Original title: A rare major retreat in the clothing industry: the Chinese market lost 400 billion dollars, and Nike Gap was unable to support it Source: Huashang Taolue

Text | Huashang Taolue Peach

A sudden outbreak continued from winter to hot summer. While the virus gradually faded, some industries still struggled in the cold night. A “big reshuffle” within the industry is taking place. How can brands and merchants overcome the storm and break through the siege under such circumstances?

In July, Fengsheng Town, Chegongmiao, Shenzhen — where many clothing stores gather and is one of the favorite places for young people in Shenzhen to check in for shopping, a children's clothing store that has been in business for nearly ten years announced its withdrawal. Affected by the pandemic, poor business performance, and landlords' reluctance to reduce rent, the store had no choice but to leave. The famous Guangzhou Panyu clothing market in China is a market that was supposed to be full of pickers. The hustle and bustle of the past is no longer there, but it has become a monkey.

Liu Jinyan, vice president of marketing at Convertlab, recently delivered a keynote speech at a clothing conference in Shenzhen, saying, “2020 is bound to be a turbulent year. It is expected that the Chinese clothing market will evaporate at least 400 billion dollars in revenue, and the overall market size will shrink by 15%.”

There is a clear gap between this year's clothing market and previous years. Apart from the fact that manufacturers were unable to start construction and products were unable to be supplied in a timely manner in the early stages of the epidemic, strong discounts in retail stores were still unable to attract customers, which is the main reason why the market continues to decline.

According to official data from the China Apparel Industry Association, from January to May 2020, retail sales of clothing products per unit above the limit in China totaled 288.7 billion yuan, down 25.6% year on year, and online retail sales of clothing products fell 6.8% year on year. However, with the exception of China, the global clothing industry has shown a decline under the influence of the epidemic, and the “big retreat” of clothing brands has become an inevitable trend.

The well-known brand Nike has also initiated public layoffs, and lost a huge loss of 5.6 billion yuan in the fourth fiscal quarter of fiscal year 2020; in addition, Levi's had a net loss of US$364 million in the second fiscal quarter of 2020, a profit of US$28.5.07 million in the same period last year, and announced that it will cut global corporate employees by about 15%; GAP, the largest clothing brand in the US, sales in the first quarter fell by 43% to US$2.1 billion, with operating losses reaching US$1.2 billion, and sales of all brands in offline stores fell by more than 50%.

In the three months up to the end of April, Zara's parent company Inditex's sales fell 44% year on year to 3.3 billion euros, with a net loss of 409 million euros. Inditex announced that it may close 1,000-1,200 stores by 2021; Sweden's H&M, the second largest clothing retailer in the world, had 3,778 stores temporarily closed by the end of March.

Layoffs, salary cuts, and the cessation of production and closure of businesses. It seems that the initial three axes of self-help in the garment industry have not been able to recover. How to use new retail and 5G technology to open up new sales fields, transform and upgrade has become a new way of thinking full of expectations for merchants.

Domestic apparel groupPeacebirdAlthough half of the stores were suspended during the pandemic, the average daily retail sales volume still exceeded 10 million yuan through WeChat flash sales, mini-program distribution, and alternating live broadcasts in different cities or regions.

With the restoration of logistics, the online sales model has brought the operations of some brands back on track. Adidas's earnings report shows that brand e-commerce channel sales increased 35% in the first quarter, and the increase in March alone reached 55%; the financial report also specifically pointed out that investment is being accelerated to support e-commerce business efforts.

Currently, the apparel industry is facing an unprecedented cold winter. Only companies that adapt more quickly to new markets can survive the fittest.

As Buffett said, “You only know who is swimming naked when the tide recedes.”

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