Nike: The Handover With Domestic Brands Has Become A Trend.

Recently, the shoe industry has heard an explosive rumor: Nike is likely to "lose its value" and enter the two or three line market at the lowest price of 300 yuan / double.

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.

International big market moves downward

The rumour of Nike's price reduction comes from an analysis of China's sports apparel industry released by UBS in May this year.

The report has made an interesting assumption: if those international first-line brands, such as Nike, Adidas, and so on, choose to lower the price of footwear products for two or three tier cities, what kind of impact will they have on domestic brands?

Before this,

UBS analysis, since last year

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 sales network of international brands such as Nike and Adidas in China is mainly distributed in Beijing, Shanghai and Guangzhou.

However, with the continuous improvement of store rents and other operating costs, and the acceleration of the layout of the first-line market by Lining, Anta, PEAK, XTEP and other domestic sports brands, the growth space has been shrinking. The trend of Nike and other multinational brands to enter the two or three tier cities has been recognized by the industry.

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

In the report, UBS mentioned the ability to examine the decline in the cost of the value chain through a unique value chain model after discussing with industry manufacturers, and they concluded that Nike has the ability to set the price of footwear in a very competitive 300 yuan / pair.

To this end, they also put up examples of two companies that have successfully infiltrated both 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.

All circles discuss the reasonableness of "self dropping".

In fact, after the hypothetical securities price reduction is assumed, it is also questioned by the industry.

Whether the price cuts will hurt Nike brand, Liang Yuchang, an analyst at UBS, believes that prices and brands are not born on the opposite side.

Just like in Shanghai's best buy, there are 199 yuan NOKIA low end machines on the shelves, but the top white-collar workers in Shanghai are also willing to spend more than 6000 yuan to buy the latest NOKIA mobile phones.

It depends on whether the company has the ability to meet the needs of different segments of the market with a diversified product mix.

In this regard, Quanzhou marketing people Luo does not agree with this view.

He believes that the consumption of mobile phones and clothing is quite different.

Mobile phones are electronic technology products, consumers are willing to spend more money to buy good mobile phones, more are looking at its richer functions and better quality.

In the process of consuming clothing and accessories, they prefer the promotion of brand to taste, so that there is fashion in the clothing consumption of over 10000 yuan or even one hundred thousand yuan.

"If Rolls-Royce comes out with a $500 thousand car tomorrow, I don't know how many rich people will buy it in the future."

He said.

This is the identity symbol embodied in the brand, and on the other day, if all the street workers are wearing Nike, the purchase of Nike may now buy other brands, which may be a good thing for Adidas.

Mr. Luo believes that in any industry, price is not the only factor determining consumer choice.

Excellent brands tend to retain more consumers because of high prices, and naturally mean more profits.

It is not necessarily a wise choice to exchange prices for the market. If Nike looks after the two or three tier domestic market, the best way is to buy other brands to compete with domestic brands at low prices.

Whether Nike's price cut is conducive to competition with Lining and Anta is unknown.

This controversy, China's top ten brand planners Li Guangdou previously interviewed by the media, said, depends on the strategy of competitors in competition.

He believes that Nike's price reduction is a coping strategy. When the local brand grows fast, it will fight the price war.

At this time, it has to deal with a large number of domestic brands. Each brand has at least more than 1000 stores in China, and they have been rooted in the Chinese market for a long time.

Li Guangdou did not feel that Nike's "price cut" would have too many risks from its brand positioning.

He pointed out that Nike is not a high-end product in the United States, and ordinary people can afford it, which is more expensive than Nike's expensive brand.

Mr. Zhang of Jinjiang has good family conditions. He has Nike shoes when he was in high school, which made him feel a sense of superiority among his classmates.

Nowadays, he often wears 1000 yuan Nike or Adidas shoes.

He feels that many friends around him like to wear these so-called "brand" shoes, which only reflect an identity.

He thinks Nike may not be a high-end product in the US, but in China, consumers think it is a high-end product.

Because of the different economic and consumption levels, it is not easy to compare this matter, at least for now.

If all the people in the street wear Nike, this "identity" sense of superiority will disappear, so he will only choose other brands.

Short handover has become a trend.

Experts believe that the assumption of UBS's so-called Nike price drop is only willing, but it also reflects the current situation of domestic sports brand competition and the possible trend in the future.

Like Adidas, Puma and other pnational sports giants, Nike's current sales network in China is mainly distributed in Beijing, Shanghai, Guangzhou and other first tier cities.

However, with the continuous increase of store rents and other operating costs, and the increase of domestic sports brands such as Lining, Anta, PEAK, XTEP and other domestic brands in the layout of the first-line market, the growth space has been far behind. How to expand to the two or three line market has become a major focus of the international first-line brand thinking.

At the same time, the two or three tier cities are the main battlefields of domestic brands such as Anta, PEAK, XTEP and so on. They are the foundation for the growth of these brands. When we feel that the trend of international brands is sinking, domestic brands will inevitably compete against them in terms of price and marketing.

In addition, with the two or three line market firmly foothold, now Anta, PEAK and other enterprises to attack the international brand hinterland intention is also very obvious.

In this case, how will Nike's old rival Adidas take the opportunity to deal with it? How can Nike defend itself when preparing for attack? In fact, this is not only a question for Nike to think about. "How will the two major camps of international brands and domestic brands in the future come to hand over and compete in the two big markets?"