Daphne: TOYOTA In Women's Shoes

With its strong manufacturing capability and perfect monopoly system, Daphne does not have many dazzling innovation concepts, but it has the most persistent adherence to the Chinese market.

Chen Yingjie, chairman of Daphne International Holdings Ltd's board of directors, is in a good mood recently. After more than 1 years of negotiations with TPG Capital in the US, TPG finally invested in 550 million yuan for Daphne, which not only sent cash to Daphne, which was threatened by the financial crisis, but also finally settled Chen Yingjie's concern that Daphne was not a "family business" at last.

From the perspective of single brand sales, Daphne shoes have been sold for the first time in more than ten years in China, but the label of "family business" has discouraged investors from it. In 2007, Daphne suddenly encountered the "founder arrested" storm, and its share price fell more than 20% within a day. And the subsequent financial wind has caused Daphne's foundry and agency business to suffer. The outside world began to doubt the governance capacity of Daphne's "family business", and the company's share price fell to HK $1.11.

As the second generation of family managers, Chen Yingjie urgently needs to reshape Daphne's image in the industry, and the introduction of TPG is the most important step in Daphne's "de familial" process. After 2 years of hustle and bustle and turmoil, Chen Yingjie feels that Daphne is returning to the "highway", and the value of this Chinese cheap shoe king will eventually show itself.

Making TOYOTA in women's shoes

In 2008, BELLE and Daphne respectively secured the top two in the domestic market with HK $17 billion 860 million and HK $5 billion 290 million respectively. Although it also started as a foundry, it also launched its brand of women's shoes in the early 90s of the last century. It was also the first step in opening a special store in the department store, and the two companies with so many similarities showed different personality characteristics on the road of growth.

In Chen Yingjie's words, BELLE is the Mercedes Benz in women's shoes industry, while Daphne should be "TOYOTA".

Unlike BELLE, which is in the middle and high-end line, Chen Yingjie's positioning of Daphne is popular. In terms of price, the average price of Daphne shoes is 200~300 yuan, while BELLE is almost 1 times that of Daphne. In some high-end shopping centers, it is hard to see the figure of Daphne now, because the price of customers is low, and the rents of shopping malls increase year by year. As early as a few years ago, Daphne counters were gradually withdrawn from high-end shopping malls and began to focus on their own stores.

And BELLE's strategy is totally different from Daphne's.

The main channel for BELLE to take the middle and high-end route is shopping malls and shopping centers. In order to be able to grasp the power of discourse and pricing in negotiations with shopping malls, BELLE has made BELLE group into a multi brand footwear empire by means of mergers and acquisitions and agency. At present, BELLE's own brands include BELLE, Teenmix, TATA, Staccato and more than 10, in addition to agents such as Bata, BCBG, Elle and other foreign brands. There are so many brands in the hand that the mall can love and hate BELLE. In order to improve the grade and richness of shopping malls, we must invite BELLE with a large number of brands to enter. But on rents, brand resources give BELLE a strong voice. In Chen Yingjie's view, BELLE's current strategy is very pragmatic. "In fact, we are no longer competitors."

However, although the price of BELLE is 1 times that of Daphne, the profit margins of the two companies are less than 3 percentage points, while Daphne, who is taking the parity strategy, relies on "quantity". At present, Daphne sells more than 20 million pairs of women's shoes every year, making it the biggest selling brand of women's shoes in the domestic market. And in the women's shoes industry, Daphne is one of the few enterprises that have the entire industrial chain from manufacturing, design to terminal sales, and this complete industry chain supports Daphne's parity strategy.

At present, Daphne has 3 production bases in China, and most of its products are produced through their own production bases. In order to ensure scale production, 50% of every Daphne store is unified and unified by the company, while the other 50% products can be chosen by the franchised stores, so as to ensure the diversity of the stores. Large scale production can reduce procurement cost through centralized procurement, and its own factories can make Chen Yingjie more efficient in terms of delivery time and quality.

In the design process, Daphne did not buy foreign designs through buyers like most women's shoes enterprises, but mostly relied on its own design team. And Daphne's design concept is also to meet the needs of mass production. The design concept of Daphne is somewhat similar to the concept of "modularization". Most of the women's shoes of Daphne are mainly "basic funds". There are not many popular or fashionable elements. Most women's shoes can be moulds, but they can be differentiated by adding small accessories or different designs on the vamp. This design idea enables Daphne to greatly improve the utilization rate of materials, so that Daphne can still get the profit rate recognized by the industry under the "parity" strategy.

Winning stores

Xinhua Street, one of the main roads in Tongzhou, Beijing, connects the Hebei Yanjiao and Beijing city. On the busy side of the street, Daphne stores are next to KFC and pizza hut. People passing by often see such a scene. The waiter of the Pizza Hut will take the call number to the Daphne next door to find the guests. While waiting, the guests who only want to go to Pizza Hut buy a pair of shoes. It's a shortcut for Daphne to find a neighbor with KFC.

Now, it seems that in the past, it was hard to build its own store network in the country, so that Daphne had an absolute right to speak in the channel area. Unlike other consumer products, the footwear products channel adopts the "futures ordering system". Agents generally buy goods in the second half of the year in advance six months to the branding business, and are responsible for selling them everywhere. In the days when the competition was not fierce before 1999, brand dealers like Daphne were doing this "wholesale" business, so long as they sold their shoes to agents, they were done well. However, with the continuous emergence of women's shoes, agents become scarce resources for brands.

Agents always choose the largest profit margin products to sell, which makes Daphne often subject to "betrayal" by agents. Moreover, because of the inability to reach the final customers, sales leadership is in the hands of agents, which makes Daphne unable to understand the market demand and cause high inventory risk. In 1999, Daphne encountered such a channel crisis. Stock pressure increased abruptly and the capital chain was tight. Daphne started the largest clearance in history. After the crisis, Chen Yingjie realized that "his brand must face up to consumers and run by themselves".

Since 2000, Daphne has shifted the focus of its channel strategy from agents to self owned stores, and the scope has been expanded from shopping malls to street stores. As of June 30th this year, Daphne has opened 3077 Daphne brand sales terminals in China, of which more than 80% are Daphne's proprietary stores. Daphne store system is currently distributed in all provinces and municipalities in China, and some areas even penetrate into the 6 tier market. This huge monopoly system is increasingly playing a strong competitive edge.

Mastering the vast majority of sales terminals allows Daphne to react quickly to environmental changes without looking at the face of the mall. At the beginning of last year, Daphne executives felt that the market environment had changed, and made a quick decision to clean up the inventory. "If sales terminals are shopping malls, such promotions or discounts must be in line with shopping malls, and there is no quick response at all." Daphne Beijing Brand Manager Du Wenlong said.

At present, in the domestic women's shoes industry, the depth and breadth of the network coverage of Daphne stores can not be achieved. And its stores have different functions. For example, in Shanghai Huaihailu Road and Beijing Wangfujing, Daphne has opened stores, which are mainly brand promotion. In some secondary markets, Daphne will set up special discount stores to clean up inventory, and the disadvantage of the shopping mall counters is also here.

Generally speaking, Daphne's new product sales and inventory clearance will not be carried out in the same store, which is to ensure the sales of new products. But in shopping malls, there is not much difference between the functions of counters, so discounted goods and new products are often displayed together for sale. And Daphne allows different functional stores to cooperate with each other. On the one hand, it ensures that new products will be sold as quickly as possible, and on the other hand, clean up inventory, reduce inventory pressure and ensure the return of funds. Moreover, with the gradual deepening of the Daphne monopoly network to the vast hinterland of China, Chen Yingjie discovered a huge gold mine.

Shandong Dongying opened the first store after Daphne stepped out of the primary market. What Chen Yingjie did not expect was that the shop which was originally held with a try mentality was very hot in the locals. From the first month of opening up, Dongying's single store sales have exceeded many stores in Shanghai, and its rents are less than 1/10 in Shanghai. Since 2003, Daphne has rapidly expanded its market share in the two or three line market. Now these markets have become Daphne's most important source of profits. Especially in the shadow of the financial crisis, these vast inland hinterland become Daphne's best haven.

"The Chinese market can accommodate 1 000 Daphne stores, and there will be considerable room for future development." Chen Yingjie thinks so. And Daphne is steadily advancing at an annual rate of 300 stores.

Community shoe cabinet

In 2008, the agency's sports brand dragged down, almost all domestic agents grew weak, and Daphne was no exception. "The brand makes money away, and the goods are on the retailer." Chen Yingjie decided to abandon sports brand agents in an all-round way, focusing on Daphne and another potential brand, shoebox. Moreover, "shoebox (shoe cabinet)" will bear another dream of Chen Yingjie.

In Daphne's OEM career, there was an American customer called Payless. It was the largest footwear supermarket chain in the United States. Although the shoes sold by Payless were cheap, some even below $10, the annual sales volume was about $3 billion. And Chen Yingjie hopes that "shoebox (shoe cabinet)" can become China's Payless.

"Shoe cabinet" is different from Daphne. It will become a channel brand which includes many kinds of footwear products. From children to old people, they can find the right shoes in the shoe cabinet. "No shoes no," Chen Yingjie defines the shoe cabinet so that the whole family can consume it. Moreover, the price of "shoes cabinet" will be more and more inexpensive. "Shoe cabinet is not expensive". Unlike Daphne shoes, the "shoe cabinet" sells men, women, children's shoes, and even some footwear products. Moreover, in the choice of location, the "shoe cabinet" will highlight the concept of "community", "mainly in the community, and will be next to the supermarket".

"China is constantly emerging with new residential business circles, and with the emergence of residential business circles, new business circles are also emerging. In the future, we will continue to expand the "shoe cabinet" with the new business circle. Chen Yingjie looks forward to the future of "shoe cabinet". Moreover, unlike Daphne's route extending from the central area to the periphery, the current strategy of "shoe cabinet" is to take residential areas as the center, for example, in Beijing, "shoe cabinet" prefers to live in large residential areas such as Tiantongyuan and Tongzhou.

"Close to the public life", this is the "shoe cabinet" positioning. Because with the emergence of more and more communities, public consumption habits are moving from department stores to community business circles. There are not many popular elements in the "shoe cabinet". The main advantage is the price performance ratio, and the key is to facilitate the purchase of the whole family.

And Daphne's store system will also make some adjustments. In Chen Yingjie's view, Daphne's "civilian" route is not only reflected in the price of "close to the people", but also reflected in the promotion of consumer buying experience. For example, to provide consumers with more convenient purchasing channels, so that consumers can use a more convenient way and the lowest cost to achieve the purpose of consumption. In order to achieve this goal, we should try our best to set up stores in the areas where people often visit. Although Daphne counters are not seen in some high-end shopping malls, Daphne stores are always seen in these stores, such as Carrefour, WAL-MART and Tesco.

In the future, Daphne will be a commodity brand, and products will expand from women's shoes to clothing, bags and glasses. "Daphne will slowly follow the growth of China's per capita income, changing the material, changing the style and changing the price with the demand of consumers. But the shoe cabinet will keep the average price of $20 unchanged. This is our future strategy. " Chen Yingjie said.

In Daphne's OEM career, there was an American customer called Payless. It was the largest footwear supermarket chain in the United States. Although the shoes sold by Payless were cheap, some even below $10, the annual sales volume was about $3 billion. And Chen Yingjie hopes that "shoebox (shoe cabinet)" can become China's Payless.

"Shoe cabinet" is different from Daphne. It will become a channel brand which includes many kinds of footwear products. From children to old people, they can find the right shoes in the shoe cabinet. "No shoes no," Chen Yingjie defines the shoe cabinet so that the whole family can consume it. Moreover, the price of "shoes cabinet" will be more and more inexpensive. "Shoe cabinet is not expensive". Unlike Daphne shoes, the "shoe cabinet" sells men, women, children's shoes, and even some footwear products. Moreover, in the choice of location, the "shoe cabinet" will highlight the concept of "community", "mainly in the community, and will be next to the supermarket".

"China is constantly emerging with new residential business circles, and with the emergence of residential business circles, new business circles are also emerging. In the future, we will continue to expand the "shoe cabinet" with the new business circle. Chen Yingjie looks forward to the future of "shoe cabinet". Moreover, unlike Daphne's route extending from the central area to the periphery, the current strategy of "shoe cabinet" is to take residential areas as the center, for example, in Beijing, "shoe cabinet" prefers to live in large residential areas such as Tiantongyuan and Tongzhou.

"Close to the public life", this is the "shoe cabinet" positioning. Because with the emergence of more and more communities, public consumption habits are moving from department stores to community business circles. There are not many popular elements in the "shoe cabinet". The main advantage is the price performance ratio, and the key is to facilitate the purchase of the whole family.

And Daphne's store system will also make some adjustments. In Chen Yingjie's view, Daphne's "civilian" route is not only reflected in the price of "close to the people", but also reflected in the promotion of consumer buying experience. For example, to provide consumers with more convenient purchasing channels, so that consumers can use a more convenient way and the lowest cost to achieve the purpose of consumption. In order to achieve this goal, we should try our best to set up stores in the areas where people often visit. Although Daphne counters are not seen in some high-end shopping malls, Daphne stores are always seen in these stores, such as Carrefour, WAL-MART and Tesco.

In the future, Daphne will be a commodity brand, and products will expand from women's shoes to clothing, bags and glasses. "Daphne will slowly follow the growth of China's per capita income, changing the material, changing the style and changing the price with the demand of consumers. But the shoe cabinet will keep the average price of $20 unchanged. This is our future strategy. " Chen Yingjie said.

In Daphne's OEM career, there was an American customer called Payless. It was the largest footwear supermarket chain in the United States. Although the shoes sold by Payless were cheap, some even below $10, the annual sales volume was about $3 billion. And Chen Yingjie hopes that "shoebox (shoe cabinet)" can become China's Payless.

"Shoe cabinet" is different from Daphne. It will become a channel brand which includes many kinds of footwear products. From children to old people, they can find the right shoes in the shoe cabinet. "No shoes no," Chen Yingjie defines the shoe cabinet so that the whole family can consume it. Moreover, the price of "shoes cabinet" will be more and more inexpensive. "Shoe cabinet is not expensive". Unlike Daphne shoes, the "shoe cabinet" sells men, women, children's shoes, and even some footwear products. Moreover, in the choice of location, the "shoe cabinet" will highlight the concept of "community", "mainly in the community, and will be next to the supermarket".

"China is constantly emerging with new residential business circles, and with the emergence of residential business circles, new business circles are also emerging. In the future, we will continue to expand the "shoe cabinet" with the new business circle. Chen Yingjie looks forward to the future of "shoe cabinet". Moreover, unlike Daphne's route extending from the central area to the periphery, the current strategy of "shoe cabinet" is to take residential areas as the center, for example, in Beijing, "shoe cabinet" prefers to live in large residential areas such as Tiantongyuan and Tongzhou.

"Close to the public life", this is the "shoe cabinet" positioning. Because with the emergence of more and more communities, public consumption habits are moving from department stores to community business circles. There are not many popular elements in the "shoe cabinet". The main advantage is the price performance ratio, and the key is to facilitate the purchase of the whole family.

And Daphne's store system will also make some adjustments. In Chen Yingjie's view, Daphne's "civilian" route is not only reflected in the price of "close to the people", but also reflected in the promotion of consumer buying experience. For example, to provide consumers with more convenient purchasing channels, so that consumers can use a more convenient way and the lowest cost to achieve the purpose of consumption. In order to achieve this goal, we should try our best to set up stores in the areas where people often visit. Although Daphne counters are not seen in some high-end shopping malls, Daphne stores are always seen in these stores, such as Carrefour, WAL-MART and Tesco.

In the future, Daphne will be a commodity brand, and products will expand from women's shoes to clothing, bags and glasses. "Daphne will slowly follow the growth of China's per capita income, changing the material, changing the style and changing the price with the demand of consumers.