseas demand is declining and there are general concerns about business volumes. Most factories are absorbing some of the additional US import duties to keep production lines moving. Chinese mills are also expected to rapidly move their production capacity investments offshore. Most Chinese fabric mills are holding prices and, in some cases, making the sale to keep capacities running. There are lots of shifts to Southeast Asia and not just because of the trade war but in general due to a price increase in China. Some domestic Chinese brands are also moving production offshore.
When it comes to sustainable fashion, consumers don’t see price or style as an obstacle.This is especially true of France, Italy, Germany and the US. In the minds of consumers today, having sustainable clothes no longer means they can’t have nice clothes. Among the hurdles facing consumers who want to buy sustainable fashion products, lack of information and lack of knowledge on where to find such products. The thorny issue of information is predominant. Only 22.8 per cent of French consumers are able to mention a fashion label that sells sustainable products.
Compared to food and cosmetics, sustainable fashion is lagging behind in France and Italy. This isn’t the case in Germany and especially in the US, where consumption of responsible fashion exceeds that of organic cosmetics. For French and Italian consumers, environmentally friendly production processes are the priority. For Americans, the type of material used is the first concern. For German interviewees, the priority concern is that of working conditions. Product provenance isn’t the prime concern for any of the groupings. In 2018, 45.8 per cent of French interviewees bought at least one sustainable fashion item, from eco-responsible brands, secondhand or from a local producer. The figure is 43.4 per cent for Germany, 46.7 per cent for Italy and 55.3 per cent for the US.
The Panorama and Neonyt trade fairs, usually held during the Berlin Fashion Week, will now be held during Berlin Tempelhof, in January 2020. Though both these events will share an entrance, they will however remain independent. Panorama’s change of location is a result of its strategic plan to reactivate the fair. The organisation recently reinforced its helm by incorporating anew head of its marketing and communication department.
On the other hand, Neonyt is expanding its operations. The trade show, which specialises in sustainable fashion, plans to hold its next edition in a bigger location.
Old Navy plans to open 75 stores a year. The goal is to increase the count from around 1100 stores, most of which are in the US, to 2000. The openings will happen predominantly in underserved small markets. Over the past few years, Old Navy has opened about 35 stores in smaller markets. About three-quarters of Old Navy stores are not in malls.
Old Navy belongs to Gap and serves a core audience of value-seeking families. Children’s clothing is often an entry point for the brand. It gets mothers to come in and shop repeatedly as their children grow. Those mothers can also shop for themselves and everyone else in their families while they’re there. The brand has focused on increasing its size range, too, making it a destination for the many American women who go underserved by the narrow ranges at other labels. And it has built an infrastructure that quickly feeds stores with what customers want rather than serving the same assortment to everyone.
This year has been brutal so far for America’s brick-and-mortar retailers. There were more than 7000 store closures in the first half of the year. The majority of closings are happening in clothing and footwear, mainly due to bankruptcies and companies downsizing their store footprints.
Levi Strauss is implementing a strategy aimed at significantly reducing overall water use. Suppliers are already engaged–and deeply invested–in the effort to reduce water use. In water-stressed regions, suppliers have begun to install water-efficient machinery and recycle water. The company will help its suppliers identify worthwhile investments in water projects and, in doing so, help them be successful over the long term. A tag sewn into jeans instructs consumers to wash their garments in cold water, line dry them when they do and donate them when no longer needed. There will also be more consumer-facing and in-store information provided to consumers in the year ahead. In addition, the company participates in a host of industry coalitions and is vocal about its water use programming and the need to work together across companies–and across industries–to truly achieve the necessary impact.
The brand does not believe that by focusing on more environmentally friendly items the prices of the final product may rise. On the contrary, it believes that suppliers can reduce their costs by reducing their water and energy use and becoming more efficient and sustainable in general. Levi Strauss is known for its brands Levi’s, Dockers, Signature by Levi Strauss and Denizen.
L Brands has been focused to diversify its supply chain over the past five years. The company has been in negotiations with its Chinese suppliers to take costs out of the production chain to offset the increases but that also means leaving a little bit on the table so vendors don’t end up seeing their businesses fail.
By the end of 2019, China is expected to represent less than 20 per cent of the brand’s total production. L Brands’ move to other locales is less about tariffs and more about good business practices. The company had been moving production outside China even before the tariffs, putting it in a diversified supply chain position ahead of the hikes. A few years back, 84 per cent of its bra pads were made in China. Most of that is now in Vietnam and Sri Lanka. The lingerie group still works with Chinese vendors, but now less than five per cent of bras are made in China.
The problem with China is not where the product is being made, but also where the raw materials come from. For L Brands’ beauty offerings, 90 per cent of the beauty products are made in the US but all the chemicals used are made in China.
Chinos Holdings plans to split the Madewell denim brand from J Crew as the company plans to raise funds to pay off some of its $1.7 billion in debt, although the volume of shares and their projected value is yet to be revealed. According to this plan, Chinos Holdings will be renamed as Madewell Group.
The Madewell denim brand is considered to be more successful than its sister J Crew which has been struggling to maintain market share and brand appeal in recent years. In the second quarter of this year, the company’s sales rose by 15 per cent to $139.7 million with same-store sales up 10 per cent. That followed a 28-per-cent rise in sales in the same quarter a year ago. J Crew sales, however, fell by 7 per cent in the second quarter, to about $400 million, with comp-store sales down by 4 per cent.
