Nike'S Price Was Questioned By Quanzhou Shoe Companies (1)

Recently,

Once the news came out, it immediately stirred up waves in the domestic industry, especially in the shoe industry of Quanzhou.

Because the domestic two or three line market is the main position of Quanzhou sports brand such as Anta, PEAK, XTEP, 361 degree and so on, and if the rumors of "300 yuan / double" become a reality, it means that Nike from the international brand camp will launch close combat with the sports brand from Quanzhou footwear industry.

Shops in the first tier cities are too expensive.

International big market moves downward

The rumour of Nike's price reduction originated in May this year.

Before that, Nike announced a "Five Year Plan" in May. It is estimated that in the next five years, the annual revenue of the emerging markets including the Greater China region will grow at around 10%.

The growth of this speed means that Nike must adjust its sales channels and product mix, take the initiative to "kill" the two or three tier cities with lower consumption level in the next one or two years, and directly compete with the domestic brands that occupy the two or three line market.

UBS analysis shows that sales of Adidas in Greater China have declined since last year, while domestic brands headed by Lining and Anta have been rising. This means that, on the one hand, the first-line market that has been familiar with these international brands has gradually become saturated. On the other hand, the two or three line Market is still full of potential for growth.

According to UBS's report, at present, the "perfect price" of footwear in the two or three tier cities should be between 170 yuan and 250 yuan per pair, while the price of shoes sold by Nike and Adidas in China is 400 yuan to 1000 yuan per pair. Obviously, the difference between the highest and lowest 150 yuan has become the gap between some international brands entering the two or three line market.

So UBS assumes that if Nike achieves the lowest price of footwear products to 300 yuan / double, although it is still slightly higher than the "perfect price", but "more than 50 yuan can buy a pair of Nike shoes" preferential, or will encourage those who buy Lining, Anta, PEAK and other domestic sports shoes brand consumers to shift.

The analysis report thinks Nike has the ability to "300 yuan / double".

UBS mentioned in the report that after discussing with the industry, through the unique value chain model to examine the ability of the value chain to absorb the cost down, they came to the conclusion that Nike has the ability to set the price of footwear products at a competitive 300 yuan / double.

For this reason, they also cited two examples of successful penetration of both companies into high-end and low-end markets.

UBS confirmed in its report that Nike will decide to sell products with lower prices in China.

They believe that if Nike can successfully penetrate into the two or three tier cities, some of the domestic brands with general brand image will be squeezed out of the market.

Those small and medium-sized brands with annual marketing budgets ranging from 350 million yuan to 500 million yuan are unlikely to compete with Nike, Lining and Anta in the whole country (these companies spend more than 1 billion yuan a year in marketing costs).

UBS predicts that if Nike makes this price reduction strategy, the short-term impact will be the high average selling price of domestic brands.

"The average selling price of domestic brands such as Kappa and Lining will be most affected in the short term, because some consumers in the two or three tier cities may choose Nike instead, and the medium and long term impact will be domestic small and medium-sized brands."

The agency considers that.

Quanzhou sports brand questioned the possibility of price reduction

At present, the sports brand of the two or three tier city footwear is Quanzhou brand, mainly based on Anta, PEAK, XTEP and 361 degree. Most of these brands are priced in the so-called "perfect price" of UBS, that is, between 170 yuan and 250 yuan.

If Nike cuts prices, it will be those brands that bear the brunt.

However, for Nike's hypothesis, Nike has not yet made a clear statement, and the brand of the sports brand that may be directly related to it also shows a plain attitude.

"I do not think that Nike will adopt the way of price reduction to enter the two or three line market."

Xu Jing Nan, chairman of PEAK Group Co., told reporters.

He said that the rumour that Nike wants to reduce prices is not this year. There are rumors that Nike will reduce prices every year for more than ten years.

This is also undisputable, because if Nike wants to grab a bigger cake in China, then the great prospect of the two or three line market is undoubtedly tempting, and this has become the willingness of some people.

Xu Jingnan believes that Nike's advantage in China lies in its brand and high price consumer market. If we take a low-cost strategy to enter the two or three line market, we will hurt its brand.

"In the short term, it may be effective, but in the long run it hurts."

He said.

He Ruibo, executive director and chief financial officer of XTEP, said in an interview with reporters that he did not think that entering the two or three tier city would become the general direction of Nike.

He believes that Nike has been developing in mainland China for more than 10 years, and has always understood the demand of mainland consumers for high-end products. It also understands that low-end products are not the source of Nike's profits.

At present, local brands have more advantages in the two or three tier cities. On the one hand, the market is more familiar with local brands. On the other hand, the relevant brands have already had a sound distribution network in relevant markets.

If Nike makes the deployment, XTEP will only be regarded as "one more local brand competition".

Anta's distribution of Ma Gang also questioned whether Nike would really cut prices.

He believes that Nike will have more consideration before playing this card, that is, whether the price reduction will lead to the damage of Nike's brand, thereby making it lose the most loyal users.

"For example, a middle class in a city walks out of the door and finds that all the shoes on the street are brand names. Will he insist on his choice?" he said.