Clothing Trader Interpretation: Where Is The Biggest Profit Of China'S Garment Industry?
Li Guang Dou
Cao Yi Tang
Moderator: Zhou Zhou
Special guest: CCTV brand consultant, famous brand strategy expert Li Guangdou
Investment expert, who has been responsible for the strategic director of Cao Yitang, director of Metersbonwe strategy,
Shoes, clothing, a number of well-known enterprises strategic advisers, practical faction
Marketing
Expert Liu Hanlong
An Jie Yang Yang marketing planning agency CEO, Hai Wei international trend.
Children's wear
Marketing consultant Fang Zhong
The fifth generation retail profit model is famous.
fashion
Retail training expert Jin Keyan
At present, the natural growth rate of China's garment industry is 15%. If it can not reach this figure, it will be difficult for the brand to survive and develop in the fierce market competition.
How can we maintain and improve the growth rate of brands? The industry generally believes that the problem lies in the management of brand and supply chain.
Metersbonwe founder Zhou Chengjian recently said that H&M's products 60% are produced in Asia, 30% of which are produced in China, and shops are also open in China. Their retail prices are 3 times that of the United States and their business is very good. There are also some products whose retail price is the same as that of the United States, and the United States has no profit, but these fast fashion brands can do it. What is the mystery of this?
He believes that the price is 3 times higher than that of the US state, and its brand value is the same as that of the US state, and the profit is its supply chain value.
Therefore, the next goal of the United States is to integrate the supply chain, to make sure that I have a profit, and that my opponent does not; to create brand value, to achieve 3 times the premium of the opponent, and 2.5 times the US bond premium, so as to truly achieve the strong competitiveness of the brand.
As the saying goes, "there is no industry that does not make money, it depends on whether you will make money". We invite the famous experts and operators in the clothing industry to gather together to discuss how the brand can find the maximum profit.
The most profitable link in the industrial chain
Zhou Zhou: which link do you think the biggest profit for the garment industry is? Why?
Cao Yitang: the whole garment industry mainly involves the following links: Design - raw material procurement - production - logistics distribution - brand channel marketing - wholesalers - retail outlets (direct or join) - brand consumer promotion - consumers.
According to their own development background, business mode and core competence, garment practitioners involve a number of links or links, which vary from enterprise to company.
Which link is the biggest profit? It depends on which link is the most acceptable value to consumers, and the value contribution determines the profit margin.
Different industry cycles, the same link value contribution is also different.
In terms of current and future trends, the most profitable product planning / design, brand marketing and retail terminal (including terminal operators and shopping malls) are most profitable in Golden Triangle.
That is to say, the price and the right of price distribution are in the hands of those who have high profit margins, and consumers are willing to pay for this part of the profits.
Now the clothing industry and academia are studying ZARA, and I have visited the ZARA headquarters in Spain. I have talked with Mr. Pablo Isla, the CEO of the group. In fact, the biggest part of ZARA creating customer value is its strong product planning / design and retail terminal, and its supply chain system, including logistics and distribution, is the realization of the value created by the former two.
Li Guangdou: the biggest profit link in the clothing industry is actually in the brand link.
Maslow talked about 5 theories of human needs: physiological needs, security needs, social needs, respect for needs and self actualization needs.
With the development of society, the demand of clothing for human beings has been focusing on functions only from the beginning to the present, and has attached importance to texture, style, taste, color and so on.
In the future, the function of clothing will be further weakened, and the brand packaging of clothing will continue to strengthen.
The brand effect of the clothing industry is obvious to all. For example, an ordinary shirt can only be sold for 40 yuan. If you put this shirt on the Versace brand, you may sell it for hundreds of dollars. If you put the Armani brand on it, you can sell it for thousands of yuan.
This is the brand's premium capability, and is also the proof of the brand's biggest profit as the garment industry.
For fast fashion brands such as Zara and H&M, logistics is now a profit point, but it is not the biggest profit point. The key is the brand influence of Zara and H&M in the world.
Therefore, the focus of the garment industry's profit is to go from circulation to brand premium.
Liu Hanlong: at present, the production and marketing chain of China's clothing industry is basically a pattern: the fabric supplier, the producer -- the brand agent -- the general agent -- the retailer -- the consumer.
Fabric dealers and manufacturers sell them to brands according to the cost of about 15% of the increase, and brands offer 15%~45% to their general agents according to their brand value.
The general agent will increase the price of 20%~30% to supply the retailer, and the retailer will increase the sale price by 30%~150%. This is the fare increase mode on the street floor.
If the final sale is completed in the shopping mall and the first four items remain unchanged, the final selling price will vary according to the location of the shopping mall. The increase rate is decided by the value of the brand, and the wholesale channel of the bulk goods is basically maintained at the lowest level; the brand monopoly is maintained at a higher level of 100%~1000%.
According to the above analysis, it is easy to see that the most profitable link in the garment industry is the monopoly sales link with huge brand influence, followed by the brand dealer, the general agent again, and finally the producer.
If the total profit is analyzed, the maximum profit is the largest.
The first is the brand, then the general agent, the second producer, and the last retailer. This refers to the brand clothing. For those non brand clothes, it is possible to be the most profitable in every aspect because of the competition of their own ability, but the overall profit is much lower than that of the brand clothing.
Jin Keyan: the biggest profit of the garment industry is of course in the retail sector.
Facts speak louder than words. I have a very real case here. I trained for two women agents in Sichuan and Guizhou.
In the early years, the franchisee of Sichuan agents performed very well, and their performance was ranked first in the company, and Guizhou agents performed generally.
By 2008, Guizhou's agents had been batting at a very fast pace, ranking first in performance. So far, the first position has been rock solid.
This is only a performance. There is an interesting phenomenon. The Sichuan agent asked me to train once. The training fee is sponsored by the brand.
The Guizhou agent asked me to train seven times, and the training fee was basically not sponsored by the brand.
What is more interesting is that the Sichuan agent once told me, "business is becoming more and more difficult now."
But the Guizhou agent told me, "business is getting more and more interesting."
Of course, the retail competition is also very fierce. Now we have to make a higher profit in retailing, and we are in urgent need of a major breakthrough in our concept.
Fang Zhong: I think the core link of clothing industry is brand, product and marketing.
Brand locked in blue ocean, product defined trend, marketing lock in channel.
The three must not be allowed, so the garment industry has the concept of "three carriages".
ZARA, H&M and other fast fashion brands believe that the biggest profit of the garment industry is in logistics and distribution, and I think that these brands' logistics distribution and product supply chain are the key links to maximize the profit of the brand.
For example, ZARA and H&M are upgraded versions of mass entertainment, and incorporate fashion elements to establish category blue ocean and product trends.
Without the profit maximization link of logistics distribution and product supply chain, ZARA and H&M can also succeed, but will only affect their success rate.
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Core view
? the most profitable and most profitable product planning / design, brand marketing and retail terminal (including terminal operators and shopping malls) is the most profitable garment industry in Golden Triangle.
The pricing power and the price distribution right are in the hands of those who have high profit margins, and consumers are willing to pay for this part of the profits.
The profit focus of clothing industry will eventually be pferred from circulation to brand premium.
Product planning / design links, brand marketing links and retail terminal links are the most profitable links in the industry chain, and direct stores will be an important profit growth point for Chinese garment enterprises in the future.
At present, the whole Chinese apparel industry chain mode is interlinked and moving all over the body, so it is difficult to make qualitative changes in the short term. At least 5 years, the brand will remain the most profitable link.
Online shopping enables these modes to be complementary or United. On the network platform, everyone's information is equal and fair, so the competition between wholesalers and retailers based on diversified business models is inevitable.
The function of circulation wholesale is becoming lower and lower, and its front-end value is cut down by the rigid cost rise of the manufacturer. The value of the back end is gradually split up by the brand or retailer, and the profit margin of the enterprise is getting lower and lower. Therefore, it begins to develop towards the retail terminal and control the store resources so as to increase the profit margin.
Choose the right trend, take the elevator, choose the wrong trend and climb the stairs.
For wholesalers, in the wholesale market and retail, it is a good process for consumers to understand consumers' needs better, and has a good reference value for their orders.
Re segmentation of profit space
Zhou Zhou: will the profit space of the garment industry be re segmented in the future? Which part of the industry chain will you become the most profitable segment?
Cao Yitang: it is inevitable that the profit space of the garment industry will be re divided in the future. This is also the inherent law of the development of the industry. The profit rate of the industry will be pferred to the most valuable links that create customers.
According to the European and American market, individuals believe that product planning / design links, brand marketing links and retail terminal links are the most profitable links in the industrial chain, and the direct store will be an important profit growth point for Chinese garment enterprises in the future.
In addition to individual markets, almost all shops in ZARA are directly run to ensure that store image, display and pricing management are in line with the brand strategy established by the headquarters and the product planning strategy for quick response, and most of its stores are profitable.
Here is a point to talk about. Everyone often mentioned that the ZARA product's lead time is very short, the shortest is only one week.
In fact, the pricing and price management of ZARA is also very strong. For seasonal clothing industry, the correct pricing and price adjustment is the fastest and effective way to increase profits.
According to McKinsey consultancy's research on the average profit and loss of the listed companies in the S & P 1500 index, if the total sales volume is unchanged, the price will increase by 8% every time, and the operating profit will increase by 8%, which is almost 50% higher than that of the raw material and the direct labor cost. The sales volume must be increased by 18.7%, which is enough to offset the impact of the 5% reduction on profits.
However, at present, the sales scale and profit of many garment brand retailers in China rely mainly on franchise stores, and the direct stores are mainly used for strategic brand image and strategic cards.
It is still a long way to go for the domestic enterprises to make profit from direct business and become a profit growth point in the future.
However, there are also some new garment brands, such as elegant women's clothing, which have made progress in product planning, brand marketing and retail terminal operation. They have continuously improved the profits of direct shops, but also promoted the increase of profit margins of franchise stores.
Li Guangdou: in the future, the profit space of the garment industry will be re segmented and gradually pferred to the terminal, that is, the brand will become the most profitable link in the entire industry chain.
The development of China's garment industry is actually the process of brand growth and growth.
LV sells well, Shanzhai LV is also popular, which is the power of brand.
The clothing industry should grasp the vane and make the brand bigger and stronger. Then the value and profit brought by the brand will be an immeasurable wealth.
Liu Han long
Liu Hanlong: in the future, in the clothing industry, there may be a channel like the Gome and Suning, which is similar to the appliance industry, to grasp a large number of sales channels. With the rapid increase of the number of stores and the upgrading of the styles of goods, the rapid development of online stores will lead to a timely, accurate, fast and high frequency logistics distribution system, which will lead to the redistribution of the profits of the apparel industry chain.
However, the current Chinese apparel industry chain model is interlinked, leading to the whole body, so it is difficult to make qualitative changes in the short term. At least 5 years, the brand will remain the most profitable link.
Fang Zhong: the Shanghai Jie Jie Yang marketing planning institution that I serve is the brand concept: choose the right trend, take the elevator, choose the wrong trend and climb the stairs.
The specific trend of the brand is as follows: Metersbonwe, Semir and YISHION establish the blue ocean of quantity and leisure; the seven wolves, the strong fighter and the talented person establish the blue ocean of business leisure category; Jack Jones, CABBEEN and KONZEN establish the blue ocean of fashion and leisure; Ayilian, Gloria and romantic Manifesto establish the blue ocean of fashion and little accomplishment; Saint West establishes the fashion business category blue ocean.
Therefore, the strength of brand core competitiveness determines the volume of future brand profit space.
Jin Keyan: the main profit of the garment industry in the future is still in the retail sector.
Of course, as mentioned earlier, the retail sector needs to have a sense of crisis. To consolidate profitability, we need to find new breakthroughs urgently.
The retail theory is far behind the competitive retail reality. There are four obvious manifestations:
First, the concept of terminal promotion is relatively strong, but the concept of marketing is relatively weak, not even.
What is marketing? Marketing is the influence of the terminal. What is the influence of the terminal? It is an interesting story happened at the terminal.
Stories are highly disseminated.
Second, the sales promotion means are monotonous and dull, giving consumers the promotion fatigue, and there is no reason for impulsive consumption.
Before this new year's day, a woman's brand executive asked me how to do the new year's sales promotion.
I said, "beautiful on New Year's day, buy clothes and send us dollars".
They used it very well, causing media reports.
This is the new sales promotion idea, which is the influence of the terminal.
Third, the lag of personnel management theory has led to the lack of enthusiasm for the terminal staff, poor execution and difficult recruitment of outstanding personnel.
Fourth, the terminal sales mode is lagging behind, and terminal staff's understanding of goods is very lacking.
Goods can be their weapons. What should we do? In the "fifth generation retail profit model", the concept of "terminal special forces" is introduced to help solve this problem. The future retail sales must be strong. There must be a retail special force.
Many brands have begun to pay attention to the new retail mode, or the phrase: the brand wins the terminal, the terminal wins the mode; the new retail era calls for the new retail mode.
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Fang Zhong
Jin Ke Yan
Wholesale sink and retail rise
Zhou Zhou: at present, the competition between the increase of retail brand profits and the reduction of wholesale profits is becoming increasingly fierce. The wholesale market is also being retailing to gain more profit margins.
What factors do you think this causes, and whether this pattern can be changed in the future?
Cao Yitang: the business enterprise has the mission of increasing profit margin, and the actual profit is the value accepted by the customer (the price of the bag, the value of the bag for safety, that is, the original price minus the price after the discount, etc.) - the total cost (all the direct product cost and the specific cost for the customer / customer).
There are two main factors affecting the profit margin of the industry.
First, cost driven inflation.
Various cost elements (such as raw material costs, land prices, labor costs, property costs, pportation costs, online and offline advertising costs) are all rising, squeezing the profit margins of garment enterprises; the other is that brand dealers are getting closer to consumers, and their design value or brand value is beginning to show. With the increase of consumer consumption level and brand awareness, consumers gradually recognize and accept these design values or brand values, so that brand owners get premium or brand premium, which improves the profitability of enterprises.
At the same time, the role of pure wholesale in circulation is getting lower and lower. Its front-end value has been cut down by the rigid cost rise of manufacturers, and the value of backend has been gradually segmented by brands or retailers, and the profit margin of enterprises has been getting lower and lower. Therefore, it has begun to develop towards retail terminals and control shop resources to improve profit margins.
Li Guangdou: what is the profit of the retail brand? The answer is -- brand.
When a retailer achieves a certain scale, he will start thinking about playing his own brand so as to create greater value and gain more profits.
There are two reasons for the fierce competition between wholesale markets and retailers: first, brand influence is expanding, and consumers' brand awareness is constantly increasing.
From the perspective of brand, its influence is expanding.
LV package costs hundreds of dollars, why sell tens of thousands, tens of thousands of price, consumers still buy it? This is the influence of LV brand, people buy is not only the package itself, but the LV brand.
In addition, a good brand means quality assurance, good reputation, perfect after-sales service, and even shopping environment. A higher level of understanding is to lead the trend, highlight the personal image, status and so on.
People pay more and more attention to brand packaging, which is a blank point in the market, and also an opportunity for businessmen.
The two is the vigorous development of e-commerce and the diversification of business models.
With the rise and development of online shopping, business models have begun to enrich.
The traditional B2B (the e-business between enterprises and enterprises) has been unable to meet the needs of market development, thus deriving various forms of electronic business mode, namely B2C (e-commerce between enterprises and consumers), C2C (e-commerce between consumers and consumers) and so on.
Online shopping enables these patterns to be complementary or United. On the network platform, everyone's information is equal and fair, so the competition between wholesalers and retailers based on diversified business models is inevitable.
The future pattern will be that the wholesalers market will gradually shrink, and the retailer teams will continue to expand. The profit growth point of retailers will not be realized by circulation alone, but only by brand premium.
With the increase of annual total cost of sales and personnel costs, many retailers who are not branded and have little profit will be driven out of the main commercial streets to find the places with lower rents. The wholesale market may be one of them. Many agents in the wholesale market have begun to sell in the market because of the poor access. The way of doing retail business in the wholesale environment will attract some consumers. Although a mature wholesale market will radiate to almost the whole province, consumers will attract a lot of consumers because of the long distance, inconvenient traffic, noisy shopping environment, and after-sales service. Liu Hanlong: as the store rents
Jin Keyan: the wholesale market's retail is actually a long time, and this pattern will continue, and even the retail sales in the wholesale market will be even heavier.
The number of consumers in the wholesale market is increasing, making the stalls of the wholesale market a good store; the competition between the wholesales is also fierce, so that wholesalers must open up new sources of profits. Some excellent wholesalers believe that doing retail in the wholesale market is a good process to deal with consumers, which can better understand the needs of consumers and have a good reference value for their orders.
Fang Zhong: I think the wholesale clothing has come to the end of the garment industry, wholesale mode will fade out of the clothing industry.
The wholesale mode is the inevitable outcome of the early development of the apparel industry. The limited raw material resources, limited processing resources, limited manpower, material resources and financial resources of the clothing market will eventually lead to the era of resource integration and asset optimization, and the wholesale mode will also be replaced by the new brand integrated platform.
For example, Beijing hundred glory: Retail + office brand integration platform; Harbin's new Hongbo: Retail + image brand integration platform.
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