Online shops are developing rapidly

GAP, an American clothing retailer, has seen its profits fall since the first quarter of 2015, but it has lost face despite a series of measures such as closing stores and laying off workers. In 2016 alone, GAP closed 75 Old Navy and Banana Republican stores outside North America; GAP’s store in the heart of Chengdu’s Chunxi Road was closed, its second in Chengdu, opening in 2012. The New York Times reported earlier that Instagram and other social media platforms had fallen victim to GAP, with a large number of comments suggesting that the GAP brand was outdated.

Uniqlo, Japan’s fast-fashion giant, also admitted that net profit of its parent company, Fast Retail Group 2016, fell 16.9% year-on-year as a result of the decline. Among them, Japan’s domestic performance and the performance of overseas markets, mainly in Greater China, were not up to par, with operating profits falling by 12.4% and 14.2% year-on-year, respectively.

Spanish fast-fashion brand Mango, whose parent company, Mango MNG Holding SL, posted a net profit of only 4 million euros in fiscal 2015, down 96% from the previous year.

Zara seems to be better. As of July 31, 2016, Zara’s parent company Inditex had sales of about 10.5 billion, up 11% from a year earlier, with net profit of 1.26 billion, of which Zara contributed 66.5%. But the situation is not optimistic: since March last year, Zara is reducing the number of new stores a year, with the intention of slowing the pace of expansion, and the annual new store area plan has been reduced from 8-10% to 6-8%. The excessive expansion speed and price increase will eventually lead to an increase in product inventories and a decline in gross margins.

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