Young People's Fashion: Hot for No Clear Reason, Dropped for No Clear Reason | 2015 Youthification Series

This is part of QDaily's year-end "youthification" series. Here we look at how fast fashion, a business built on young people, changed this year.

In 2015, Zara stuck to its rapid-copying model: in under two weeks, its newest designs travel from headquarters in Spain to 1,947 stores in 88 markets worldwide. H&M entered the 11th year of its designer collaborations; a velvet dress from the latest, Balmain x H&M, was resold online for US$1,599, more than twice the official price. Uniqlo opened 165 new stores in international markets. It keeps stumbling in North America, but on the strength of Greater China its international revenue still rose a comfortable 45%. Gap is still lost. In June it announced it would close 175 underperforming stores in North America. The brand that once set trends with its jeans has spent a long time wondering what young people today actually want.

Gap does not disclose figures for China, so we can only glimpse its position through assorted trend rankings. Of all the lists QDaily published this year, not one "favorite brands of the post-80s and post-90s generations" list mentioned Gap.

The American press has not been kind either. Gap's third-quarter results set it off: "October Performance Raises Concerns Over Gap's Holiday Season," "Gap Is Gradually Losing U.S. Apparel Market Share to Fast-Fashion Rivals," "Gap Lowers Profit Outlook on Weak Sales"... Gap's share of the U.S. apparel market has fallen to 4.7%, below even the mid-market retail chain Target, at 5.4%.

Perhaps Gap stopped being cool long ago, and this year's numbers are simply especially bad. But how did it come to this? This brand was once required study for anyone researching youth culture. It is called Gap precisely to declare that it was different from stuffy, old-fashioned clothing.

Here is another curious thing: the "West Coast look" has gone out of fashion too.

You may never have heard the term. It usually means the style of American West Coast high schoolers: hoodies, denim cutoffs and flip-flops all at once. Still can't picture it? Think of A&F. In fiscal 2014, Abercrombie & Fitch's same-store sales fell 12% year on year, and everyone reported that its nightclub atmosphere and marketing built on muscled men had had their day. Similar brands are faring no better. American Apparel declared bankruptcy this year after years of struggle. American Eagle has been a permanent markdown brand in department stores for years. Aeropostale, whose customers are even younger, has not escaped either: over the Thanksgiving shopping season that just ended, its store sales fell 1.5% year on year, and on the first trading day after the holiday its shares dropped more than 14%.

Abercrombie & Fitch, with its American West look. Image from yolasite.com

When we interviewed Gap earlier, it insisted it is not fast fashion. Uniqlo says the same. But the public sees clearly: if they say you are fast fashion, you are fast fashion. At the very least, you are among the handful of options young people consider. In China, what can a young person with a few hundred yuan buy? Basically these: Uniqlo, Zara, H&M, Gap, and, oh yes, a crowd of Taobao sellers of factory overruns and leftover stock, Taobao-native brands, and a few niche buyer-curated e-commerce sites. The many fading brands in shopping malls still find some buyers, and there is the Hong Kong streetwear multi-brand store i.t, though for that you'd wait for the sales, wouldn't you?

This, then, is the competition fast fashion faces: online versus offline, mass versus niche, basics versus trend pieces. It mirrors young people's shopping mindset almost perfectly. They don't want to fall behind, but they don't want to follow the crowd either. Nothing too expensive, but nothing that looks cheap. Ideally everything is quick and convenient, yet if a physical store is cool enough, they will still talk it up to everyone in their circle.

To analyze Gap's predicament, and whether its problems will recur at other companies, you have to face these shifts in consumption head-on. These seemingly contradictory attitudes have always existed; faster and faster information flow and dense social networks have simply made them louder.

As we set out to discuss the youthification of fast fashion, we asked ourselves a question: isn't fast fashion already a business built on young people? So what does "youthification" mean for it?

Take Gap again. Real competition always comes down to the product. Once consumers decide you "don't look good," they need hardly any other reason to drop you. Quartz fashion reporter Marc Bain put it well: "Consumers in rich countries don't buy clothes because they need them; they are chasing a sensory sugar rush." And that rush must not only be pretty; the more often it comes, the better.

This is exactly what Gap is criticized for: its product cycle is too long and its designs aren't fashionable enough. And compared with H&M or Uniqlo, its prices are not friendly. Gap's global CEO Arthur Peck named still more problems: frequent departures of senior executives, a rocky overseas expansion, and the failure of omnichannel services in the U.S. (in-store pickup, store appointments, in-store stock lookup and so on).

Did all this happen overnight? Of course not. Gap simply never adjusted or responded. In other words, to do business with young people, you must change products, marketing and channels far faster than the traditional clothing industry does.

We have picked out several fast-fashion trends worth noting in 2015. Don't assume cross-brand collaborations and flashy posters are all it takes: from product to marketing, getting close to young people takes a great deal of work.

First, the line between sportswear and fast fashion is blurring.

H&M's collaboration with Alexander Wang produced a collection that looks fit for the gym. H&M is also promoting H&M Sport, a sports line many people don't know exists. Uniqlo launched a tennis collection several years ago and signed Novak Djokovic as brand ambassador. Its AIRism line, launched in 2013, sold on sweat-wicking and comfort; new items came out this year, and its sports bras and activewear sell well. As we have written before, Nike named Uniqlo as a competitor in its annual report last year. The most obvious difference is price: compare the two brands' sports skirts, and Nike's costs more than five times Uniqlo's.

The athleisure collaboration between H&M and Alexander Wang

H&M's sportswear. Image from lewproductions.com

Second, people's spending is more scattered.

It is hard to find anyone dressed head to toe in fast fashion, or head to toe in luxury, and mixing the two stopped being news long ago. In fashion blogs that teach styling and fashion magazines that showcase trending items, fast fashion sits beside the big labels, and you can't tell whether that is the editors' choice or a brand's PR strategy.

In the U.S., fast fashion faces not only sports brands such as Nike and Under Armour moving into fashion, but also niche fashion e-commerce brands such as Everlane and Spring. Their sales are nowhere near comparable yet, but these small brands put more weight on close contact with customers and can offer young people a different taste.

It is increasingly obvious that young people are changing where they shop. During this year's Singles' Day ("Double 11") shopping festival, Uniqlo's sales ranked fourth across all categories on Tmall and first in apparel, topping 600 million yuan. Uniqlo was the first fast-fashion brand to sell online in China, though its global e-commerce reach is fairly cautious, confined to Asia and North America. Zara and H&M, by comparison, have taken e-commerce to 27 and 22 markets worldwide, respectively. Leave the product aside, and e-commerce solves a problem of efficiency. Many brands talk about their online services alongside the O2O (online-to-offline) concept, but few have actually done it well.

Third, fast fashion, like every other brand, has entered the Instagram era.

More precisely, brands must do something visually striking and creative on social networks to keep customers interested and loyal. They did this before too; in 2015 there are simply more ways to do it.

Zara's Instagram homepage, with 7.9 million followers

Uniqlo likes to market on WeChat, handing out red envelopes freely and using QR codes nimbly. But on that platform it stresses its low prices, and may overlook young consumers' interest in individuality and brand image.

Zara has turned Instagram into a digital lookbook, suggesting several outfits a day and never forgetting to include product codes (Instagram doesn't allow clickable web links in posts). The most interesting part: even such blunt, joyless self-promotion still draws more than 60,000 likes per post, because the pictures are beautiful and the taste (apparently) refined enough. It also runs a series called "ZaraEditorials," working with models around the world and photographing them in the season's clothes. Its picks range from big names such as Marjan Jonkman to distinctive newcomers, such as the tomboyish Harmony Boucher or Sophia Ahrens. Zara is not a company that just keeps its head down making products; it understands the power of KOLs (key opinion leaders), and when the two come together, of course it works every time.

There are also countless fan accounts riding on Zara's popularity, such as Zara_kids, Zaraman and Zaramania, each with hundreds of thousands or millions of followers. You don't know who runs them, and it doesn't matter. The sheer number of imitators shows how popular Zara is on social media.

Social media buzz shows up directly in the data too. According to the Baidu Index, over the past 11 months Uniqlo's search index has been far ahead, eight times that of second-placed H&M. In other words, for every friend talking about H&M, eight might be talking about Uniqlo, and the other two brands come up even less. That said, Uniqlo owes this partly to the "fitting room" incident in July; before that, it ranked third in search popularity on the Chinese internet. Incidentally, anyone who thinks that incident was a Uniqlo marketing stunt probably doesn't understand how big companies conduct themselves.

Fourth, fast fashion needs a brand too.

In an interview with the business site The Business of Fashion, Uniqlo creative director Yukihiro Katsuta said that the company's most urgent task is to make consumers understand what kind of company Uniqlo really is.

To that end, it is stepping up brand marketing. It wants to sell not just products but a "lifestyle." This year, for example, it launched a magazine that uses customers' stories to show how Uniqlo sees the relationship between clothing, life and self. The magazine is also a concrete expression of Uniqlo's LifeWear concept.

A story in The Life Wear Book magazine

COS, H&M's upscale sister brand, has long been a good example here; it knows exactly what values it wants to convey. It opened a pop-up store in downtown Los Angeles to show its autumn/winter 2015 collection. The spare decor, the generous empty space and the use of mirrors quickly make you forget it is H&M's sister brand; the store feels refined and tasteful. Its New York store is just as carefully composed: New York Times writer Matthew Schneier described its neckties as laid out "like sardines carefully arranged on a plate". In 2014 it also ran a sound experiment with a Dutch artist, conveying the brand's elegant, refined values through play.

The pop-up store of COS, H&M's sister brand, in Los Angeles

COS again: this is how its New York store is laid out

Finally, everyone has realized that stores have to be in the right places.

Fast fashion is now a favorite of shopping malls, taking the best spots on each floor alongside the big luxury labels. But whether because of the property bubble or shifts in their own strategy, fast-fashion brands are clearly thinking harder about where to open stores. This year Zara announced that once the group reaches 500 stores in Greater China, it will slow new openings. Its earlier aggressive expansion ran into the commercial property bubble, and poor locations dragged down per-store sales and pushed up operating costs. From now on, it will focus on flagship stores in key cities rather than rushing into third- and fourth-tier cities where people have less to spend.

Stores are also no longer just for selling. Customer experience, product concepts and brand display matter more and more to fast fashion. The Magic for All concept store that Uniqlo opened with Disney this September is a model case. It occupies the fifth floor of Uniqlo's Huaihai Road flagship in Shanghai. It is called a "concept store" because its layout and product displays are playful and artistic. Besides the UT line made with Disney, it sells Mickey Mouse dolls made from Uniqlo flannel and fleece, and it has a sound-activated interactive area: shout loudly enough and you can control the electronic screen and have your photo taken.

H&M stores offer similar interaction. One H&M store in Midtown Manhattan has a small runway where shoppers can strut a lap in the clothes they have just bought, and the walk is captured on video. Clearly, H&M wants you not just to look fashionable but to feel what it is like to be a fashion model.

There are other changes. H&M and Gap have both started (trial) selling cosmetics in stores, and Zara's home line keeps expanding to draw young people in. Incidentally, more and more brands from its parent company Inditex have arrived in China, from Zara Home to Massimo Dutti, which you may not know, and all of them add to its revenue.

Fast fashion is a business of efficiency. Some of what it sells may meet your basic clothing needs, but the industry thrives mainly on young people's hunger for novelty. And working out what young people will find new may be the hardest thing in retail.

The Four Big Fast-Fashion Companies in 2015: Operating Overview

H&M: Total sales in fiscal 2014 were about US$23.799 billion, up 17.67% year on year; the group has 3,511 stores worldwide (including H&M, COS, & Other Stories and others).

Zara: Total sales in fiscal 2014 were about US$19.274 billion, up 8.32% year on year; the group has 6,683 stores worldwide (including Zara, Zara Home, Massimo Dutti and others).

Uniqlo: Total sales in fiscal 2015 were about US$16.817 billion, up 21.6% year on year; the group has 2,978 stores worldwide (including Uniqlo, GU, Theory and others).

Gap: Total sales in fiscal 2014 were about US$16.435 billion, up 1.77% year on year; the group has 3,709 stores worldwide (including Gap, Old Navy, Banana Republic and others).

The Four Big Fast-Fashion Companies in 2015: Timeline of Major Events

October 2014: John C Jay, formerly creative director at W+K, joined Uniqlo as global creative director of Fast Retailing.

March 2015: Gap creative director Rebecca Bay left. Wendi Goldman replaced her under a new title, vice president of product design and development; Gap no longer has a global creative director.

May 2015: H&M announced it would launch the H&M Beauty cosmetics line.

August 2015: Zara signed an exclusive agreement with Alibaba making Tmall its only third-party online sales platform in China.

August 2015: Uniqlo and Disney launched the "Magic for All" product line.

August 2015: Zara announced it would slow store openings once it reaches 500 stores in Greater China.

September 2015: The Uniqlo-Disney "Magic for All" concept store opened at Uniqlo's Huaihai Road flagship in Shanghai.

November 2015: Balmain x H&M went on sale.

October 2015: Uniqlo x Lemaire went on sale.

November 2015: Gap marked five years in Greater China.

Cover image from Hellorf Creative