NEWS

In October this year, the Chinese version of "ZARA" La Chapelle's Q3 financial report showed revenue of 5.757 billion yuan, a year-on-year decrease of 7.16%. From a profit of more than 200 million yuan in Q3 last year, to a direct loss of more than 800 million yuan in Q3 this year. Earlier data disclosure showed that the equity pledge ratio of Xing Jiaxing, the actual controller of La Chapelle, was close to 100%. Behind the actual controller's pledge and liquidation was the fact that La Chapelle's stock price was only 1/6, and 2,400 stores were closed in the first half of 2019. Judging from the 2019 Q3 financial report, it has become a fact that La Chapelle has gone from profit to loss.
It is worth noting that La Chapelle is not the first company to experience a sharp decline in performance. Metersbonwe is the youthful memory of countless people born in the 1980s and 1990s. The performance report recently released by its listed company Meibang Apparel shows that in Q3 2019, Meibang Apparel suffered a loss of 238 million yuan, and the extent of the loss increased. In addition, the retail environment is weak, and delivery schedules and destocking have a greater drag on profits. Looking back at the number of Meibang Apparel stores, it has dropped from more than 5,000 at its peak to more than 3,700.
2019 does not seem to be friendly to China's apparel industry. On the one hand, the retail environment is weak, and on the other hand, the demographic dividend is disappearing. However, the number of apparel brands is increasing year by year, and overseas brands continue to enter the Chinese market. Store closures, losses, and unsaleable inventory seem to have become the three major keywords for Chinese clothing brands in 2019. Judging from the history of Chinese apparel companies, more attention is paid to data scale during rapid development. However, in recent years, clothing companies have frequently fallen into crises, with unsalable inventory, store closures, etc. Faced with these, they seem to be facing a situation of transformation and change: when the market is too saturated with products and consumers have too many choices, brands will How to shift from demographic dividend to efficiency dividend.
The fit of clothing brand transformation: the rise of e-commerce.
I still remember that from 2009 to 2014, when e-commerce was booming, it was also the birth and rapid development stage of Internet brands. Overseas marketing strategies also gradually entered the Chinese consumer market. At that time, What I hear most is the “multi-category, multi-brand” wolf pack tactic. Among these brands, there are only a few or even dozens of brands at hand, ranging from children to the elderly, from women to men. It seems that they have all 1.4 billion Chinese consumers in mind. All brands are blindly expanding. Whether they are new Internet brands or traditional brands, everyone is expanding their brands and categories. As the consumer market matures, the barbaric development path no longer conforms to market rules. On the other hand, costs are rising, inventory pressure is rising, and sales turnover continues to decline. Clothing companies may not have realized that the crisis was coming at that time, but some brands have already fallen into crisis.
From 2012 to 2014, Li-Ning, a well-known domestic sportswear brand, also experienced a crisis. Sluggish inventory, tight cash flow, poor store management, and internal and external attacks from foreign brands and domestic brands made Li-Ning almost collapse in inventory in these years. In the end, stores tightened, e-commerce cleared inventory, accelerated inventory sales, and revitalized cash flow, which also allowed this well-known domestic sports brand to escape from the predicament.
At that time, e-commerce became a channel for traditional brands to clear their inventory, which also gave brands the opportunity to grow in emerging channels such as e-commerce. However, as more players enter the game, traditional e-commerce is no longer what it used to be in the early years. For brand owners, the efficiency of these channels in destocking is too low. They are also beginning to value e-commerce channels, integrating hot products and new products, and some even develop a separate channel. Product lines directly enter e-commerce channels. On the other hand, the destocking capabilities of traditional e-commerce channels are not as good as before, and efficiency is decreasing.
Does flexible supply chain really work?
Starting in 2014, represented by Internet brands, they began to focus on a short, flat and fast supply chain model, which the industry calls "flexible supply chain". According to the explanation on Baidu Encyclopedia, flexible supply chain, referred to as supply chain management flexibility, refers to the agility of the supply chain to changes in demand, or its ability to adapt to changes in demand. Changes in demand can also be called uncertainty or risk. This is a phenomenon that objectively exists in all links in the supply chain, between enterprises or between enterprises and final consumers. Increased demand uncertainty will increase the difficulty and cost of supply chain management.
For example, a brand owner can take a small quantity and quickly test the market response. If the sales gradually increase, they can then enter mass production. If the sales are not good, they can immediately enter the clearance process. However, with the increasing performance pressure year by year, external processing plants have obvious off-peak and peak seasons. Brand owners still have to predict hot sales, produce in batches, and reduce product costs. Some people in the industry said that the rise of flexible supply chain is still due to the problem of slow-selling inventory by brand owners. The forbidden area that can put brand owners into a dilemma is inventory. On the one hand, there is no deep inventory, which means performance pressure. On the other hand, there is no deep inventory. Solving the problem of slow-selling inventory may become the straw that breaks the enterprise's back.
There are frequent reports in the media that the difficulty of inventory processing has overwhelmed a certain clothing company. Faced with pressures from many parties such as inventory and revenue, how to speed up inventory circulation and improve efficiency has become a key point for all companies. If not careful, the company may be pushed into the It's an abyss; but if handled properly, there is still a glimmer of hope. With the funds returned from inventory clearance, the brand strategy can be readjusted to be more in line with the current consumer market. The real meaning and value of the promotion of flexible supply chains is to help enterprises manage supply chains, improve goods turnover efficiency, and capital utilization efficiency.
The moment of revolution has arrived, and improving efficiency is the key.
In June this year, the well-known research institution iResearch released the first domestic inventory e-commerce report - "2019 China Inventory E-commerce Industry Research Report". The data shows that the inventory e-commerce market in 2022 The scale will reach 150 billion; the S2b2C model inventory e-commerce platform represented by Aikun is becoming the "savior" of clothing companies. They are using inventory e-commerce to speed up the flow of goods and improve efficiency in sales and capital withdrawal.
On October 9 this year, according to information from Ali Auction’s official website, Fuguiniao Co., Ltd.’s bankrupt assets such as prepaid bonds receivable, long-term equity investments, and inventories were unsold 24 hours after they were put on the shelves. The auction lasted from 10:00 on October 8 to 10:00 on October 9, and the starting price was 283.72 million yuan. According to Ali auction information, no one has registered for Fuguiniao’s bankrupt assets. A total of 91 people have set reminders and watched 6,334 times. Fuguiniao failed to find a good way to improve its own efficiency during the reform, whether it was goods or cash flow, which eventually led to bankruptcy.
It is reported that many domestic clothing companies, including Metersbonwe, hope to learn from the fast fashion models of ZARA and H&M, such as increasing styles, reducing the volume of single products, shortening the replenishment cycle and delivery time, and at the same time reducing the cost of related products. Selling price, but from the current point of view, not only no company can succeed, but some companies have even derived a series of other problems such as rising costs and frequent quality problems. The analysis pointed out that although the current hardware of China's clothing companies meets the standards, they do not have the "software" of international fast fashion brands such as Uniqlo, ZARA, H&M, etc., such as cost control and inventory reduction. Take the supply chain as an example. Due to the large scale and large number of brand stores, the above-mentioned "fast fashion" brands have absolute initiative in the "dialogue" with upstream suppliers and can obtain the corresponding raw materials at the lowest price and speed. This is currently something that domestic local brands cannot do.
The revolution of clothing companies is not just about copying overseas brands, but about finding their own crux and finding a development path for their own companies. The road to change may be a bit lonely and tempting, but the core lies in efficiency. For a clothing company, what are the lifeblood, goods and funds, and how to improve the efficiency of their use may be issues that domestic brands should focus on thinking about.
For a brand, goods are not only the source of performance, but also the straw that breaks the life of the company. How to improve the turnover rate of goods, how much unsalable inventory is left in the warehouse, how to scale it up and handle it privately will ultimately be the key to the company. to face. In addition, let’s talk about funds. The importance of money is undoubted. How to quickly withdraw funds and increase the frequency of fund use may reduce the risk factor of the enterprise. For example, a clothing company has a cash flow of 10 million. Now the number of turnovers of 10 million in a year is 2, and the turnover is once every six months. In the future, whether the number of turnovers in a year can be increased to 12, and the turnover is once every month, then for the enterprise , effectively solving a series of problems caused by unsalable inventory caused by inaccurate market predictions.
When clothing companies change their thinking, they often align with past successful cases. However, the scale effect of wolf pack tactics is completely unable to meet today's consumer demand. To save themselves, clothing companies may need to rethink the logic of spending money while clearing inventory, and improve the efficiency of capital use and goods circulation. Reducing own costs and quickly clearing inventory is the only way for clothing companies to survive. However, at this time, it still cannot solve the foundation of clothing companies or brands in the consumer market. Learning to understand consumer demand and refine operations may be the only way for clothing companies to survive now. Key factors in self-rescue.