Local Sports Brands Encounter Inflection Point Collectively, Profits Can Only Rely On Price Increases?

Excess inventories continue to increase

Just after the Spring Festival, Li Ning Co announced the layoffs to reduce staff costs. The exact number of people has not yet been determined.

According to Li Ning Co's performance forecast, group revenue in 2011 is expected to decline by 6%-7% compared with 2010.

Shao Ligang, chief consultant of a clothing consultancy company in China, told reporters: "the reason why Lining has laid off is that the company's open source is out of order. There is no way to cut it down through layoffs."

In fact, it is not just sports tycoons such as sports tycoon Lining, PEAK, XTEP, 31st degree, Anta and other domestic sports brands that are also facing similar problems.

Reporters learned from Anta, which once surpassed Lining's turnover, that the rising cost and the backlog of sales channels further exacerbated the competition in the domestic sporting goods retail market. The group is expected to face some pressure in the future.

In addition, PEAK said that the demand for sports goods industry in China slowed down in 2011, and the competition became increasingly fierce. The surplus Library in the distribution channel of the group continued to increase in recent months.

PEAK sports CEO Xu Zhihua, in a telephone interview with Reuters 14, said that due to the reduction in store numbers and inventory backlog, the performance of the feed company will be under pressure in the next 1-2 years. The order in the first three quarters of 2012 is expected to drop by about 25% compared with the same period last year.

The sales of -12 month in November 2011 dropped sharply, and the channel inventory ratio increased to 4.2 times in the fourth quarter. The rate of new stores is also the slowest in history.

"Profitability will be the main price increase".

From the expansion track of the domestic sports brand, we can find that with the help of the east wind of the Beijing Olympic Games and a wave of listing in Hong Kong, sufficient capital is even more powerful for enterprises.

According to the statistical analysis of Tan Ke, a Dongxing apparel and apparel industry analyst, the number of new stores in mainland China's sports brand enterprises listed in -2009 in 2007 totaled nearly 2, and the number of terminals increased by nearly 2 times at the end of 2009 compared with the end of 2006.

However, behind the crazy expansion, there are many problems, such as scale growth decline, high market concentration, high inventory and so on.

"Listed companies have a certain cash reserves and smooth financing channels, and are so cautious that the two or three line unlisted companies will be more difficult."

Zhang Qing, President of brand promotion research institute "key sports", said.

Li Guangdou, a brand strategy expert, said: "the predicament faced by local brands is that" before they have strong enemies, they will be followed up. "In the case of severe homogenization of products, local brands did not grow well after the Beijing Olympic Games.

In addition to the above "symptoms", Tan can predict that the domestic sports brand will continue to "raise prices" in the future.

On the one hand, the inevitable cost factors, on the other hand, enterprises are gradually replaced by the simple extension method of expansion channels, and the profit driven mode will also be changed from "volume and price increase" to "price increase".

After the crazy expansion, the bomb exploded.

The industry believes that sports brand enterprises are facing not only the homogenization competition pressure of the same industry, but also the extrusion of the leisure industry market.

On the one hand, a large number of low-cost local brands, which have the ability to quickly make up and pfer goods, blossom everywhere. On the other hand, ZARA, UNIQLO and other foreign brands bring forth new ideas, all of which create pressure on the local sporting goods industry.

"The Li Ning Co announced that it was only the first Domino to start layoffs, and the layoffs of other sports brands will start."

Shao Ligang told reporters that 2012 is bound to be a very difficult year for domestic sports brands. Since 2008, the "bomb" planted in the market of sports brand crazy expansion will be detonated one by one, and the cold spring of the sports brand has arrived, to see who can get through.

The industry generally believes that after the crazy expansion of the local sports brand is now facing a new cycle.

The two giants, Nike and Adidas, which are high premium brands, firmly control the high-end market of domestic sports brands. How to deal with the tendency of "brand foreign consumption" by local brands and break through in the white hot competition pattern is a proposition for enterprises to think about.