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China’s Zara rival is expanding — and it’s setting its sights on London and NYC next

Urban Revivo in Shanghai, ChinaUrban Revivo plans to expand to US and UK markets amid sluggish Chinese consumer demand.

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  • Facing a weaker Chinese market, Urban Revivo plans on expanding to the West.
  • Urban Revivo’s physical stores could help it break through to the US market, where it sells online.
  • Other fast-fashion peers have seen successes in the UK and US markets.

A Chinese fast-fashion company is planning a quick global expansion, just as industry heavyweights slow their growth to focus on online shopping.

Zara has been cutting its footprint post-pandemic, with plans to slash as many as 1,200 stores and double down on e-commerce.

But China’s Urban Revivo, founded in 2006, is eyeing markets well outside of Asia. Parent company Fashion Momentum Group wants to open in cities including London and New York, CEO Leo Li told Nikkei Asia.

FMG now has over 400 Urban Revivo outlets in mainland China and a handful across Southeast Asia. Its only foothold in Western markets has been via online shopping.

Next year, FMG plans to launch 20 international Urban Revivo stores annually, a number that could accelerate to 50 per year in the long term, Li said.

He told Nikkei he hopes to expand the company to a $13.8 billion valuation — still well below competitors like Zara and H&M, whose parent companies have market capitalizations of around $155 billion and $23 billion, respectively. Zara has about 2,000 stores globally, while H&M has about 3,800.

FMG is also weighing an initial public offering in Hong Kong, which could raise $100 million, Bloomberg reported last month.

FMG’s focus on Europe and the US comes as some of its industry peers excel in those markets. Japan’s Fast Retailing, the parent company of brands including Uniqlo, reported strong sales from North American and European markets in the first half of 2024, while business in China has declined.

Softening Chinese consumer demand has also hurt Urban Revivo’s sales, which relies on brick-and-mortar stores more than its increasingly digital competitors, reported Nikkei Asia.

FMG might fare a little better in the US. The quick adoption of Chinese brands like Shein and Temu shows that US consumers are comfortable with foreign brands, Damien Yeo, an analyst from Fitch Solutions, told Business Insider. But FMG would face a fashion-saturated America, with competition from other domestic and foreign brands like Uniqlo.

US shoppers are “increasingly price-sensitive,” Yeo said. “This means that fast-fashion companies are expected to do well as consumers trading down price points is often good news for them, since their products primarily target the mass market.”

Brick-and-mortar Urban Revivo outlets could translate to fewer ethical and political concerns than online “ultra-discounters” such as Shein and Temu, said Yeo.

London is not a new stomping ground for the brand, which opened its first-ever UK store in 2018 — a store that has since closed. However, London might be another tough sell. Yeo said that the UK’s sticky inflation numbers might spell trouble for Urban Revivo’s sales, as consumers are pulling back on discretionary spending.

The company did not respond to requests for comment.

Read the original article on Business Insider

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