The entire fast fashion industry is facing severe challenges. Topshop's several attempts to enter the Chinese market failed, and Forever 21 withdrew from China and was on the verge of bankruptcy. These fast-fashion brands, which were brought to the spotlight 10 years ago due to an efficient supply chain operation model, encountered near fatal troubles. However, in contrast, the operation of fashion brands such as H & M and COS has remained stable overall. H & M Greater China General Manager Magnus Olsson believes that the most important change is that consumers are becoming more and more opinionated. They are no longer just following fashion trends. They are instead focusing on brand values, humanization of the production process, and the use of raw materials. Putting forward higher and higher requirements, and this is exactly the problem that brands need to face and deal with at this moment.
Magnus Olsson has been the General Manager of H & M Greater China since 2012.
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Yi: The golden age of the entire fast fashion industry seems to be over. Some brands are withdrawing from the Chinese market, and some companies are even on the verge of bankruptcy. How did this change happen? Where will the entire industry go in the future?
O: One obvious change is that consumers are becoming more aware of the entire fashion industry. The more extensive their knowledge is, the correspondingly they will be more assertive in terms of styling and fashion. This is not a problem that the past brand can bring the fashion trend to them. Consumers have even begun to put forward higher requirements on various aspects such as the use of clothing raw materials, origin, and technology. Compared with the past, the entire fashion industry is facing new challenges. It involves the dissemination of brand image and the transformation of the supply chain. For global brands such as H & M, how to combine global industrial advantages to face new challenges The market situation becomes crucial because it determines whether you can finally adjust yourself to meet the needs of increasingly demanding consumers. For example, a feature of consumers in the Chinese market is that they want new things to come into their sight every day, so we have accelerated the speed of providing them with new products and new series. You will see that H & M today has brand new products almost every day. Going online, this will become a competitive advantage for us in the market. For another example, many consumers' perception of the industry is that new clothes must be washed before they can be worn home. If we can try to eliminate such concerns about the cleanliness of the entire supply chain, it will give brands a future Development brings new opportunities.
Yi: H & M is currently adjusting the layout of offline channels by closing stores. Will the brand ’s long-term challenges in inventory and profit margins reverse the store opening strategy?
O: First of all, I want to make clear the fact that in the business society, the opening and closing of stores is a common strategy for brands to respond flexibly to market changes. This is not necessarily a decision based on the brand's own considerations. It must be known that the development and popularity of business circles are constantly changing. Opening the store to your target audience in time is very critical for any retail brand. As a manager, you need to respond to changes in the channel environment in a timely manner. So when you see H & M closing some stores, you should also see that we are opening brand new stores, such as 10 have opened this year. On the other hand, we all know very well that the development of China's e-commerce is the most advanced in the world. Therefore, increasing online investment is also a legitimate decision. For Chinese consumers, they do not rely on offline stores for shopping, but they do not just need online channels. How to combine online and offline is an important challenge for retail brands in the future. Different brands will have different thinking, and there will be different combinations of the two channels, so you should actually understand it as an optimization process. From another perspective, the need for this optimization is that the data that can be collected and accumulated by online channels is very important for brand development. You need to consider the proportion of goods in the store based on previous years' data. In the Chinese market, H & M's Tmall flagship store alone has over 10 million followers. The consumer preferences of these 10 million people will inevitably affect our sales decisions. This can actually answer the question of inventory and profit margin. When you can get more optimized sales forecast, the problem of inventory and stocking can also be solved accordingly.
Yi: In recent years, fashion brands are generally moving towards sustainable development. From a macro perspective, it is certainly not a bad thing to invest more in environmental protection, but this investment has also raised the production costs of enterprises. How do you Looking at this cost increase?
O: The sustainable production mode does require us to invest more manpower and material resources than in the past. This is a test of whether we can cooperate with our partners in new ways of thinking. We need to agree with each link in the entire industry chain or have a basic understanding, but global companies are huge in scale and have a much greater impact on the environment than small and medium-sized companies. At this time you ca n’t simply take the cost To measure input. After all, all retailers are ultimately dependent on natural resources. H & M has a goal to become a company with a positive impact on the climate by 2040, so we have launched a used clothing recycling project in China. This project is our responsibility to recycle used clothing produced by any brand. So far our used clothing recycling The scale has reached 78,000 tons. We do not count the cost of this work into the production link, so the increase in this cost will not be passed on to consumers.
Yi: What specific adjustments did H & M make to face the rapidly changing preferences of Chinese consumers and increasingly high fashion demands?
O: In addition to establishing an omni-channel business model, H & M began to try to provide local consumers with products that better fit their actual needs. For example, this year we launched the H & M co-branded series H & M × ANGELCHEN for the first time in the history of H & M with Chinese designers, and the Asian fashion series launched a series of underwear that is more suitable for Asian body shapes for young people in the Asian market. The process of responding quickly to the regional market needs to go through many challenges. You must try to be flexible. For example, the cooperation with ANGELCHEN was negotiated by the Chinese team. H & M's Swedish headquarters only put forward some opinions and supervised the implementation of the entire project. Promoting projects by region can reduce many barriers to communication with designers at the global level, thereby accelerating the implementation process of the entire project. When cooperating with a third-party e-commerce platform like Tmall, we used to have an opportunity to use additional third-party platform resources. Tmall asked us to provide materials within one day, and we often needed to control the materials from the company level. In the end, through the collaboration of multiple teams, we worked overtime to complete the production and confirmation process of the material, and achieved high-quality investment of resources.
Yi: Which aspect of your life are you most concerned about in the future?
O: A sustainable green earth is closely related to people's lives, and it is also a vital part of corporate social responsibility. We take the concept of sustainability into our values with a serious and rigorous approach. H & M Group has been promoting responsible water and chemical management models in its supply chain more than a decade ago. The Group's environmental standards are among the most stringent in the industry. I think it is the responsibility of each of us to use various measures to protect the environment. We know that we are in an environment that challenges nature. Therefore, we are very concerned about these issues. In terms of manufacturing, make sure that fashion is so-called recyclable and that it has a positive impact on the climate. We hope to establish a closed-loop model of fashion so as to have a positive impact on the environment. In a country with mature e-commerce like China, transportation is naturally very important, and the use of new energy for terminal logistics services is particularly important. As a company that is very willing to support the use of electric transportation for distribution, we ensure that the delivery services of buyers in the supply chain, stores, and the entire e-commerce chain are satisfied, while we adopt environmentally friendly transportation methods as much as possible.
Source: First Financial