2021 OCTOBER
MARKET INTELLIGENCE PART 2
Short Read
Written by : Andrew Sia
Contents:
Urban Outfitters Creating Marketplace for Secondhand Goods
Wealth Redistribution in China Hits Luxury Market
The Latest Development with the Retail World
Primark is Going for Sustainable
Luxury Brands in China
Retail Sales in the US
Marks & Spencer Closing French Stores
New Retail Landscape in the New York City
Nike Sales Miss Estimates
Copenhagen Fashion Summit
Supply Chain Issue is Affecting H&M
Power Cuts in China Would Increase China’s Textile Prices
Fast Fashion Business Model’s Challenge
Net-a-Porter is Entering into Resale
China Has Jumped on the Bandwagon of Luxury Resale Boom
Debenhams Launched Its Marketplace Platform Under Boohoo
Nike’s High-Tech Research and Innovation Lab
Benetton Is Moving Its Production Back to Its Home Turf
Retail Labor Shortage
Wellness-Themed Shopping Concept in Shanghai
Urban Outfitters Creating Marketplace for Secondhand Goods – WSJ, August 25, 2021
Urban Outfitters Inc. is doing this to keep its customers to go to online resellers such as Poshmark Inc. and thredUP Inc. Its Nuuly Thrift will launch an iPhone app this fall and will expand into the resale to collect commissions.
It comes to realize that if they don’t create the thrift platform, it is not going to stop the market to go in this direction.
Already Lululemon Athletica Inc., Levi Strauss & Co. and Macy’s Inc. have expanded into this secondhand market. This is a popular alternative to fast fashion among younger consumers and about 42% of Gen Z shoppers are buying secondhand fashion in 2020.
In any case, Urban Outfitters and its brands—Anthropologies and Free People, are already popular in the secondhand marketplace.
Wealth Redistribution in China Hits Luxury Market – FT, August 28, 2021
This came after Xi Jinping sent out the signal to “regulate excessive high incomes and encourage high-income groups and enterprises to return more to society”. With these words said on August 17, it took off €61.7 billion, or 10% from the collective value of LVMH, Hermès, Kering, Richmont and Burberry.
China has been the main growth of the luxury market, and its consumers are expected to spend 45% of all the luxury goods sold globally for this year despite the pandemic that have restricted the Chinese from traveling to Paris or Milan to shop.
This is also led by the rising middle class of Generation Z and millennials and a small group of ultra-wealthy people in China about 100,000 of them. They can spend more than €100,000 on fashion and jewelry. This is almost a quarter of the luxury sales to Chinese consumers. Xi Jinping’s calling for “common prosperity” to all has sent the chill to the luxury industry.
Precautions are beginning to take, such as keeping a low profile for the time being with their campaign for autumn and winter, apply a more sober clothing design and avoid the bling which is often popular in China.
Opportunity in the China market is still very attractive, but the risk and the uncertainty are calling for alert.
The Latest Development with the Retail World
Overheard that the bricks and mortar retailers have been decimated in recent years. Many of them have been beaten by the e-commerce, especially from Amazon. The pandemic has just speeded up their defeat, and without it they could have lingered a bit longer.
At this pandemic, we have seen giant shopping malls are dying, first with the C-malls. Even those big-box stores where they are located at the strip malls throughout the exurbs are suffering at one time. But lately, companies like Best Buy, Dick’s Sporting Goods and Home Depot have even managed to strive.
Primark is Going for Sustainable – FT, September 15, 2021
Primark, a $30 billion fast-fashion company is saying that it will make clothes more durable and commit to using more sustainable materials in all its garments by 2030.
This fashion is accounted for more carbon emissions than all the airlines and shipping industry combined.
Primark at this time is committed to use all its clothing recyclable in the next nine years. It has already a range under the Primark Cares which is accounted for a quarter of its products.
Global consumption of apparel reached its height of 62 million metric tons in 2019 and fast-fashion brands have been known for its lower-quality clothes selling cheaply while chasing the fashion trend. It ended up also known as the disposable-fashion. As a result, 57% of all clothing ended up in landfill.
Other fast-fashion rivals—H&M and Inditex have pledged to make all of their products from sustainable materials before the end of the decade.
Luxury Brands in China – FT, August 28, 2021
Since Xi Jinping announced that China would “regulate excessive high incomes and encourage high-income groups and enterprises to return more to society” not only the shares of the luxury brands plummeted, but the market also started to tick up slightly and too prudent to keep a low profile. They might consider toning down on the marketing campaign and not to emphasize on exclusivity and elitism.
Analysts said that China may boost taxes on expensive products, crack down on influencers who flaunt of social media. Will also imply strict border control to stop the daigou. But everything is too early to say until specific policy would be announced.
Retail Sales in the US – New York Times, September 17, 2021
In August the sales in the stores increased slightly by 0.7% after a decline in July for 1.8%. The rise was due to the spending on clothing, electronics, furniture and home goods.
But business in restaurants and bars fall after the rise in July. People took the blame on the virus.
Sales of sporting goods and musical instruments and at bookstores rose because of the students who were preparing for the “back to school”.
Sales of cars and auto-parts were down 4.5% in August. The auto industry was hit by a shortage of computer chips.
Analysts at Bank of America reported that spending on clothing increased by 27% for the week ending September 11 compared with the same period last year. Sales at department stores increased by 21%, and furniture rose by 9% compared with same period last year.
Marks & Spencer Closing French Stores – New York Times, September 17, 2021
The largest British retailer, Marks & Spencer, has been weighing its operation in France for the cost and the hurdles of its supply chain, has finally decided to close its 11 food stores in France. The food products were used to process in Northampton, in the middle of England, shipped across the English Channel every day before the Brexit. As the result the stores’ shelves are empty, unable to serve fresh and chilled products are turning the customers away.
The rules of origin requirement have forced clothing retailers to move the distribution center to European Union. And the current situation of the supply chain has further upended by the pandemic.
The stores in France, which are currently run by the franchisee in France, will be closed by the end of the year. Nine other stores in France, run by another partner will stay open. The website which sells mostly clothes and home products will remain.
Marks & Spencer’s other international business in India, the Middle East and Asia, has also been affected by the Covid-19. The revenue dropped by 17% in the year to March.
New Retail Landscape in the New York City – New York Times, September 20, 2021
In the heart of the Manhattan’s garment district, many of these chain food joints have shuttered their doors. The Delta variant has again delayed plans by many companies to bring back their employees to the offices. Those eateries have opened are found to operate with a reduced hours and limited menus. With the pandemic keeping millions of New York City office employees’ home for the past year resulted restaurants, coffee shops, apparel retailers and many others to struggle to stay afloat.
By the end of 2020, the number of chain stores in Manhattan, everything from drugstores to clothing retailers, have fallen by more than 17% from 2019.
Across Manhattan, a quarter of those street-level stores in Lower Manhattan are available for rent, it is more desperate in Herald Square.
But in any big international city, one person’s downturn can be another person’s opportunity. Both new restaurants and apparel retailers have signed up new leases. But it maybe more in the residential neighborhood than the commercial areas as there are still many uncertainties about the return of the office staff.
With the stopping of those welfare checks for the restaurant workers this week, and the rumor about the dining areas set up outside the restaurants are going to be abolished by the end of December, this is going to be very challenging again for New York.
Nike Sales Miss Estimates – Bloomberg, September 23, 2021
Analysts’ estimate was $12.5 billion for the quarter ended August 31, but Nike’s sale rose 12% to $12.2 billion. The demand from the consumers is still strong but the supply chain issues in Asia that are hindering sales around the world. The resurgence of Covid-19’s cases that lead to factory closures in Vietnam, high shipping cost and lengthy transit time are the causes.
But the good news was the earnings rose to $1.16 a share, compared with the estimates of $1.12 a share.
Copenhagen Fashion Summit – BOF, October 3, 2021
This will be held online from October 7 to 8 and this year’s focus is on whether the fashion businesses can be grown sustainably. This is setting the tone for November’s UN Climate Change Conference in Glasgow for the new targets going forward.
The annual Copenhagen Fashion Summit is to check the large brands how do they think about sustainability and will draw the participation of the climate and labor activists.
In the past, the event was focusing on raising the awareness of fashion’s negative on the environment and its people and resulted brands to set lofty goals. This resulted the overall progress being halted.
This year, the theme is more fundamental, but to tell the fashion brands to refrain from higher sales, bigger profits and be more aware of their obligation to the planet tend not to be popular with their investors.
We will follow the progress of the summit and report to our readers accordingly.
Supply Chain Issue is Affecting H&M – BOF, September 30, 2021
Although its sales gained slightly in September, but its third quarter slide 14%. The bulk of its clothes from Asia is strained in the bottleneck as it is delaying shipments.
Between factories being lockdown due to the pandemic and the shipment crunch, H&M has found it hard to serve its core of those younger customers who are buying outfits to go to pubs, clubs and restaurants.
Power Cuts in China Would Increase China’s Textile Prices – BOF, September 30, 2021
China is blaming it on various reasons—the surging demand for exports as other countries have reopened their market, coal supply from Australia has stopped, and aiming at making the country carbon neutral by 2060 have further slowed coal production. The power shutdown would perhaps continue until December 2021 and give Beijing the goal to curb emissions for the coming Winter Olympics in February 2022.
The planned shutdowns in industrial hubs like Jiangsu, Zhejiang and Guangdong could send prices of textiles and garments up in the coming weeks.
Already raw materials, textiles, labor and shipping have all become more expensive since the beginning of the year.
China’s producer-price index, a gauge of factory-price, rose 6.8% in April, the fastest pace since October 2017, according to China’s National Bureau of Statistics. It was already predicted that in Q2 and Q3, the increase could become more pronounced. And already the consumer price index jumped in comparison to a year earlier.
Fast Fashion Business Model’s Challenge – The Telegraph, September 30, 2021
If we look back at the last decade, it was a truly golden period for the fast fashion industry. H&M and Zara have expanded at the pace that have never seen before and this have allowed them to expand to the four corners of the world.
On the other hand, Primark has taken over the UK high street. Already the household names like Debenhams and House of Fraser have ceased to exist. The only remaining M&S and John Lewis are continuing to struggle in the clothing market.
Next is the only one to be able to hold themselves and maintained their share price.
Online is the only fashion retail business, like Asos and Boohoo, that is performing exceptionally well. And it is interesting to know that Boohoo, with its full list of 1,100 suppliers, more than a third are based in China, 205 are from Turkey, 151 are from India and just 96 of them are from the UK.
Net-a-Porter is Entering into Resale – Fashionista, October 1, 2021
The market for secondhand clothing and accessories has grown rapidly, in fact 21 times faster than the overall apparel retail market over the last few years. More and more consumers are embracing the buying and selling of used designer goods through the sales platform like The Real Real, Rebag and Fashionphile.
Unlike before, the luxury brands and retailers are shifting to the consumer behavior, instead of fighting it. It is like, if you cannot fight them, join them.
The luxury e-commerce giant, Net-a-Porter is the latest to join them. It has announced it partnering with resale technology provider, Reflaunt, to launch a program that encourage customers the lifespan of their designer pieces by reselling them.
Net-a-Porter is becoming the enabler of re-commerce and using Reflaunt as the backend of this operation by collecting them from the seller’s homes, authentication, pricing recommendation, professional photography and listing by uploading them to other international marketplaces.
China Has Jumped on the Bandwagon of Luxury Resale Boom – Jing Daily Report, October 4, 2021
Chinese have traditionally been perceived as resistant to used goods, but it is now a leading market both for new luxury goods and a source of vast quantities of pre-owned luxury items. Its younger consumers under the age of 30 have proved to be more open for purchasing used goods. These digital-native shoppers have been the driving force for the sourcing and selling of the secondhand luxury items.
This is a market for opportunities but also the risks that one cannot neglect as the fake products would find their way into this lucrative market segment. It is advisable to be careful when you are buying the secondhand luxury products and the market platform would be very important to choose to shop with.
Debenhams Launched Its Marketplace Platform Under Boohoo – Just Style, October 6, 2021
Powered by Miraki Marketing Platform, Debenhams has evolved into a new era of digital commerce and rapidly growing its products to offer to its customers.
Debenhams is known for its high brand awareness and has its own customer base. This time it is creating the UK’s largest marketplace across fashion, beauty, sport and homeware.
Boohoo Group is teaming up with Miraki, and through its technology, expertise and seller ecosystem, Miraki is pushing Debenham’s digital transformation and maintain the iconic brand that has been created 240 years ago.
Debenhams was acquired by Boohoo in January of this year.
Nike’s High-Tech Research and Innovation Lab – Just-Style, October 7, 2021
Its high-tech Nike Sport Research Lab (NSRL) houses biomechanical researchers, robotics experts, computational designers and patent pro, together with 80-plus new prototype machines, 825 pieces of testing equipment, 97 force plates and four environmental chambers. It has also the world’s largest motion-capture installation comprising 400 cameras.
This lab is also highly environmentally sustainable and uses 908 solar panels on its roof, 100% renewable electricity and 40% less water wastage.
Recently Nike unveiled its most sustainability-minded performance shoes yet with the Nike Air Zoom Aphhafly Next Nature composed of at least 50% total recycled content by weight.
Benetton Is Moving Its Production Back to Its Home Turf – Just Style, October 5, 2021
It is found when Benetton said the shipping container that used to cost $1,200 to $1,500 can now become $10,000 to $15,000 and without a certainty date of delivery is putting the group to come to a strategic decision. It has decided to move the production closer in Europe and to have a better control. It is said to grow its production in Turkey, Croatia, Tunisia and Egypt, and to halve Asia production by end-2022.
Although the production cost is 20% lower in Vietnam and Bangladesh versus Mediterranean countries, the benefits can be offset by longer lead time and unpredictable supply chain challenge.
Retail Labor Shortage – BOF, October 6, 2021
During this pandemic there is this mass psychological phenomenon called the “Great Resignation” as cited by BOF. Through my personal observation, workers across many industries especially those restaurant workers, left their jobs and now they need a good reason to steer them back to their former positions. At this time, millions of people have reassessed what they want from their jobs—professional development, pay, flexibility and family life. And better still, all of the four.
For retail as the sales associate position, normally the earning is only the minimum wage per hour that they would get paid. At this time when the stores are hiring hundreds of thousands of workers to handle the holiday rush, they are raising pay and offer benefits to lure applicants. Some of the retailers even offer sign-on bonuses.
Earlier on we heard that Kohl’s are offering sign-up bonuses up to $400 and Target is indicating some seasonal positions will become permanent. Walmart is even promising to pay college tuition for store associates.
The average annual salary for a salesperson working in a clothing store was $28,680, or $13.79 per hour in 2020 and according to the US Bureau of Labor Statistics, it is below the living wage in the US.
Target has raised the wages to $15 per hour this year, but many nationwide fashion chains are still paying an average of $12 an hour.
In the fashion business the margins are very thin and to pay the sales associated at such a low hourly rate is nothing new in the industry. Now they will have to decide.
During this covid period, we have to reexamine the system and come up with some major overhaul. We have talked enough to work the sustainable way and it is time for the retail industry to look into their costing structure and make happy and skill shop associates to work efficiently. After all, it is still a business that is very much service oriented. We have a lot of rethinking to do.
Wellness-Themed Shopping Concept in Shanghai – Inside Retail, October 6, 2021
Taikoo Li Qiantan (前灘太古里), a retail complex, which is Swire Properties’ latest joint-venture with Shanghai Lujiazui Group (上海陸家嘴集團), has recently opened in Shanghai. It followed on what was opened in Beijing known as the Taikoo Li Sanlitun (北京三里屯太古里) and in Chengdu known as Sino-Ocean Taikoo Li (成都遠洋太古里).
It is a shopping area spanning in a 120,000 square meters in the heart of the Shanghai Pudong New Area. It is featuring a wellness-theme concept with open-plan and lane-driven architectural design. It is a wide expanse of open green space and lanes across the ground level and rooftop are connected by an 80-meter-long scenic bridge overlooking the Huangpu River.
It is divided into two main areas—Stone Zone and Wood Zone, and the project has 250 premium shops, and you can find big brand names like Balenciaga, Bulgari, Cartier, Dior, Fendi, Giorgio Armani, Gucci, Hermes, Loewe, Louis Vuitton, Moncler, Prada and Saint Laurent.
Anchor tenants on the rooftop include Japan’s Tsutaya Books, whose 3,000 square meter flagship store is there.
The Japanese professional sports brand Asics opened its first “Running Station” on the Chinese mainland. The Taikoo Li Qiantan is highlighted with an AI digitized track dubbed “Sky Loop” surround the rooftop of the complex. The 450-meters running track provides smart changing rooms as well as a gentle slope that rises to the roof of Tsutaya Books.
2021 OCTOBER
MARKET INTELLIGENCE PART 2
Short Read
Written by : Andrew Sia
Contents:
Urban Outfitters Creating Marketplace for Secondhand Goods
Wealth Redistribution in China Hits Luxury Market
The Latest Development with the Retail World
Primark is Going for Sustainable
Luxury Brands in China
Retail Sales in the US
Marks & Spencer Closing French Stores
New Retail Landscape in the New York City
Nike Sales Miss Estimates
Copenhagen Fashion Summit
Supply Chain Issue is Affecting H&M
Power Cuts in China Would Increase China’s Textile Prices
Fast Fashion Business Model’s Challenge
Net-a-Porter is Entering into Resale
China Has Jumped on the Bandwagon of Luxury Resale Boom
Debenhams Launched Its Marketplace Platform Under Boohoo
Nike’s High-Tech Research and Innovation Lab
Benetton Is Moving Its Production Back to Its Home Turf
Retail Labor Shortage
Wellness-Themed Shopping Concept in Shanghai
Urban Outfitters Creating Marketplace for Secondhand Goods – WSJ, August 25, 2021
Urban Outfitters Inc. is doing this to keep its customers to go to online resellers such as Poshmark Inc. and thredUP Inc. Its Nuuly Thrift will launch an iPhone app this fall and will expand into the resale to collect commissions.
It comes to realize that if they don’t create the thrift platform, it is not going to stop the market to go in this direction.
Already Lululemon Athletica Inc., Levi Strauss & Co. and Macy’s Inc. have expanded into this secondhand market. This is a popular alternative to fast fashion among younger consumers and about 42% of Gen Z shoppers are buying secondhand fashion in 2020.
In any case, Urban Outfitters and its brands—Anthropologies and Free People, are already popular in the secondhand marketplace.
Wealth Redistribution in China Hits Luxury Market – FT, August 28, 2021
This came after Xi Jinping sent out the signal to “regulate excessive high incomes and encourage high-income groups and enterprises to return more to society”. With these words said on August 17, it took off €61.7 billion, or 10% from the collective value of LVMH, Hermès, Kering, Richmont and Burberry.
China has been the main growth of the luxury market, and its consumers are expected to spend 45% of all the luxury goods sold globally for this year despite the pandemic that have restricted the Chinese from traveling to Paris or Milan to shop.
This is also led by the rising middle class of Generation Z and millennials and a small group of ultra-wealthy people in China about 100,000 of them. They can spend more than €100,000 on fashion and jewelry. This is almost a quarter of the luxury sales to Chinese consumers. Xi Jinping’s calling for “common prosperity” to all has sent the chill to the luxury industry.
Precautions are beginning to take, such as keeping a low profile for the time being with their campaign for autumn and winter, apply a more sober clothing design and avoid the bling which is often popular in China.
Opportunity in the China market is still very attractive, but the risk and the uncertainty are calling for alert.
The Latest Development with the Retail World
Overheard that the bricks and mortar retailers have been decimated in recent years. Many of them have been beaten by the e-commerce, especially from Amazon. The pandemic has just speeded up their defeat, and without it they could have lingered a bit longer.
At this pandemic, we have seen giant shopping malls are dying, first with the C-malls. Even those big-box stores where they are located at the strip malls throughout the exurbs are suffering at one time. But lately, companies like Best Buy, Dick’s Sporting Goods and Home Depot have even managed to strive.
Primark is Going for Sustainable – FT, September 15, 2021
Primark, a $30 billion fast-fashion company is saying that it will make clothes more durable and commit to using more sustainable materials in all its garments by 2030.
This fashion is accounted for more carbon emissions than all the airlines and shipping industry combined.
Primark at this time is committed to use all its clothing recyclable in the next nine years. It has already a range under the Primark Cares which is accounted for a quarter of its products.
Global consumption of apparel reached its height of 62 million metric tons in 2019 and fast-fashion brands have been known for its lower-quality clothes selling cheaply while chasing the fashion trend. It ended up also known as the disposable-fashion. As a result, 57% of all clothing ended up in landfill.
Other fast-fashion rivals—H&M and Inditex have pledged to make all of their products from sustainable materials before the end of the decade.
Luxury Brands in China – FT, August 28, 2021
Since Xi Jinping announced that China would “regulate excessive high incomes and encourage high-income groups and enterprises to return more to society” not only the shares of the luxury brands plummeted, but the market also started to tick up slightly and too prudent to keep a low profile. They might consider toning down on the marketing campaign and not to emphasize on exclusivity and elitism.
Analysts said that China may boost taxes on expensive products, crack down on influencers who flaunt of social media. Will also imply strict border control to stop the daigou. But everything is too early to say until specific policy would be announced.
Retail Sales in the US – New York Times, September 17, 2021
In August the sales in the stores increased slightly by 0.7% after a decline in July for 1.8%. The rise was due to the spending on clothing, electronics, furniture and home goods.
But business in restaurants and bars fall after the rise in July. People took the blame on the virus.
Sales of sporting goods and musical instruments and at bookstores rose because of the students who were preparing for the “back to school”.
Sales of cars and auto-parts were down 4.5% in August. The auto industry was hit by a shortage of computer chips.
Analysts at Bank of America reported that spending on clothing increased by 27% for the week ending September 11 compared with the same period last year. Sales at department stores increased by 21%, and furniture rose by 9% compared with same period last year.
Marks & Spencer Closing French Stores – New York Times, September 17, 2021
The largest British retailer, Marks & Spencer, has been weighing its operation in France for the cost and the hurdles of its supply chain, has finally decided to close its 11 food stores in France. The food products were used to process in Northampton, in the middle of England, shipped across the English Channel every day before the Brexit. As the result the stores’ shelves are empty, unable to serve fresh and chilled products are turning the customers away.
The rules of origin requirement have forced clothing retailers to move the distribution center to European Union. And the current situation of the supply chain has further upended by the pandemic.
The stores in France, which are currently run by the franchisee in France, will be closed by the end of the year. Nine other stores in France, run by another partner will stay open. The website which sells mostly clothes and home products will remain.
Marks & Spencer’s other international business in India, the Middle East and Asia, has also been affected by the Covid-19. The revenue dropped by 17% in the year to March.
New Retail Landscape in the New York City – New York Times, September 20, 2021
In the heart of the Manhattan’s garment district, many of these chain food joints have shuttered their doors. The Delta variant has again delayed plans by many companies to bring back their employees to the offices. Those eateries have opened are found to operate with a reduced hours and limited menus. With the pandemic keeping millions of New York City office employees’ home for the past year resulted restaurants, coffee shops, apparel retailers and many others to struggle to stay afloat.
By the end of 2020, the number of chain stores in Manhattan, everything from drugstores to clothing retailers, have fallen by more than 17% from 2019.
Across Manhattan, a quarter of those street-level stores in Lower Manhattan are available for rent, it is more desperate in Herald Square.
But in any big international city, one person’s downturn can be another person’s opportunity. Both new restaurants and apparel retailers have signed up new leases. But it maybe more in the residential neighborhood than the commercial areas as there are still many uncertainties about the return of the office staff.
With the stopping of those welfare checks for the restaurant workers this week, and the rumor about the dining areas set up outside the restaurants are going to be abolished by the end of December, this is going to be very challenging again for New York.
Nike Sales Miss Estimates – Bloomberg, September 23, 2021
Analysts’ estimate was $12.5 billion for the quarter ended August 31, but Nike’s sale rose 12% to $12.2 billion. The demand from the consumers is still strong but the supply chain issues in Asia that are hindering sales around the world. The resurgence of Covid-19’s cases that lead to factory closures in Vietnam, high shipping cost and lengthy transit time are the causes.
But the good news was the earnings rose to $1.16 a share, compared with the estimates of $1.12 a share.
Copenhagen Fashion Summit – BOF, October 3, 2021
This will be held online from October 7 to 8 and this year’s focus is on whether the fashion businesses can be grown sustainably. This is setting the tone for November’s UN Climate Change Conference in Glasgow for the new targets going forward.
The annual Copenhagen Fashion Summit is to check the large brands how do they think about sustainability and will draw the participation of the climate and labor activists.
In the past, the event was focusing on raising the awareness of fashion’s negative on the environment and its people and resulted brands to set lofty goals. This resulted the overall progress being halted.
This year, the theme is more fundamental, but to tell the fashion brands to refrain from higher sales, bigger profits and be more aware of their obligation to the planet tend not to be popular with their investors.
We will follow the progress of the summit and report to our readers accordingly.
Supply Chain Issue is Affecting H&M – BOF, September 30, 2021
Although its sales gained slightly in September, but its third quarter slide 14%. The bulk of its clothes from Asia is strained in the bottleneck as it is delaying shipments.
Between factories being lockdown due to the pandemic and the shipment crunch, H&M has found it hard to serve its core of those younger customers who are buying outfits to go to pubs, clubs and restaurants.
Power Cuts in China Would Increase China’s Textile Prices – BOF, September 30, 2021
China is blaming it on various reasons—the surging demand for exports as other countries have reopened their market, coal supply from Australia has stopped, and aiming at making the country carbon neutral by 2060 have further slowed coal production. The power shutdown would perhaps continue until December 2021 and give Beijing the goal to curb emissions for the coming Winter Olympics in February 2022.
The planned shutdowns in industrial hubs like Jiangsu, Zhejiang and Guangdong could send prices of textiles and garments up in the coming weeks.
Already raw materials, textiles, labor and shipping have all become more expensive since the beginning of the year.
China’s producer-price index, a gauge of factory-price, rose 6.8% in April, the fastest pace since October 2017, according to China’s National Bureau of Statistics. It was already predicted that in Q2 and Q3, the increase could become more pronounced. And already the consumer price index jumped in comparison to a year earlier.
Fast Fashion Business Model’s Challenge – The Telegraph, September 30, 2021
If we look back at the last decade, it was a truly golden period for the fast fashion industry. H&M and Zara have expanded at the pace that have never seen before and this have allowed them to expand to the four corners of the world.
On the other hand, Primark has taken over the UK high street. Already the household names like Debenhams and House of Fraser have ceased to exist. The only remaining M&S and John Lewis are continuing to struggle in the clothing market.
Next is the only one to be able to hold themselves and maintained their share price.
Online is the only fashion retail business, like Asos and Boohoo, that is performing exceptionally well. And it is interesting to know that Boohoo, with its full list of 1,100 suppliers, more than a third are based in China, 205 are from Turkey, 151 are from India and just 96 of them are from the UK.
Net-a-Porter is Entering into Resale – Fashionista, October 1, 2021
The market for secondhand clothing and accessories has grown rapidly, in fact 21 times faster than the overall apparel retail market over the last few years. More and more consumers are embracing the buying and selling of used designer goods through the sales platform like The Real Real, Rebag and Fashionphile.
Unlike before, the luxury brands and retailers are shifting to the consumer behavior, instead of fighting it. It is like, if you cannot fight them, join them.
The luxury e-commerce giant, Net-a-Porter is the latest to join them. It has announced it partnering with resale technology provider, Reflaunt, to launch a program that encourage customers the lifespan of their designer pieces by reselling them.
Net-a-Porter is becoming the enabler of re-commerce and using Reflaunt as the backend of this operation by collecting them from the seller’s homes, authentication, pricing recommendation, professional photography and listing by uploading them to other international marketplaces.
China Has Jumped on the Bandwagon of Luxury Resale Boom – Jing Daily Report, October 4, 2021
Chinese have traditionally been perceived as resistant to used goods, but it is now a leading market both for new luxury goods and a source of vast quantities of pre-owned luxury items. Its younger consumers under the age of 30 have proved to be more open for purchasing used goods. These digital-native shoppers have been the driving force for the sourcing and selling of the secondhand luxury items.
This is a market for opportunities but also the risks that one cannot neglect as the fake products would find their way into this lucrative market segment. It is advisable to be careful when you are buying the secondhand luxury products and the market platform would be very important to choose to shop with.
Debenhams Launched Its Marketplace Platform Under Boohoo – Just Style, October 6, 2021
Powered by Miraki Marketing Platform, Debenhams has evolved into a new era of digital commerce and rapidly growing its products to offer to its customers.
Debenhams is known for its high brand awareness and has its own customer base. This time it is creating the UK’s largest marketplace across fashion, beauty, sport and homeware.
Boohoo Group is teaming up with Miraki, and through its technology, expertise and seller ecosystem, Miraki is pushing Debenham’s digital transformation and maintain the iconic brand that has been created 240 years ago.
Debenhams was acquired by Boohoo in January of this year.
Nike’s High-Tech Research and Innovation Lab – Just-Style, October 7, 2021
Its high-tech Nike Sport Research Lab (NSRL) houses biomechanical researchers, robotics experts, computational designers and patent pro, together with 80-plus new prototype machines, 825 pieces of testing equipment, 97 force plates and four environmental chambers. It has also the world’s largest motion-capture installation comprising 400 cameras.
This lab is also highly environmentally sustainable and uses 908 solar panels on its roof, 100% renewable electricity and 40% less water wastage.
Recently Nike unveiled its most sustainability-minded performance shoes yet with the Nike Air Zoom Aphhafly Next Nature composed of at least 50% total recycled content by weight.
Benetton Is Moving Its Production Back to Its Home Turf – Just Style, October 5, 2021
It is found when Benetton said the shipping container that used to cost $1,200 to $1,500 can now become $10,000 to $15,000 and without a certainty date of delivery is putting the group to come to a strategic decision. It has decided to move the production closer in Europe and to have a better control. It is said to grow its production in Turkey, Croatia, Tunisia and Egypt, and to halve Asia production by end-2022.
Although the production cost is 20% lower in Vietnam and Bangladesh versus Mediterranean countries, the benefits can be offset by longer lead time and unpredictable supply chain challenge.
Retail Labor Shortage – BOF, October 6, 2021
During this pandemic there is this mass psychological phenomenon called the “Great Resignation” as cited by BOF. Through my personal observation, workers across many industries especially those restaurant workers, left their jobs and now they need a good reason to steer them back to their former positions. At this time, millions of people have reassessed what they want from their jobs—professional development, pay, flexibility and family life. And better still, all of the four.
For retail as the sales associate position, normally the earning is only the minimum wage per hour that they would get paid. At this time when the stores are hiring hundreds of thousands of workers to handle the holiday rush, they are raising pay and offer benefits to lure applicants. Some of the retailers even offer sign-on bonuses.
Earlier on we heard that Kohl’s are offering sign-up bonuses up to $400 and Target is indicating some seasonal positions will become permanent. Walmart is even promising to pay college tuition for store associates.
The average annual salary for a salesperson working in a clothing store was $28,680, or $13.79 per hour in 2020 and according to the US Bureau of Labor Statistics, it is below the living wage in the US.
Target has raised the wages to $15 per hour this year, but many nationwide fashion chains are still paying an average of $12 an hour.
In the fashion business the margins are very thin and to pay the sales associated at such a low hourly rate is nothing new in the industry. Now they will have to decide.
During this covid period, we have to reexamine the system and come up with some major overhaul. We have talked enough to work the sustainable way and it is time for the retail industry to look into their costing structure and make happy and skill shop associates to work efficiently. After all, it is still a business that is very much service oriented. We have a lot of rethinking to do.
Wellness-Themed Shopping Concept in Shanghai – Inside Retail, October 6, 2021
Taikoo Li Qiantan (前灘太古里), a retail complex, which is Swire Properties’ latest joint-venture with Shanghai Lujiazui Group (上海陸家嘴集團), has recently opened in Shanghai. It followed on what was opened in Beijing known as the Taikoo Li Sanlitun (北京三里屯太古里) and in Chengdu known as Sino-Ocean Taikoo Li (成都遠洋太古里).
It is a shopping area spanning in a 120,000 square meters in the heart of the Shanghai Pudong New Area. It is featuring a wellness-theme concept with open-plan and lane-driven architectural design. It is a wide expanse of open green space and lanes across the ground level and rooftop are connected by an 80-meter-long scenic bridge overlooking the Huangpu River.
It is divided into two main areas—Stone Zone and Wood Zone, and the project has 250 premium shops, and you can find big brand names like Balenciaga, Bulgari, Cartier, Dior, Fendi, Giorgio Armani, Gucci, Hermes, Loewe, Louis Vuitton, Moncler, Prada and Saint Laurent.
Anchor tenants on the rooftop include Japan’s Tsutaya Books, whose 3,000 square meter flagship store is there.
The Japanese professional sports brand Asics opened its first “Running Station” on the Chinese mainland. The Taikoo Li Qiantan is highlighted with an AI digitized track dubbed “Sky Loop” surround the rooftop of the complex. The 450-meters running track provides smart changing rooms as well as a gentle slope that rises to the roof of Tsutaya Books.