Why Is It Time To Implement The Membership System?

Consumers may have heard a piece of good news recently.

After entering the Chinese market for 10 years, the Swedish brand

Announced the introduction of membership system in China since October 19th.

As the second Asian countries settled by H&M members, China's actions are closely followed in October 12th. The H&M membership system "H&M Club" has just arrived in Japan.

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There are no big differences between the rules of the system. Consumers can exchange discounts through consumption points and participate in special activities of stores.

For example, the ERDEM x H&M joint series, which is available for sale in November 2nd, can be applied to participate in advance sales activities in advance.

If you do not understand the history of H&M, this move seems to be very common, but in fact, H&M membership system was implemented in Sweden 40 years ago, and China ranked 13 in the implementation ranking, which has been separated for decades.

This means that the H&M membership system that has been running in Europe for many years now may have more significance behind the choice of landing in China.

In H&M's explanation, this landing membership system is designed to help the brand "understand customer's consumption habits and provide targeted discount, while enhancing customer's love for brand".

Guo Yan, a professor at Beijing Institute Of Fashion Technology, said in an interview with reporters that H&M Club was launched to enhance user stickiness.

In addition, it may be through collecting big data to make products that are more suitable for Chinese consumers, and ensure stable performance.

In fact, whether it is to boost sales or collect data, it is related to the development situation and demand of H&M.

This can not help reminiscent of two months ago H&M Beijing Xidan Joy City store withdrawal.

Although the real reasons are different, but as the best performing group in Beijing, its closing may reflect the fast fashion development, which is quite different from the situation that has been actively expanding several years ago.

According to H&M2015 annual report, China's annual sales increased by 16.8% compared with 2014, and by 2016, the annual sales growth in China has only reached 2.7% year-on-year, and its performance has been leveling off from high speed growth.

In terms of global performance, H&M group has suffered 5 consecutive quarterly profit declines before and after 2016, and the market needs stimulus.

Supermarkets and luxury goods all love membership.

In fact, you may never notice that the fast fashion has long been absent from active member incentives.

After all, membership is no longer a new commercial move. It is surrounded by our lives, from restaurants to shopping malls, from shopping to massage.

Especially in the Chinese market where electronic payment and electronic members have been well applied, every consumer is a member with multiple membership. When the library is sold, the membership price is always cheaper. When watching videos, you want to remove advertisements, you have to open membership, and listen to copyrighted music.

The membership system has penetrated into every aspect of life.

The same is true for the clothing industry, which can be accumulated through consumption and then exchanged for incentives and discounts.

According to the world clothing and shoe net, in recent years, the increasingly perfect online and offline integration services in the retail industry are making consumers register as brand members faster and faster.

You only need a minute to fill in the redundant forms. With the membership card being electronically, a two-dimensional code, a phone number, a WeChat applet and a WeChat card can easily retrieve easily forgotten account accounts.

Therefore, it is not so simple that the fast fashion brand in China is not active.

The concept of membership club originated in England in seventeenth Century is embodied in the form of organizational system. It is used to distinguish classes and private sociality in golf courses. After paying membership dues, the democratic electoral administrators make rules and regulations.

At that time, most of the club members' activities were closed, so they had a strong aristocratic atmosphere.

At present, this type of club membership system is also preserved in the automotive field.

The origin of modern membership marketing has never been traced back, but it may be popularized by the early pyramid schemes in the West.

At that time, small businesses sold goods to some consumers in order to save costs, thereby avoiding advertising costs.

Gradually, the marketing strategy of membership has been popularized rapidly by using the effective way of publicizing and establishing word of mouth by consumers.

With the development of history, membership has become the most common marketing tool nowadays.

Not only can we stimulate consumption with honorable status and preferential treatment, but also we can get more loyal consumers. The luxury industry is a big supporter of the membership system.

Dior has invited the most expensive Chinese customers to fly to Paris to see the show. Burberry has also invited important Chinese customers to visit the fashion photographer Mario Testino alone and pay the full cost.

Jancu Koenig, director of marketing in Burberry, said in an interview with reporters that she hoped to express her gratitude to consumers in a close and moving way like membership.

Because in the Chinese market, this kind of private experience is becoming more and more important.

Even the luxury APP Luxury Pavilion on line in August is visible only by some 88 super members and luxury consumers.

The retail department store also has the example of membership system. In the past two years, when the retail industry in the United States was confronted with a large scale of closing shop, the largest chain member retailer retailer Costco in the United States went against the stream, and its revenue increased by 5 times between 2006 and 2016, thanks to its unique "membership fee + low profit margin" mode.

Costco launched two kinds of membership fees in North America, 55 dollars a year's ordinary members and $110 a year's elite card members, who can also enjoy 2% of the consumer cash returns.

When other retailers need to make money on the difference, Costco takes the initiative to reduce gross margin to less than 15% by attracting profits from membership fees, attracting large numbers of loyal customers.

In September, Costco continued to expand its market to Tmall. It is reported that it plans to open a store in Shanghai.

In an interview with reporters, Costco said that the membership mode will continue to bring into Shanghai in the future.

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Why is it time to implement the membership system?

Now the membership system has begun to pry the fast fashion layout, and it is also related to the development of fast fashion itself.

Prior to this, for fast fashion industry lack of member motivation phenomenon, Guo Yan has said, perhaps because fast fashion in China market development is fast, no worry about sales, so there is no need to launch membership system.

H&M entered China in 2007, and reached 444 in 2016. In 2006, it opened up ZARA in the Chinese market, and the number of stores reached 157 in ten years. The first time in 2002, UNIQLO entered the Chinese market and broke through 500 stores in 2016, making China the largest market overseas.

Since entering China, they have been busy adapting to the local market, overcoming cultural barriers and increasing their performance.

However, as the maturity of the brand in the local market deepens, the conditions for the implementation of the membership system are changing.

From the past historical experience, the membership system often appears in the stable development period of mature brands.

Especially after the rapid expansion, fast fashion brands have encountered bottlenecks in recent years.

At first, the target market they located was China's first and second tier cities. However, after 2013, the first and second tier cities were already saturated, and H&M began to sink to three or four line cities to tap new growth points.

According to the data of H&M's opening store in 2016, there are 53 cities in two or three or four lines, and only 9 in the first tier cities.

However, the disadvantages of the rapid expansion of the market also appeared. In December 2016 and January 2017, the sales growth of H&M was only a single digit, and the decline in February 2017 reached 1%.

It can be seen that the sinking of the channel is not easy. The situation of the ZARA store sinking has been showing signs before and after 2014. During the same period, UNIQLO also indicated that the next 100 new stores will be infiltrated into two or three line cities.

While GAP dropped 3% in 2016, it plans to open 40 stores in China's two or three tier cities.

Competition is still fierce.

Correspondingly, fast fashion will be restricted by user growth.

Perhaps for H&M, it is even more important to develop the new consumer and pay close attention to the existing consumers.

Moreover, Millennial consumers' loyalty to brands is decreasing, and they are becoming increasingly difficult to please.

This year, consulting firm Accenture conducted a survey of 25 thousand global consumers' attitudes toward brand loyalty, including 1303 Chinese consumers.

According to the findings released by the survey, "how to conduct loyalty investment correctly" report shows that Chinese consumers in 75% have changed brands or suppliers in the past year.

In the twelfth phase of the Global Consumer Pulse Research, Accenture also pointed out that with the growth of the millennial consumer groups, some new factors are affecting consumer loyalty to the brand.

For example, 85% of respondents believe that brands should give priority to protecting and respecting consumers' personal information privacy; while 81% believes that brands should reduce the frequency of promotion of mail or telephone sales; they want private time not to be disturbed; 69%, recognition of being a long-term customer of a brand is the best interpretation of loyalty, and 59% of them believe that incentives should be established, such as gift cards, merchandise discounts or exclusive special offers, which are important for maintaining loyalty.

Some consumers also said that personalization products, environmental products, and linking with charity activities or exchanging loyalty scores with other brands are all good for consumers to maintain loyalty to specific brands or retailers.

Therefore, the membership system shows the necessity, and this method of retaining loyal customers has been practiced many times in the US market.

Since January 1, 2017, the retail industry in the US has been hit by an electric shock. It has announced more than 6700 stores, exceeding the previous record of 6163 in the financial crisis in 2008.

Then, in September this year, Messi department store launched a brand new "star feedback plan", setting up platinum, gold and silver grade members according to the amount of consumption and offering discount and free shipping services.

In this regard, Neil Saunders, general manager of GlobalData, a consultancy, said the updated customer loyalty program is relatively simple and will help Messi's performance.

Such a method has now had more mature application conditions in China.

Now China has a fully digitized business environment, and has the world's more advanced business channel as a support. Membership system is already the way to achieve the natural landing of brand data.

For example, in order to meet the Chinese consumption habits, H&M embedded the application and access of membership system in APP, webpage and WeChat applet. The traditional membership card did not show up.

"H&M Club is completely digitalized in China," Cathrine Bergstrom, head of the H&M Member Club China, told the interface news. "For the fast fashion brands that often get feedback from retail terminals, the membership system has added an online feedback channel.

After introducing the membership system, we can learn what kind of services and interests the customers want.

The usage habits of members in different countries are different.

For example, China is a country that is very suitable for electronic membership, but the Germans are very resistant to electronic payment, but prefer to use membership cards.

But establishing membership system is not easy.

While cultivating customer loyalty, collecting user data, building brand image and increasing sales volume, this kind of gain indicates the significance of membership system to a brand.

But on the whole, the introduction of membership in fast fashion is still slow.

Among Zara, UNIQLO, Topshop, Forever21 and GAP brands, only GAP started implementing the "True Blue blue premium" membership scheme in 2016.

Even if there is, it is a little tasted, not fully developed.

In the APP of UNIQLO mobile phone, it is hard to find the interface of "joining members and enjoying good manners" but finding it is not a long-term membership plan.

At the moment, we are not sure whether the implementation of H&M Club will have any impact on the competitive brand membership plan.

So what has arrested their footsteps?

Enough stores may be a niche.

Topshop, who opened the store in mainland China in 2018, told reporters on the interface that there was no membership system because members needed to be unified online and offline.

From this answer, it is not difficult to find that under the new retail environment of China, membership system needs to ensure smooth online and offline interests.

For some fast fashion brands, the layout of the entity store and the electricity supplier is indispensable.

Therefore, it may be the main reason for the failure to build a membership system for TOPSHOP, which is generally not on-line and perfect.

In addition, the establishment of membership system is also a time-consuming and costly job. For many garment enterprises, this is a process from scratch.

Compared with the overseas fast fashion brands with long decision-making process, Chinese local brands are more smooth and intent in the establishment of the membership system in the local main market.

In order to serve the consumers better, Frank Zhu, the chief financial officer of the Jiangnan cloth Garment Group, once said that after this year, there will be some changes in the thinking of the Jiangnan cloth clothes for the marketing of the fans, one is how to better grafted the Internet, turn the wire into an electronic member, or guide the scene with the data.

To this end, the group has set up a special information center to collect user data to understand "who is the user" in order to predict user behavior and trends.

Consumers can register personal information from the brand WeChat public number of Jiangnan Buyi brand. They can exchange vouchers or vouchers through points on weekdays.

It is reported that as of December 31, 2016, there were more than 1 million 600 thousand members in the south of the Yangtze River. Among them, the number of members registered through WeChat reached as high as 1 million 100 thousand.

The convenient member channel directly affects the increase of sales volume. The retail sales of Jiangnan Buyi 2017 increased by 11.3% in the first half of fiscal year, and the membership consumption of WeChat accounted for 63.6% of the total retail sales.

Since 2014, Taiping bird, which has landed membership system, is also benefiting from it. The number of online members is up to 6 million next year.

As of June 30, 2016, the electricity supplier accounted for 18.65% of the total revenue, and 2 million of the entity stores accounted for 25% of the total retail sales.

Of course, in addition to stores, funds and technology and other factors, the debate on whether fast fashion needs membership is also slow.

Some people believe that fast fashion brands, with their special commercial attributes, do not need member cards to cultivate loyal users.

Vertically integrated supply chain mode makes fast fashion become indifferent and utilitarian, and fast updating makes brand lack of emotional connection and cultural exchange with consumers. This is a stubborn disease in fast fashion industry.

However, Bergstrom does not agree with this statement.

"From the perspective of consumers, it is difficult for me to understand the brand without membership system," she said. "The membership system can not only meet the individual needs of consumers, but also enable consumers to choose the brands that register their members first, and to gain more rights in consumption."

At present, H&M Club, apart from coupons and special discounts, has also organized fashion competition, The Inn Boutique discount, fashion magazine subscription and other member services, and even has the opportunity to participate in fashion week.

It remains to be seen whether H&M will take the lead in implementing the membership system in China. But it is undeniable that even in the huge potential Chinese market, it is not entirely possible to tap the "one-off" consumption.

Whether the future ZARA and UNIQLO will keep up with the pace of H&M is not yet known. If the H&M membership system achieves remarkable results, then the possibility of other fast fashion brands on line membership will be much larger.

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