What Kind Of Competitors Are H&M Facing In The Three Or Four Tier Cities?

In March 21, 2018, H&M finally opened its official flagship store in Tmall.

Compared to many years ago, it has worked hard at the Jingdong's flagship store GAP in the double 11 sales volume, and even though it also started late, but at least in the 4 years of Zara in Tmall, the step taken by H&M is a bit late.

But this time, H&M is very clear about what he wants to get on Tmall.

"Those consumers in the three or four tier cities, where the H&M brand may not be known.

They might be able to find us on Tmall. "

In the media interview on the day of Tmall store opening, Magnus Olsson, general manager of H&M Greater China said.

The Tmall store is on the line. The new sauce wants to know if H&M's attempt is exactly the same as its expectations.

Data will not lie.

The first step is to pick up the first 10 pages of the H&M Tmall flagship store in the new sauce selection. From the actual results of the online days, we can see what kind of consumers H&M actually found on China's e-commerce platform.

At the same time, Xin Yi gets all the product price information on the official website platform which was launched on 2014 in China, which is consistent with the pricing of H&M in the physical store.

In order to make a better comparison, we also analyzed the official website of several fast fashion brands and local fashion brands and the price data of Tmall's best sellers.

The average selling price of Tmall's best seller of the four fast fashion brands is lower than the average price of its official website products. The difference between the two data of H&M even reached nearly 100 yuan.

If compared with several common local brands, except for Zara, the other three fast fashion brands of Tmall have a lower average price of the best seller than Hai Lan's home and hot air, which is only a few dozen yuan more than that of Metersbonwe and Metersbonwe.

This is not consistent with our impression of fast fashion brand positioning.

In Tmall, H&M wants to reach its customers in the wider Chinese market.

But in fact, it will find that it has to face the same problems encountered when sinking down the line. The competitors are totally different from the first tier cities and the new first tier cities.

In the first tier and the first tier cities, fast fashion brands are more like products in the rich fashion market, striving for consumers' collocation needs and fragmented consumer scenarios; and in the three or four tier cities, pricing and brand tonal will tend to be considered as "formal attire", which requires facing the positive challenges of local fashion brands that have been there for a long time.

Unlike fast fashion brands, the first tier cities start and sink gradually, and local fashion brands build more stable basic consumer markets in the three or four tier cities, and then gradually upgrade brands or develop new product lines.

In order to quantify the difference between different brand layout strategies, Xin Yi tries to calculate the connection degree of each brand in different cities, and uses network method to visually display the characteristics of these brand layout.

This algorithm is based on brand enterprise network algorithm.

Specifically, in each brand, each city is regarded as a node in its distribution network.

According to the algorithm, we define the degree of association between any two cities, which is the product of the number of stores in the two cities.

To calculate the degree of contact of a city, that is, the importance of it as a node, it is necessary to sum up the degree of brand contact between the city and other cities by the sum of the degree of interrelation between all cities.

The percentage of the brand is the relationship between the brand and the city.

Obviously, the layout of the 12 brands in the different grades of cities has two typical types.

One is represented by Metersbonwe, from the first tier to the five tier, the urban brand coverage is relatively uniform, the layout is close to a quadrilateral, the other is represented by UNIQLO, the shape is pulled up in the head city, and the whole is closer to the triangle.

The difference between homogenization and polarization reflects the bottom-up expansion logic of local fashion brands to a certain extent, which is different from the top-down development strategy of foreign brands.

It needs to be pointed out that hot air is almost the same among these local brands and the most similar local brands with foreign capital brands.

If we link each brand in different cities, we can see more differences in brand layout.

For example, Zara, GAP and UNIQLO shops focus almost exclusively on the head city, while Hai Lan's home, Metersbonwe and Semir have a more uniform layout in the rear cities. The H&M that is still trying to expand the new market is in the zone between them. There are 8 node cities in the network that surpass the third ranked Shenzhen in the Gap network.

(again, we need to emphasize that the algorithm of the enterprise network takes more consideration of the importance of nodes in the national network, not just the ratio of the number of stores.

This is closely related to the expansion strategy of H&M in the Chinese mainland market. After five years of rapid development of retail fashion in 2010 to 2014, the first-line market is gradually saturated, and various brands are constantly trying to find new outlets.

To sink into the three or four tier city and change the brand's network layout is one of H&M's choices.

This also reflects the question of "who is H&M".

In different grades of cities, the main competitive brands around H&M are constantly changing: in the first tier and new tier cities, H&M is next to more luxury goods and luxury brands; from three to five tier cities, the possibility of H&M being adjacent to luxury brands is decreasing, and La Natsu Bell, Hai Lan home and Metersbonwe have become H&M's most important neighbors.

This is of course related to the consumption power of the city itself. The number of high-end brand consumers is low in the low tier cities, and few of them are willing to layout in these cities.

It's not easy to get close to those H&M brands that are not yet familiar with the local brands that seem to be of little style. The rich style that follows the fast fashion of global fashion trends is considered to be a bizarre garment, and the "customer service" operation is considered unenthusiastic.

Faced with these consumers who are totally different from the first tier market and are hard to please, H&M obviously has a lot of homework to do.

H&M's sinking attempt in China's cities has obviously dragged its financial performance to a certain extent.

According to the data given in the financial report, the average annual sales volume of a new store opened in 2008 can reach 48 million 250 thousand yuan, while in 2016, the figure only has 2 million 25 thousand yuan.

Affected by this, the average single store revenue of H&M in Hua men store also declined from 23 million 120 thousand yuan in 2015 to 18 million 870 thousand yuan in 2016, and the figure in 2017 was 16 million 850 thousand yuan.

Although H&M's single store revenue is still higher than other brands, the pressure is already obvious. Local brands are more willing to take advantage of their familiarity and foundation for the market, with a lower single store average revenue (including lower cost) as an exchange, and layout more stores in more cities, thus achieving a wider coverage of the consumer market.

The new one found La Natsu Bell's financial data and made a more detailed comparison.

In the context of continuous exposure to online consumption in the apparel retailing industry, the local brand has also seen a decline in its turnover in recent years.

According to La Natsu Bell's own city level classification, the first tier cities are obviously dragging their legs, while the growth of the three tier cities is the main driving force for brand growth.

In these cities, there may even be no H&M at all, and the growth in 2016 has been almost negligible.

It's hard to say what secret weapons H&M can bring out in the three or four tier cities.

Even on the line of Tmall, it means that it needs to see how local brands sell themselves to these consumers in China's e-commerce channels.

Back to Tmall, Xin Yi continues to study how H&M and its competitors are doing product descriptions, such as keywords.

In the electricity supplier industry, the way to write product keywords can be regarded as a knowledge: whether a brand knows how to express itself accurately or accurately, or whether it knows the keyword marketing that is easier to be searched, has a huge impact on its sales.

Obviously, H&M, who just settled in Tmall, is still very unprofessional at this point.

From the name of best-selling products, the number of keywords used by H&M to describe product types and varieties is significantly higher than that of the 12 brands of new one.

In addition to "women's wear", "children's wear", "men's clothing" and "baby" are all very frequent vocabularies.

The VERO MODA with higher average price and the word cloud of Metersbonwe, which are positioned at the lower end, all have quite different styles: VERO MODA has obvious vocabulary in describing style, such as "dress", "print" and "letter", while the key words such as "Korean version", "trend" and "leisure" are more in Metersbonwe product description.

We have no reason to think that H&M's clothing will lack such elements as "stamp", "letter", "fashion" and "leisure".

On the contrary, it seems that these product descriptions which fail to express their characteristics accurately obscure the consumers' concerns and may even regard H&M as a main brand of children's clothing.

At this point, H&M may be able to learn from UNIQLO. As the only brand of material description in the product description, which exceeds 10% of the average level, it broke 1 billion yuan in the first minute sales of double 11 last year, and the special materials such as HEATTECH and AIRism are indeed the driving force for many people to pick up UNIQLO with zero points.

Of the four fast fashion brands, H&M seems to be the slowest online, but one of the fastest ones on the Internet.

In any case, it has now seen its competitors in all three or four cities.

In this new market, the new sauce can only hope that H&M will give up his own answer as soon as possible.