(TMTPOST)—Zara, the renowned Spanish fashion brand, debunked rumors regarding its exit from the Chinese market in response to speculations sparked by recent closures of its stores across various cities in the country.

While some economic analysts view these closures as strategic measures to consolidate and expand store sizes, the allure of fast fashion has dimmed in China, with cost-effectiveness now prevailing in the mass consumer market.

Reports have circulated about Zara's sudden store closures in several Chinese cities. Zara's staff confirmed the shutdowns of stores in Huizhou and Dongguan in Guangdong province, as well as in Baoshan district, Shanghai, over the past two months.

Around 2018, Zara operated 183 stores in Chinese mainland in its prime time, as per its financial report. However, current staff disclosures indicate that only 87 stores are operational, suggesting nearly a hundred closures over the past six years.

These closures have sparked online discussions, with some brand enthusiasts expressing concerns about a potential withdrawal from the Chinese market.

Zara refuted such speculations immediately, asserting its ongoing optimization and enhancement of stores through the opening of larger outlets equipped with efficient digital technology. The fashion giant emphasized its commitment to opening new flagship stores in select cities, underscoring China's significance as a strategic market for both Zara and its parent company, the Inditex group.

The China market is a crucial strategic market for Zara and Inditex, which has been operating in the country since 2004, the Arteixo-based firm said. The retailer runs brick-and-mortar stores across nearly 50 cities, and also operates on a wide variety of online platforms such as Zara’s website, app, mini programs, as well as on e-retailers Douyin and Tmall.

According to the Inditex group's 2023 financial report, as of January 31, 2024, Zara operates 1,811 stores worldwide, with China boasting the highest count of 118 stores outside of Spain. In 2023, Zara's offline store area increased by 4.5%, with a corresponding 7.9% rise in sales.

Zara's sales growth, despite store closures, is largely attributed to its focus on online sales, facilitated by platforms like Douyin livestreaming, where many purchases are made.

While some brand enthusiasts expressed regret and hurried to make last-minute purchases amidst store closures, others criticized the brand's poor quality and diminished cost-effectiveness.

Industry observers note that fast fashion brands, once appealing for their affordability and trendy offerings, are now challenged by shifting consumer priorities favoring value and quality over mere trend-following.

It is not the first time for the emergence of such speculation. In 2017, Zara shuttered its largest flagship store in Chengdu, followed by closures in Beijing's core business districts in 2019 and all Wuhan stores by the end of that year. After the pandemic, Zara announced plans to close 1,200 stores globally, primarily in Asia and Europe. Inditex Group also closed physical stores of its Bershka, Pull & Bear, and Stradivarius brands in China in 2021, with Zara's sister brands exiting the market in 2022.

Zara enjoyed a decade of growth from 2006 when it made debut on Nanjing West Road in Shanghai, offering trendy apparel at accessible prices. The period from 2011 to 2013 saw its heyday amid rapid store expansion thanks to a surge in commercial real estate. However, the rise of domestic e-commerce platforms like Taobao prompted Zara to join Tmall in 2014. Now, as it expands offline presence while integrating online and offline channels, Zara faces challenges amid changing consumer behavior fueled by the pandemic.

Price hikes and the introduction of upscale lines like Zara Studio and Massimo Dutti's Studio series aimed to counter performance dips. Yet, transitioning from affordability to premium pricing faces hurdles, compounded by quality issues and fines imposed by authorities.

The decline of European and American fast fashion in China can be attributed to domestic supply chain improvements, online platforms' rise, and Chinese brand development. Brands like Topshop, New Look, Forever 21, and C&A have exited the Chinese market, citing issues with localization and failure to strike a chord with Chinese consumers.

Online rivals like SHEIN pose fierce competition, with faster updates and broader product ranges. Despite Zara's record update speed, Chinese consumers born in the late 1990s and 2000s are moving away from fast fashion, embracing domestic brands like UR, Hotwind, and MJstyle.

Diverse fashion trends, including second-hand, vintage, and Y2K styles, signal shifting preferences, challenging fast fashion's dominance. Some consumers now favor outdoor sports fashion, niche or designer brands, or higher-priced luxury goods.