For Fast Fashion Brands, Will The Market Potential Of This Country Be Stronger Than That Of China?

Although it is not early for international fast fashion brands to enter the Indian market, they have shown a vigorous momentum of development and gradually positioned the Indian market as the focus of brand expansion in the international market. What is the reason for fast fashion brands to value the Indian market? What business strategies have these international fast fashion brands implemented after they landed in India?

　 H&M's sales in India soared by 39%

E-commerce and featured products become the driving force

Recently, H&M's latest financial report announced that as of the second fiscal quarter in May this year, H&M's sales in India had climbed 39% year on year, which is one of the strongest growth in its global market. Some analysts believe that it is mainly due to the increase of new stores and the driving effect of consumer demand.

A year ago, H&M's Indian sales increased by 16% in the same quarter to about 2.73 billion rupees. Although H&M's financial report did not disclose the actual sales figures of this quarter, the rough calculation was about 3.8 billion rupees.

In less than four years after entering the Indian market, H&M's annual sales have exceeded 11 billion rupees, becoming the fastest growing fast fashion brand in India. The CEO of H&M global business said that by the autumn of 2019, H&M will begin to lay out its network channels in India and launch them on the e-commerce platform Myntra, which means that millions of consumers in India will be able to experience fast and convenient H&M online sales services.

It is understood that Myntra is one of the online fashion retailers most used by local consumers in India. A few years ago, Myntra bought Jabong for 70 million dollars, and joined forces to become the most competitive brand in the Indian e-commerce market.

According to a new report issued by the Indian government, compared with the previous quarter, the sales of e-commerce in India in the first quarter of this year increased by 4% month on month. According to the report, the sales of the top 10 countries in the international e-commerce market were basically flat in the first quarter, while India and Japan were the only countries that saw an increase. It is estimated that by 2022, India's e-commerce market will triple to more than US $100 billion. It can be seen that H&M is aiming at this opportunity and hopes to make a difference in the Indian e-commerce market.

Not only online channels, but also offline channels have become the focus of H&M layout. It is reported that H&M has opened more than 42 stores in India every month on average, and plans to open 50 stores by 2020.

For brands, it is crucial to understand the cultural identity of the Indian market and its consumers. With the entry of global brands, Indian consumers have higher and higher requirements on store design, visual marketing, product pricing, product design, marketing and other aspects.

Therefore, H&M not only actively cooperates with local designers in India to launch a series of products with local characteristics, but also launched basic everyday clothes for the Indian market. The prices of these products are lower than most of its competitors.

　 Uniqlo will open the largest store

Share the Indian market with H&M, etc

The founder and CEO of Uniqlo, Masaaru Yanai, said recently that India may become the most exciting market in the future. He predicted that India would surpass China and its own country as its largest sales market. In addition, he believes that India may also become a large global procurement base of Uniqlo except for China and Bangladesh.

As a result, Uniqlo plans to launch its first store in New Delhi, India, at the end of this year, which will be the first store of Uniqlo in South Asia. Yanai is talking about that this new store will cover an area of 60000 square feet, making it the largest fast fashion brand store in India. At present, the largest fast fashion store in India is Zara's 5-storey store in the south of Mumbai, with a total area of more than 50000 square feet, followed by H&M's store with an area of 40000 square feet. Yanai is proposing that India has a population of nearly 1.3 billion, but there are not many large-scale modern stores in India compared with the huge population. Uniqlo plans to expand its market in and around New Delhi first, and then consider opening stores in other parts of India.

It is understood that Uniqlo's entry into the Indian market benefited from the new rules on foreign investment introduced by the Indian government. According to the latest regulations, Uniqlo will be able to set up a wholly-owned branch, rather than having to joint venture with local partners.

A spokesman of Uniqlo said that Uniqlo would have to comply with other regulations of the Indian government, that is, 30% of retail goods must be purchased locally. Uniqlo said it "will cooperate with the government to meet this requirement".

The overseas market has always been the growth engine of Uniqlo's performance. According to Uniqlo's semi annual financial report from September 2018 to February 2019, the operating profit of Uniqlo's overseas business exceeded that of Japan for the first time in half a fiscal year. From September 2018 to February 2019, the operating profit of Uniqlo's overseas business reached 88.4 billion yen, exceeding the domestic operating profit of 67.7 billion yen in Japan.

Yanai once said that today's Asia is the focus of Uniqlo's business growth, and millions of consumers in Asia are entering the middle class. Especially with the rapid development of Indian economy and the increase of disposable income of the growing middle class, Uniqlo is full of expectations for the Indian market.

　 Zara slows down shop opening in printing

Turn to store revenue efficiency

Zara, a fast fashion brand, took the lead to enter the Indian market as early as 2010. At that time, the Indian fast fashion market was not yet mature. At the same time, people lost interest in fashion brands such as Benetton, which had been operating in the Indian market for nearly 20 years. So Zara was an oasis of Indian fashion at that time, and showed amazing sales.

"Asia is one of our fastest growing markets, and we will continue to promote Zara's development in the Indian market at the past speed," said Zara's person in charge of Asian affairs when asked whether he had plans to speed up the layout of the Indian market, "we do not want to become overly anxious because we need this market."

Zara's actions in the Indian market in the past few years are really not frequent. Since the establishment of a joint venture with Indian company Tata Group in 2010 and the opening of the first local Zara store in the same year, Zara's store in India is not fast.

But this does not mean that Zara can be calm. For Zara, India is also a "very important" production base besides Europe - at present, 40% of Zara's products are produced in non European countries, of which India accounts for a large proportion. Therefore, Zara can make a difference in the Indian market, which means that Zara can gain more profit space in this market by reducing logistics costs.

Since fiscal year 2015, Zara has launched a plan of deep cultivation of stores around the world, that is, instead of blindly pursuing the growth of the number of stores, Zara values the revenue efficiency of each store instead. Mumbai flagship store is just a practice of this strategy in India.