Lining Is Trapped In The Post 90'S Dilemma: The Brand Is High-End.

Be high-end

Contrary to expectations, the 20 year old gorgeous evolution expected by Li Ning Co Ltd is Waterloo.

Lining announced at the just concluded order meeting, according to the wholesale shipment calculation, Lining products in the second quarter of 2011.

Faced with the myth of the growth of sales, brokers sing the prospect of Lining, thinking that Lining has been caught in brand positioning and sales crisis.

"With regard to the results of this order, our view is that this year (2010) the retail environment of the sporting goods industry is obviously under greater pressure."

Zhang Zhiyong, chief executive officer of Lining group, explained.

However, according to Chen Zhaochang, an analyst at Jianhui international, Lining will not perform well in the second quarter of 2011, not the whole sporting goods industry.

Compared with Lining's orders decreased by 6% over the same period last year, another domestic sporting goods brand Hongxing Erke, in 2011 spring and summer order meeting order amount of 849 million yuan, an increase of 24.9% over the same period.

"The growth of the industry itself is that Lining has not done well in his own way, making it difficult to compete with other companies in the market share."

Chen Zhaochang commented.

Insiders believe that Lining's sales crisis was mainly derived from the brand strategy after the bid changed in June 2010.

Awkward position

At the end of June 2010, at the 20 th birthday celebration of Li Ning Co, the new Logo of "Lining cross action" was unveiled. Meanwhile, the new brand slogan "made the change (let change happen") replaced what consumers already knew "anything is possible".

During this period, joked that his company was a "post-90s", and he himself had a "post-90s" heart of Lining himself, and spare no effort to praise the "post-90s" young people.

This is because, at the same time of changing the logo, Lining's brand strategy has directly crossed the "post-80s", targeting the core target consumer group to the "90 generation" generation of its age.

The original "70 after" consumer group, which has become the backbone of Lining's product business, has become an abandoned generation after changing its bid.

But Lining's efforts to cultivate 90% of customers do not seem to buy it, they are more fond of Nike and Adidas.

According to a survey conducted by the relevant agencies for "post-90s", "90's" favorite brand of sports shoes are Nike and Adidas. The favorite digital product is apple. They are called new consumption owners. In the "post-90s" mentality, Lining is still the best among local brands.

Although Zhang Zhiyong said that the company is planning to launch a series of clothing with old logo within two years, it will bring nostalgia to the supporters who are now running instead of running.

But this is allowed to be seen as a shift in the focus of Lining's product, which has been unsuccessful in a series of actions that are close to the young consumer group. The company has made adjustments to ease the pressure on business weakness.

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In addition to the crowd's choice, Lining's new strategy is trying to match the multinational brand by price.

The new strategy shows that Lining is trying to get rid of his earlier image as a cheap substitute for multinational brands and pform to a more high-end brand.

Lining, who is complacent, began to adjust the pricing strategy and gradually narrow the price gap between the first-line international brands such as Nike and Adidas.

"Lining plans to increase the proportion of sports shoes with an average retail price of more than 400 yuan."

CLSA securities analyst Wei Xiaopo said.

The latest order will show that Lining's footwear orders in the three quarter of 2010 increased by 11%.

"Every season is up 3%, 5%, or 10%, 12%, it is judged according to the product, whether the brand equity is continuously improving, and whether the price stress test report is a support factor or not."

Zhang Zhiyong hopes that the price difference between Lining and Nike will be smaller and smaller, and that it may be less than 10% in the future.

However, sales of Lining products showed a gradual downward trend after the increase in prices.

The company's three quarterly report in 2010 showed that in the three quarter of 2010, the same store sales revenue increased by 4% in the three quarter, while sales growth in the first quarter of 2010 and the first half of 2010 were 5% and 4.6% respectively.

For Lining's brand strategy, Ai Chis, the father of the world's position, suggests: "for Lining, a better strategy is to have two brands: a high-end, a low end.

High end brands can compete with Nike and Adidas on the global market, and low-end brands can compete with other local brands in the Chinese market.

Suffer from both sides

When Lining tried to differentiate herself from the local brands such as Anta, Hongxing Erke and PEAK, these local brands, which were "wolf like" in sales, were speeding up their pace to occupy the low-end market which Lining quit. At that time, Lining had been unable to stay in the high-end market.

In recent years, Lining has been surpassed by his competitors step by step.

In 2003, Lining, who had been leading the domestic market for the first time, was surpassed by Nike for the first time and was surpassed by Adidas in 2004.

In addition to the two major international brands to quickly seize the first tier cities, local brands such as Anta, PEAK, and Hongxing ERK's collective rise to defeat Lining become their goal in one stage.

Anta sports chief operating officer Lai Shi Hsien said in November 29, 2010 that the company's stock level was healthy, and that in the 2010 fiscal year, Anta brand retail sales might exceed Lining.

Lining's strongest opponents are Nike and Adidas.

Because of its long term position in high-end brands, Nike and Adidas get enough product premiums. When competing with Lining, these premiums become the advantages of price war.

According to Nike's fourth quarter 2009, the profit margin of Nike in China is 40.3%, compared with 24.2% in the North American market.

Once Nike wields a price knife, its brand appeal is much higher than that of Lining.

International brand moves are much faster than people expected.

Shortly after Li Ningxin's brand strategy was released, they had lowered their value and began to sink to the two or three tier city and implemented the "people friendly action".

In August 2010, Nike lowered its value and launched the 300 yuan low price shoes, which is 25% lower than the current price.

According to the survey, the most affordable footwear in China's two or three tier cities is priced at 170 yuan ~250 yuan. As an international brand, Nike is priced at 300 yuan, which will still attract the "post-90s" generation pursuing the brand, which happens to be Lining's target consumer group.

"Nike low impact shoes are the most obvious impact on Lining."

Liang Yuchang, a researcher at UBS Securities, said.

With the growth of the first tier cities in China and the fact that international and domestic brands have been sinking two or three line cities, Lining is facing the risk of being left behind.

But in the face of such a dangerous market environment in China, Lining's development focus is international.

"The new logo has been registered in the world and is waiting for the approval of the local government, which takes about 2~3 years."

Zhang Zhiyong insisted on the internationalization of Lining.

3 years ago, Lining formulated the internationalization strategy, hoping to get rid of the international image of "Shanzhai" that has always been wrapped around him.

As early as Lining surpassed Nike and became the second place in China's sports market, he set a ten year strategy for his future Internationalization: in 2009 ~2013 was the preparatory stage for internationalization; in 2014, ~2018 was a comprehensive internationalization stage, becoming the top 5 of the world sports brand and the first place of Chinese Sports brand.

But Lining's timing of internationalization has not been recognized.

"The longer the preparation stage before Lining's internationalization, the weaker the international positioning of his brand.

The 2008 Beijing Olympic Games was a great opportunity for Lining to build a global brand. At that time, every athlete in the world was concerned about the competitions in China.

However, the positive cognition created by Beijing Olympic Games for Lining is gradually fading away.

Ai Chis said in his article.

According to the usual "internationalization" standard, the contribution rate of overseas market to the company's business has reached 20%. At present, Lining's overseas contribution rate is less than 2%. The long growth distance makes Lining likely to fall into the dilemma of domestic failure and internationalization.

Reorganization of distribution system

Another factor affecting Lining's performance is sales channels.

Unlike Anta sports and other companies, Lining sells products in the form of exclusive distribution, that is, distributors will not set up special stores with "Lining brand", but sell other brand products at the same time.

At present, Lining has more than 129 distributors and more than 2000 distributors, most of which are small in scale. They operate 2 stores on average, and 1756 distributors run only one store.

Bank of China international survey of Lining recently found that Lining's basic situation is not optimistic.

The company's sales channels in small and medium-sized cities are facing certain structural problems.

At present, there are about 2000 retail outlets operated by distributors.

Most of these stores do not perform well in commodity procurement and inventory management, and too much inventory of old goods leads to the sale of new products after they are launched.

Zhang Zhiyong said that the group had earlier proposed to reform its distribution system, aiming to solve the problems faced by the retail sector and enhance the growth of same store sales.

According to information disclosed by Lining, the number of distributors will be reduced by about 30% in the restructuring plan proposed by Lining management.

Analysis of the industry, the number of Lining shop may reach 500~600.

As of June 30, 2010, there were 7478 shops in Lining brand.

Haitong international analysts believe that Lining integrated distribution channels, including the closure of some stores in 2011 related measures, affecting the confidence of distributors.

"Closing stores will affect some distributors' orders next year, and some distributors are worried about being turned off, so they will not order next year at the order meeting."

The industry said that the integration of channels may bring profits and market losses to Lining.

"Although these measures will bring short-term pains, the order of Lining brand may still be under some pressure for the next two quarters, but this will help the group develop in a long-term, stable and healthy manner."

Zhang Zhiyong said.