Reporter | Chen Qirui
Edit | Lou Shuqin
Over the past decade, Chinese independent designers have undergone a transition from niche circles to becoming bigger market chasers.
Angel Chen and 8ON8 are canada goose and canalis. SAMUEL GUÌ YANG, XU ZHI and CHENPENG have the opportunity to work with commercial brands such as ICICLE, ERDOS and GXG.
The co-branded series made a lot of money and sold sales. The chenpeng and GXG joint models, known for their innovative applications for down materials, sold more than 10,000 units, with one product selling 5,000 units within three minutes of the live broadcast room being revealed.
According to McKinsey, the share of Chinese consumers who prefer to buy local brands increased from 15 percent in 2011 to 85 percent in 2020. According to the report of China Insight Consulting, the size of China's designer brand market increased from 11.1 billion yuan to 56.8 billion yuan between 2011 and 2018, with a compound annual growth rate of 26.3%, and is expected to exceed 90 billion yuan by 2020.
No one can deny the potential of the Chinese market, but the complexity is enough to make people inhale cold air.
Eternal puzzles
Behind the hilarity, independent designers are still careful to survive. A question that has never changed is how to explore the balance between business and creativity.
Founded in 2013, deepmoss is an old brand in the field of independent designers. Deepmoss said it is inconvenient to disclose specific sales figures, but Interface Fashion learned from a number of industry insiders that its commercial operation performance has been quite mature, and many products in tmall flagship stores have double-digit sales, including many high-priced products of two or three thousand yuan.
Other places that reflect maturity are that deepmoss has built its own flexible supply chain, the core product price has been adjusted from 2500 yuan to 6500 yuan to 2000 yuan to 3000 yuan, and the commodity planning team and design team alternately promote product development in the creative process.
Deepmoss CEO Zheng Mingwang said in an interview with Interface Fashion that Deepmoss has a more complete team organizational structure than start-up designer brands. But these practices have made them somehow no longer an independent designer brand in the simple sense of the word, but more like a large-scale clothing company.
Independent designer brands have a strong personal style, with designers leading the creative, production and even more work, usually operating in a studio model.
Fang Yannan, founder of designer brand Susan Fang, mentioned in this interview that the complexity of the original process determines that most of the work can only be done in-house. "Most of our client groups are looking for something more special than mass luxury, so we always need to balance product craftsmanship with artistic innovation.
Susan Fang was shortlisted for the LVMH Designer Award, and the most recent event to make it known to more general consumers was the launch of a co-branded collection with Zara. "Part of the production work is helped by consultants, but they are more about introducing a good supply chain." Fang Yannan added.
The deepening degree of commercialization is often related to the compromise of style positioning and the more affordable price. In terms of price, Interface Fashion understands that the common capital-protected pricing model of designer brands is to double the cost as the wholesale price, and the retail price in the buyer's store is 2.7 times or 2.8 times the wholesale price.
If designers want to become more commercial, on the one hand, they can increase production, on the other hand, they can reduce costs in workmanship and material selection. But not all designers are willing to make such a change.
"Less and finer is precisely the difference between an independent designer brand and a commercial brand." Yang Guidong, founder of designer brand SAMUEL GUÌ YANG, told Interface Fashion.
SAMUEL GUÌ YANG combines traditional Chinese style with Western wear, and tends to use expensive fabrics and complex processes in the production process. This is the reason why the overall production of the brand is small, but in turn, it also shapes the style image through scarcity, and ultimately raises the overall premium level of the brand.
However, the relationship between business and creativity is not just reflected in design, pricing and terminal sales. Marketing such as catwalks and filming has its own commercial attributes, and these promotion methods help designers visualize their creative style, but in order to maintain a balance of payments, some designers need to negotiate cooperation with sponsors.
"It cost $1.3 million to make a show in New York and $1.5 million to do a show in Shanghai. If you add social media operations, blockbuster shooting, video shooting, there is almost a budget of three or four million yuan a year, and we basically allocate 30% to 40% of the budget every year to do marketing. CHENPENG founder Chen Peng told Interface Fashion.
This is also why more and more designers are beginning to adjust the product structure to increase revenue under the premise of maintaining style and tonality.
EVERY YEAR, CHENPENG guarantees that 30% of the models are acceptable to consumers in terms of style and price, and renovates the classics. Susan Fang is adding categories such as knitting and bags, and also plans to offer more intermediate price segments and more everyday items.
But launching a lower-priced product doesn't solve all the problems. Lower prices lead to more consumers, but a bigger market also means more competitors. This makes the question for designers become, "When faced with many brands, why do consumers choose me?" Do they know me? ”
The meaning of the joint name is...
There is probably no strategy to solve these problems of independent Chinese designers more than a joint collaboration.
More popular luxury brands and commercial brands are not new to cooperate with Independent Chinese designers, but no one has given a specific number of specific figures on how much sales conversion the co-brand series can bring to the main line of designer brands.
"The joint name will not have a particularly obvious effect on increasing brand sales in the short term, but we are not doing a joint name for sales." Fang Yannan said. Susan Fang was the first Chinese designer brand to partner with Zara, and the co-branded collection sparked a buzz on social media in early 2022. "For us, this is an opportunity for more consumer groups."
Zara's actual collaboration process with Susan Fang begins in the summer of 2021. Zara opened up to Susan Fang a rich database of consumers and supply chain systems. With the help of a joint name with Zara, Fang Yannan designed the first men's and children's wear collection since the establishment of the brand. She had envisioned that it would take a few years for the two categories to free up energy for design.
The epidemic has made more brands choose to co-brand with Independent Chinese designers.
The rapid recovery of China's high-end consumption has allowed luxury brands to increase investment, hoping to highlight the importance of the Chinese market through cooperation with Chinese brands; On the other hand, commercial brands have accumulated some of their surplus publicity budgets during the early stages of social stagnation, so they are more willing to develop new content and use it to drive transformation.
For independent designer brands, co-branding can measure whether their brands have sufficient commercial value and cultivate potential consumer groups, which is one of the ways to balance business and creativity.
In the past few years, CHENPENG has cooperated with Li Ning, Barabala, and also launched a joint name with Moncler. This series of resumes is an advantage for designers participating in the 2022 Beijing Winter Olympics. In the opening ceremony of the Winter Olympic Games, the design and production of costumes in 5 links was completed by the team led by Chen Peng.
But not all collaboration offers will be considered. Designers often don't choose to work with brands in the same category, positioning, or price point. "If you cooperate with the positioning of the volkswagen women's wear brand or other similar brands, it will inevitably clash with the main line." Chen Peng said.
E-commerce has unlimited potential, but...
Another common view in the industry is that entering the mainstream e-commerce platform can provide designer brands with sinking users that are difficult for most buyers to reach; Precise algorithm models can better represent the brand image and meet the needs of consumers, and then monetize ideas in the mass market.
Deepmoss entered Tmall in 2019. Brands want to be able to establish a more intuitive display channel for a full range of products. Zheng Mingwang said that the Tmall flagship store provides a channel for people who know deepmoss on social media to quickly browse and understand the brand's products.
"Offline channels are more like relatively stable private domain traffic pools, while online is public domain traffic. For brands, online and offline channels are now complementary. Zheng Mingwang said.
For smaller brands, Shangtianmao is not cost-effective. Even brands that already have a certain market size and popularity, entering mass e-commerce is not a natural success.
The standard that interface fashion understands is that the designer brand has been established for at least 5 years, and the annual sales offline have reached the level of 30 million to 50 million, before entering the threshold of Tmall opening a store. This is determined by the market size of domestic independent designer brands. Annual sales of 50 million, which means that the offline market, which is dominated by buyers, is almost exhausted. Directly from the offline into the sinking market is too risky, expansion can only start from online.
Tmall has evaluation requirements for store services, new speed and product content, including customer service response speed, 48-hour delivery system and 7-day no-reason return. Based on this, designers need to hire an additional team of at least 30 to 50 people to take care of operations and logistics. Even if you choose to outsource your team, the amount of money you need to spend is still quite large.
There are many mass e-commerce marketing activities, and the requirements for the new are high. Most designer brands have complex craftsmanship, small output and long production time. Because designer brands do more quarterly business, two main line ready-to-wear series plus a few cooperative series in a year are all, and the supply chain is difficult to match the speed of e-commerce operation.
But the most critical thing is cash flow, which is another problem that can lead to the production cycle.
"E-commerce works quickly, and the first stage of production is completed with cash to pick up the goods, as does the second and third stages." Chen Peng said, "Our cash flow in April, May, September and October every year is relatively large, but this is not enough. Opening an e-commerce company needs to have a relatively smooth cash inflow, otherwise it is not a healthy model. ”
The impact of the pandemic continues
The pandemic has affected the trajectory of independent designers.
In the last decade, a group of designers who graduated from Central Saint Martins and Parsons made their debuts in London or New York, which is the best platform to showcase avant-garde ideas and attract the attention of global media and buyers. Subsequently, they were shortlisted for various awards such as the LVMH Prize, or their first collection was selected by well-known boutiques such as Dover Street Market and Lane Crawford to become rising design stars.
"As a Chinese designer, the goal is to lead trends on an international scale; As a new brand, participating in various competitions is the fastest way to enhance the industry's recognition," Fang Yannan said, "Before the epidemic, some domestic buyers would care about which stores the brand entered abroad, but after the epidemic, they didn't care so much." ”
Affected by the epidemic, in the past, most of the budget of buyers who went abroad to purchase overseas brands was allocated to local brands.
Brands including Susan Fang and CHENPENG quickly shifted their focus back to China after the pandemic. Before the epidemic, CHENPENG's overseas and domestic business accounted for 70% and 30% respectively; Between 2020 and 2022, this proportion will change to 40% overseas and 60% domestically.
But outbreaks in Shanghai, Beijing and other cities since March have brought the industry to a near standstill. Some designers expect that sales performance in 2022 may only reach 70% in 2018 or 2019. In fact, a number of designers told Interface Fashion that the lagging impact of the epidemic has led to a decline in orders from the autumn of 2021 after the recovery outbreak of independent designer brands in the second half of 2020.
Interface Fashion understands that cutting the budget is the theme of the brand's operational strategy this year. Out of generally unoptimistic expectations, some designers said that after the postponement of Shanghai Fashion Week, they will not make up for the online launch. The savings on filming and hiring models will be budgeted for the next quarter.
"The last two years of fashion week shows have been specially involuted. The budget of an independent designer brand for a show is basically 500,000 yuan, and it may take 1.5 million to 2 million to do a high job. Chen Peng said, "But it is not advisable to spend the budget on the fashion show, to shoot blockbusters, to find supermodels, to find the best production team." ”
In times of uncertainty, planning is becoming increasingly important.
Kennis Chan, head of the fashion project "FASHION ASIA HONG KONG", stressed the importance of controlling costs to Interface Fashion several times in interviews. "Designers tend to use high-grade fabrics and craftsmanship in pursuit of creativity, but some new brands are not highly competitive in the market. In calculating the cost of production, designers sometimes do need to give up some persistence. ”
When talking about future planning, Fang Yannan said that it may be reduced to styles created in the following quarters. Susan Fang's third year of establishment has returned its capital, the overseas official website e-commerce has been completed, and the domestic e-commerce platform is being built.
At the moment when the epidemic is unstable, maintaining the frequency of cooperation with commercial brands, stabilizing the channels of buyers' stores and developing online channels are the means to maintain stable development. But Fang Yannan also admits that the basis for achieving these goals is to establish a unique brand language and world view.
These practices eventually settled on the original question: how to maintain a balance between creativity and business.
"When the brand was founded, it was more like a designer's personal expression. But today, more consideration is given to how to make the brand develop in the direction of specialization and commercialization on the basis of maintaining design characteristics and brand language. Zheng Mingwang said, "There is no fixed formula for doing a good brand." ”