With the increasing of living standard, a family with children is willing to spend more money on children’s clothes. Meanwhile, the relaxation of one-child policy largely increased the children numbers. Kids wear market in China became the most potential market in the apparel industry. With the spread of e-commerce, the diversification of retail channels is important for a brand to expand its business.
Kids wear market in China: Overview
Thanks to the expansion of the average income per capita, a family tends to focus more on physical life standards. Especially, the recent relaxation reform, the common family models of “4+2+1” or “4+2+2” (4 grandparents, 2 parents, and 1/2 children) enable adults to have more focus on the third generation, which is the kids wear market in China. A family on average spends about 33% revenue in child-related consumption, of which 8% are clothes. Thus, The total retail sales of the industry have surged by 9.2% in 2014, with a 7% growth in women’s wear and in 2017 the sales volume of the kids wear market in China is expected to be RMB 151 billion. In order to meet the rapid market change environment and satisfy customers’ needs, companies had to develop new products to create fashion trends. Safety fabric of clothes, popular design of grown-up and parent-child, simple and leisure style and sub-brands of mature adult apparel brands are the most significant characteristics nowadays. In addition, in the modern internet era, the theory of internet accelerates this industrial development.
Diversified distribution channels for the kids wear market in China
In the past few years, there was a structural change for the top 10 brands in the kids wear market in China. According to Euromonitor International, the total brands account for 10% market share in 2014 while 5 new entrants including Red, Gap, and Anta Kids replaced the origin brands as Balabala (3.6%), Annil (0.9%), and Pepco (0.9%) remain ranked the first three places. In this rapidly changed market, innovation is the key to retaining and developing the company’s market shares. Most companies pay more attention to diversifying distribution channels as an important part of the strategies. Although conventional retail channels through shopping malls and department stores are still the most popular channels, online stores ranked exactly after these methods. According to a recent research, shopping malls dominated 70% market as the most effective channel, while department stores, online stores through PC and mobile portals take up 56%, 54% and 53% of the market shares respectively. Because childhood is a period of fastest development, it is better to find most suitable clothes by trying on in physical stores. Meanwhile, according to a focus group discussion results, most parents rely more on ‘seeing, touching and feeling’ to judge the quality of clothes. This makes people incline to buy clothes at physical stores. Since physical stores provide this service, parents still prefer to visit stores and collect clothes for their kids at stores. On the other hand, online stores provide more choices and lower price, services of delivery packages are also convenient and fast. These are the reasons that foster the rapid improvement of online sales.
Future trends in China
Consumers preference change: E-commerce transformation
As the improvement of electrical transaction application, Chinese e-commerce market develops rapidly. Moreover, since mobile phone applications are well-developed allowing a more friendly use compare to that are easier for users to manipulate and more convenient to reach compared to computer websites, e-commerce is becoming a major part of e-commerce. The number of Chinese online shoppers via mobile phones grew from 55 million to 236 million while the online transaction increased from 69 billion RMB to 930 billion RMB from 2012 to 2014. To cater for the trend of mobile commerce, an increasing number of children wear brands have built digital and mobile applications.
Since China owns the largest social media users around the world, the power of social media can spread huge impression among customers, such as purchase attitude transformation. In the current Chinese society, social media have already combined media and business functions. Weidian and Weibo are the successful examples of media promotion. Hence, both of these online stores model established good platforms for companies to build up their brands images and mouth-to-mouth publicity.
Company’s’ innovation: big data
Big data is a new subject currently in studying customers’ needs in order to specialize shopping experience. Through data analyzing system, a company can observe every tiny change of customers and lead to a new design of strategies. Leyou China store Co., Ltd of children apparel had well-applied data-analysis technology in many aspects, such as segmentation identification, timing control, and promotion design. It is believed that data is the strongest evident for strategies reform.
Third party: B2C and O2O
Ever since single physical selling entity not as compatible as before, an increasing number of companies search for new channels for selling. B2C is a cost-effective channel. T-mall and JD are the biggest third-party online sales platforms, which dominated 50.1% and 20.1% respectively of the Chinese B2C baby and maternity products in 2015. However, why B2C model became popular as physical stores sales are still the main source of selling? On one hand, selling through internet cut cost from labor and rent. On the other hand, new generation parents, who are more familiar with online shopping, prefer to buy kidswear online once they have known the good quality of children garment giants. B2C business model exactly satisfied both customers’ and retailers’ needs and is becoming popular. In addition, a recent research conducted by Daxue Consulting states that some Chinese parents are inclined to buy the imported style of brands clothes. Thus, Chinese cross-border e-commerce platforms such as mia.com, targeting children market and providing imported products, are becoming popular.
In regarding children apparel giants’ development, they are not satisfied with the sales volume in physical and online stores respectively. Then, an increasing number of retail brands expand the new model of O2O. O2O combines online sales and offline retail with the same price and mainly provide services. Many retailers even offer temporary babysitting services in children’s play area, allowing parents to have more shopping time and leisure. They claimed that this business model can provide an integrate shopping experience for customers. These brands not only rely on the professional third party platform but also develop a website and mobile applications for their loyalty customers. Balabala, the leader of children wear market, seized the opportunity of expanding its scale and open website stores and set up a mobile phone application.
After understanding the right channels, a company should design appropriate strategies in the environment of the internet to add competitive advantages. Apart from catering for the trend of fashion by developing new products with nature material and unique styles, online stores via PC, mobile phone, social media, and big data collecting and the process can effectively increase the total sales volume of the companies as well as build up brand reputations.
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