Sports brand test water outdoor or children's clothing

On one side is a high inventory, and on the other is a tide of closing shops. Whether it is local Li Ning, Anta, or international giants Nike, Adidas, sports brands are facing the pain of transformation.

Annual report period, Li Ning (HK 2331), Anta (HK 2020), 361 Degrees (HK 01361), Peak (HK 1968), Xtep (HK 01368), China Dongxiang (HK 03818), the six domestic sports brands listed in Hong Kong It is bleak. For the first time in the five years since ANTA's listing, its net profit fell 21.5% to 1.358 billion yuan. The 361 degree net profit, which has been known for its steady management, has also dropped by about 40%. Peak net profit fell by as much as 60.1% to 310 million yuan.

Ordering data also cannot give encouragement. Peak's order amount in the second quarter of 2013 decreased by 20% to 30% year-on-year. Xtep and Anta also stated that the amount of order booked in the second quarter of 2013 fell by about 20% year-on-year.

Another problem brought about by the decline in orders is the increase in inventories. According to the “2012 Annual Report of China's Sports Goods Industry”, the total inventory amount of Li Ning, Anta, 361 Degrees, Peak, Xtep, and China Mobile currently stands at RMB 3.721 billion.

Nike also failed to escape the dilemma. Its net profit for the first fiscal quarter of fiscal year 2013 was US$567 million, while net profit for the first quarter of fiscal year 2012 was US$645 million. At the same time, new orders for Nike in this key market in China are decreasing, and the number of new orders in Greater China dropped by 5% year-on-year.

On the one hand, there is a high level of inventory, and on the other is a tide of closed stores. Last year, Peak and Li Ning had about 1,000 shops closed, and there were nearly 100 special steps. In early March of this year, Xtep once again stated that it plans to close about 100 stores this year. Anta, which has suffered the first loss since its listing, will reduce its stores by 475-575 this year.

Poor thinking is changed, Li Ning and Nike have embarked on the road of transformation, sinking channels to clear inventory, test the water or outdoor or children's clothing to build the market. In front of the sports brand is a more difficult "re-starting."

Giants "sink" ahead of schedule

In the clothing market, the so-called transformation is nothing more than two directions: First, to open up more channels for the past inventory to find a way out; second is to find a higher profit margin market "blue ocean."

In fact, foreign brands have taken the lead in opening up new sales channels.

As early as the expansion of local brands, Nike and Adidas overestimated the market demand of Chinese people for high-end products after the 2008 Beijing Olympic Games. In addition to the financial crisis that followed, leading to a serious backlog of inventory, prior to the start of domestic brands. Inventory clearance.

Adidas took the lead in reforms, such as re-segmenting the country into six regions, increasing support for distributors, and first proposing "channel sinking." When adidas announced in 2010 that it wanted to penetrate 1,400 counties in China and even include a township market with a population of only 50,000, the entire industry felt unbelievable. However, Adidas already had a deeper foundation when the entire industry faced an inventory crisis. Galaxy Securities Research analyst Mali told “New Business Weekly” that Adidas opened 800 stores in China in 2012. At present, the total number of sports fashion series and sports performance series in China has reached 7,000. In 2012, the nation's retail industry fell into a difficult situation. Adidas ushered in the best time after the Beijing Olympic Games. According to data from HC Shoes.com, Adidas Greater China's 2012 annual sales revenue increased by 15% year-on-year to 1.562 billion euros. Group sales revenue increased by 6% year-on-year to EUR 14.9 billion.

Like adidas, Nike's strategic adjustment is also characterized by a shrinking brand layout and expansion of low-end channels. In addition to plans to spin off brands such as Umbro and Cole Haan and focus on operating Nike, Jordan, Converse and Hurley brands, Nike will also implement a "clear inventory" strategy in the Chinese market. Specific measures include increasing discount rates and reducing ** orders.

Recently, there are reports from unofficial sources that Nike plans to open 40 to 50 new factory stores in China this year. This scale is far more than ever before, and new factory stores will be expanded from the front line to the second and third-tier markets, and discounts will be maintained. 3 fold to 4 fold. A former ANTA person revealed: "The Nike factory store has a relatively large lethality. Within 1 km of the business district, other sports brands and discount stores are generally difficult to survive."

According to Nike's factory store discounts, discounts are generally around 3.5% for Winter Wear, 4 fold for spring and autumn, and 30% for summer. If you simply calculate that Nike's best-selling sports shoes are priced at 1,500 yuan, then the final market price will be 400 to 500 yuan. This price will undoubtedly cause great impact on other domestic brands of sports shoes.

The end of the expansion "high-speed expansion" was the key word for major sports brands in China.

After catching up with China’s fastest-growing economy for ten years and catching the Beijing Olympics express train, manufacturers are eager to share a share in the post-Olympic era, so they have expanded wildly. In the early stage of the establishment of 361 degrees, it avoided major cities such as foreign giants Nike and Adidas. It focused on second- and third-tier cities and relied on sports marketing to rapidly increase brand exposure. This enabled 361 degrees to achieve high growth for many years on the less competitive runway. Li Ning, the local brand's boss, achieved a strong growth of 25.4% in 2009, breaking through 8 billion yuan in one stroke, surpassing Adidas's second only to Nike.

Some industry insiders analyzed with the reporter of “New Business Weekly” that at that time, everyone’s model was “brand + wholesale”. Although there were many shops without planning, more management standards, retail standards, and brand standards were issued to distributors. Busy on the pedestrian street in Thousand Cities, one by one, to open a shop, until it is not profitable.

Nowadays, the era of "making money with closed eyes" is over. Anta Board of Directors and CEO Ding Shizhong wrote on Weibo. In the past two years, Ding Shizhong, who had become accustomed to everything, had personally “pulled the net and stepped around” and traveled to more than 500 cities in China to come to this conclusion. Based on this observation, he decided that Anta would implement a full-scale sinking of the management structure to achieve flattening to clear inventory and improve store efficiency.

Lei Yu of the Yangtze River Securities textile and apparel industry told the reporter of the “New Business Weekly” that through the reduction of prices in traditional channels and the increase in sales, it is these sports that reasonably and objectively realize the proportion of the increase in unit price and retail sales growth in apparel retail sales. Brand protection in the normal healthy development of the future apparel market.

In addition to the "sinking" of Peak's choices, the development of channels can also have multiple directions. According to the “New Business Weekly” reporter, the previously unclear positions in the country, after a long-lasting discussion by the board of directors, put forward a new strategy—“mainly offline, supplemented by e-commerce,” defining the e-commerce business as The extension of Peak's offline consumption, sales of off-season goods and additional authorized sales of some limited-edition products will ultimately create a platform based on affiliate marketing. At the same time, Peak CEO Xu Zhihua also invested in a C2B footwear custom website “Love Dingke” as an angel investor.

However, traditional sports brands are facing similar challenges as e-commerce sales. Wang Yan, secretary general of the China Garment Association, once told the media that under current circumstances, e-commerce can be used as a channel for mature, well-performing brands to handle inventory, and also suitable for the start-up of entrepreneurial brands, but if it is used as a brand, In the main way, the profit rate is too low.

The other direction of Peak's choice is the overseas market. They began to embark on the road to the United States to break through in order to sponsor the NBA. In November 2007, they became the NBA's strategic partner in China. So far, Peak has signed a total of 18 players, and has signed up with the Houston Rockets, the New York Knicks, Miami Heat three NBA teams. Su Chi, general manager of Peak Sports America, told the New Business Weekly that due to the long-term cooperation between Peak and the NBA, he helped Peak’s overseas roads. Through the retail model and effective overseas sports marketing, it can create a high degree of business opportunities, and expand this business opportunity to become the company's profitability. In 2012, Peak's overseas sales accounted for 15% of total business turnover. In the second quarter of 2013, when the amount of domestic orders fell sharply, European and American markets became more important.

If you turn to the outside world, if you develop channels and reduce inventory as "throttling," then entering the new market area will be the "open source" of sports brands.

At the beginning of 2013, most of ANTA's stores and counters could see a new “waterproof and breathable trench coat” poster, and some stores also opened special shelves for outdoor products such as waterproof shoes. This means that the outdoor market has become their new target.

In the past ten years, the annual growth rate of China's outdoor products market has exceeded 40%, and the market scale has exceeded 10 billion yuan. According to the data released by the outdoor data network in January of this year, the brands that currently have a sales revenue of over 100 million yuan in the first nine years of the Chinese market account for 55.81% of the outdoor product market. This is a long period of time before the industrial structure has been solidified. market.

Four months ago, Li Ning, the domestic sporting goods giant, also opened the first outdoor product flagship store, Li Ning. This business module affiliated with the Li Ning Group is specialized in outdoor products, including outdoor clothing, outdoor shoes, outdoor accessories and other products. Li Ning Sports is independent and interdependent. According to reports, Li Ning has recently traveled to Munich, Germany to participate in an outdoor brand exhibition.

Before Li Ning and Anta, the global sports giant Adidas also targeted the market for outdoor products, and also set up an outdoor department. In the next two years, Adidas will launch subdivision counters in 7,000 stores in mainland China to provide professional products that will attract backpackers and even fashionistas. The world's third-largest sports brand, Hummer, also said that there are two sports market segments with great potential. One is extreme sports and the other is outdoor sports goods market. In 2013, it will focus on outdoor sports products.

The other way: children's wear children's clothing is another area of ​​concern.

The reporter learned from the Changjiang Securities Research Report that in 2012, the domestic retail sales of children's wear also showed a trend of accelerating growth, and the growth rate was 1.7% faster than in 2011.

As early as 2010, 361 Degrees invested 9% (approximately HK$180 million) of the listed funds in research and development of children's wear brands. According to the 2012 financial report, the turnover of the 361 degree children's wear collection increased by 97.7% to 370 million yuan, accounting for 7.5% of the company's turnover last year, which almost doubled compared to 2011. The average selling price and sales volume increased by 25.7% and 57.1% respectively. The average wholesale price of children's wear reached 57.3 yuan.

Previously, in July 2008, ANTA had launched an ANTA KIDS brand for children aged 3 to 14 years. Its products include clothing, shoes and accessories. However, due to insufficient promotion efforts, the contribution to profits has not been high. Since the beginning of last year, in the context of the declining overall performance, Anta has increased the pace of development of the children's sporting goods line, with stores increasing from 632 in 2011 to 833 in 2012.

Other manufacturers are not far behind: in early 2010, Li Ning and local children's wear brand Parklant signed a joint contract with Liing children's wear brand Lining Kids listed; in 2011, Xtep launched the brand name "Xtep +1" children's shoes and clothing series, aimed 2 to 14-year-old children, focusing on high-end casual fashion market

Wang Wei, secretary general of the China Garment Association, told the reporter of the “New Business Weekly” that the ever-changing market and economic environment have made China’s apparel industry’s manufacturing-dominated industrial advantages challenging, and transformation and upgrading have become inevitable. These enterprises must shift from manufacturing to service, adjust the structure of talents, shape brand culture, and reorient the direction of business development. He told reporters: "At present, it seems that the most difficult time in the industry is over, but innovation is still the theme of these companies' transformation."