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Analysis of China’s clothing market, where is the opportunity after the epidemic? From depth

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The following is the Analysis of China’s clothing market, where is the opportunity after the epidemic? From depth recommended by recordtrend.com. And this article belongs to the classification: Life data.

China’s clothing industry was hit by the epidemic, forcing brands and retailers to temporarily close many of the country’s offline stores, leading to a decline in clothing sales. However, shortly after the epidemic ended, China’s clothing market began to recover its growth momentum from the third quarter. This is largely due to the strict measures taken by the government to control the epidemic, and the package of economic stimulus plan, which has successfully enhanced consumer confidence and encouraged consumption, and promoted the rapid rebound of clothing sales.

During the epidemic period, sportswear has become the fastest growing sub industry. We expect that the trend of pursuing health and fitness will continue to drive the growth of sportswear sales this year and next. In addition, through the integration of offline resources and online channels, several major sportswear brands have become successful cases of maintaining growth during the epidemic period.

In the face of the epidemic, all kinds of successful and failed brands highlight the importance of digital transformation of retail industry. More than ever, e-commerce has become the main source of revenue for brands, and those brands that have successfully implemented the digital strategy will continue to flourish in the post epidemic era

The epidemic has led to negative growth

overview

In 2019, the total value of China’s clothing market will be 2.185 trillion yuan, with a year-on-year growth of 5.2%,

From 2014 to 2019, the growth momentum of China’s clothing market is stable, with a compound annual growth rate of 6.1%.

However, the new covid-19 outbreak has caused a serious blow to the clothing market. At the beginning of the outbreak at the end of 2019, many clothing retailers have to temporarily close their stores or shorten their business hours due to compulsory isolation and social isolation. Although consumers are forced to stay at home, so that those brands and retailers with relatively mature online business can reduce the sales decline caused by the epidemic, due to the interruption of marketing activities and the forced closure of stores, many physical stores that rely heavily on offline sales have suffered a heavy blow.

China’s clothing sales in 2014-2019

From January 2020 to November 2020, retail sales of clothing and footwear fell 7.9% year-on-year, according to the National Bureau of statistics. Covid-19, although the data have been improving since April, we still expect that the total sales volume of the clothing market will have a negative digit growth in 2020. In view of the previous new crown epidemic situation, we will adjust it from the previous estimated year-on-year growth of about 3%.

Accumulated retail sales of clothing and footwear from January to November 2020

Nevertheless, China’s covid-19 epidemic has been basically controlled, and the central government has recently adopted a series of stimulus measures, including the issuance of billions of dollars worth of vouchers throughout the country to stimulate consumer spending and shopping in stores. Chinese consumers began to show higher confidence and willingness to spend in the three quarter of this year. In August, China’s total retail sales of consumer goods returned to the growth range for the first time this year, with a year-on-year growth of 0.5%. Meanwhile, the retail sales of clothing and footwear also achieved the first positive growth this year, with a year-on-year growth of 4.2% in the same month. A few months after the epidemic was blocked, the rebound in consumer demand also contributed to a sustained rebound in retail spending in September and October, with sales of clothing and footwear up 8.3% and 12.2% year-on-year, respectively

Growth of total retail sales of consumer goods and clothing and footwear from January to November 2020

The growth rate of major garment sub industries will slow down in 2019

There may be negative growth in 2020

Sub industry

Due to the overall macroeconomic uncertainty, the sales growth of the four major sub industries of China’s clothing market in 2019 is slower than that in 2018.

By category, in terms of sales in 2019, women’s wear is still the largest sub industry in China’s clothing market, while the annual sales of sportswear and children’s wear continue to maintain double-digit year-on-year growth, surpassing women’s wear and men’s wear.

Under the new covid-19 impact, the main clothing sub sectors, especially women’s wear and men’s clothing, will have negative growth in total sales in 2020.

Sales volume of major garment sub industries from 2014 to 2019

Women’s wear: the overall uncertainty of the market and the gradual saturation of the market inhibit the growth of women’s wear industry. Sales growth in the industry dropped from 7.6% in 2018 to 4.4% in 2019, lower than the 5.2% year-on-year growth rate of total clothing sales in 2019. Women’s clothing industry accounted for 47.7% of China’s total clothing sales in 2019, slightly lower than 48.1% in 2018.

The share of men’s clothing industry in China’s clothing market is second only to women’s clothing. Similar to the women’s clothing market, the men’s clothing market tends to be saturated, with a year-on-year growth rate of 3.9% in 2019 from 6.5% in 2018. Men’s wear accounted for 27.2% of total clothing sales in 2019, down from 27.6% in 2018.

The performance of children’s wear is better than that of women’s wear and men’s wear. Driven by the increase of per capita children’s wear expenditure, the children’s wear industry will achieve double-digit growth for the fifth consecutive year in 2019, with a year-on-year growth of 14.3%. Although China’s birth rate continues to decline in 2019, a new generation of parents show a stronger willingness to spend on their children. Many of them are willing to pay higher prices for safe and high-quality products, which is also an important support for the strong growth of the children’s clothing industry.

Sportswear continues to be the industry with the highest sales growth among the four major sub industries, with a year-on-year growth of 17.3% in 2019, and continues to maintain a double-digit growth rate. As Chinese consumers, especially the younger generation, become more health conscious and exercise more frequently during the epidemic, we remain optimistic about the growth potential of sportswear and expect the industry to maintain a relatively strong growth trend in the next few years.

Online retail will show explosive growth

online shopping

Over the years, under the fierce market competition and the challenge of e-commerce, the clothing sales of department stores continue to shrink. Considering that since covid-19 has been launched, online shopping has become a new normal. Even after the outbreak, many consumers will still retain their online shopping habits. Therefore, we believe that online retail will grow rapidly in 2020 and become the main distribution channel for clothing and footwear. It is expected that more physical retailers will strengthen online business and digital marketing more firmly, and make use of online shopping trend to realize. The growing shift to online shopping will further accelerate the digital transformation among clothing participants, prompting brands and retailers to reconsider their digital strategies in order to maintain their relevance and competitiveness in the market.

Market share of China’s clothing and footwear distribution channels, 2014-2019

In order to offset the decline in in in store sales due to the epidemic, as well as cash from consumers’ online shopping frenzy as soon as possible, many brands and retailers have shifted their sales focus to online, and adopted innovative digital marketing methods, such as online live broadcast, social media platform and group chat, to maintain customer participation and promote their products and services.

For example, during the outbreak of the epidemic, Chinese clothing brand d’zzit and its sister brand dazzle added new marketing functions to their wechat apps. The new features enable brands to use product marketing activities, wechat group, wechat circle of friends, APP forwarding, live broadcast, etc. to directly sell products on their wechat apps. According to the data, dazzle and d’zzit’s sales exceeded 4 million yuan on the day of new function release.

During the epidemic, more and more clothing companies have opened accounts in shaking tiktok, maintaining interaction with consumers and their interest in products.

Tiktok released a white paper in May, which showed that since 2019 3, the number of tiktok accounts has increased 5.36 times, the click through rate has increased by 1.96, the number of uploaded videos has increased by 5.18 times, the number of interactive videos has increased 1.84 times, and the number of fans has increased 3.13 times. The report also shows tiktok accounts for most of the clothing companies from Guangdong, Jiangsu and Zhejiang.

Sportswear brands dominate China’s top ten apparel brands

Top ten brands

In 2019, 70% of China’s top 10 clothing brands will be sports brands, including international brands Adidas, Nike, sketch and Filo, and domestic brands including Anta, Li Ning and Tebu. Covid-19, China is now in the forefront of the new era. As more and more people are inclined to a healthier lifestyle and start fitness during the new crown, we expect that the sportswear manufacturers will continue to dominate the top ten brands this year and next year, and will continue to grow at the high demand of Chinese consumers. We also predict that with the increase of people’s demand for sportswear, more non sports brands will enter the field of sportswear.

Top 10 clothing brands in China in 2019

Covid-19, most brands in the first half of 2020 were negative growth due to the new crown epidemic. Nike announced a 0.6% year-on-year drop in sales in the past quarter (June to August 2020), while Sketch’s third quarter results also fell 3.9% year-on-year. However, the Chinese market shows strong signs of recovery, which can be reflected in the sales data. Contrary to the global trend, Nike’s sales in China have increased by 6% in the past quarter. Even in the second quarter of this year, lululemon still performed well in the Chinese market, with total sales up 30% year-on-year. Globally, in the third quarter of this year, lululemon’s global sales grew 45% year-on-year, with the Chinese market accounting for more than 100%.

Despite the outbreak of covid-19, many online sales of major sports apparel brands have increased significantly this year, further consolidating the main trend of e-commerce in the future of apparel retailing. Despite the overall negative growth, Nike’s online sales in the past quarter still grew 82% year-on-year, while lululemon’s e-commerce sales in the Chinese market in the second quarter of this year increased by an astonishing 136%. In addition, this year’s double 11, Adidas broke through 100 million yuan of sales in one minute. On the same day, the official flagship store of Li Ning tmall achieved sales of 770 million yuan, while Anta’s total sales reached 2.84 billion yuan.

Covid-19 before the outbreak of new crown, many brands have shifted to online sales. For example, in addition to online sales channels, Nike is also actively developing digital touch points. Nike’s membership program and fitness app have strengthened the brand’s long-term sustainability beyond products and the brand loyalty of consumers, and these efforts have indeed paid off. Since the outbreak of covid-19, 30% of Nike’s total sales came from the electricity supplier channel, and the target set in 2023 has been completed ahead of schedule. In addition, by using offline stores to serve online orders (projects started before the outbreak of the epidemic), this has laid a solid foundation for a win-win situation in the online and offline markets. Earlier this year, lululemon acquired the smart home gym mirror, which offers customized virtual fitness classes through a mirror with a visual display. According to lululemon’s third quarter earnings call, this year’s revenue of Mir alone is expected to exceed $150 million.

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