Clothing Industry Wants To Reduce Inventory Pressure Through Promotional Discounts

It is reported that Hangzhou Sijiqing Women's Wear Market is the largest women's wear distribution center in Zhejiang Province, with thousands of shops, large and small. In sharp contrast to the hot weather outside the market, there are few customers in twos and threes. The most obvious positions on the doors and windows of most merchants are displayed with advertisements of price reduction and discount.

A salesperson of a clothing brand told the reporter that now is not the peak season for clothing sales, and many businesses have large inventory of goods, so it is normal to discount.

In fact, the inventory problem has been the pain of the development of the domestic traditional clothing industry in recent years. At present, domestic clothing and textile companies rely more on the traditional management mode. In the whole supply chain, the development of textile and clothing is restricted by the bullwhip effect. This effect is mainly reflected in the Retailer Managed Inventory model, that is, self ordering, replenishment, and inventory digestion. The traditional RMI model is doomed to its high inventory rate.

The haze of high inventory covers the entire industrial chain of textile and clothing, which makes enterprises breathless. "Textile factories are cautious in production, garment factories are cautious in placing orders, and the sales market is cautious in purchasing goods, which has caused a panicky contraction of the whole industry. Under the contraction, the consumer market is becoming weaker and weaker, forming a vicious circle," said a person in charge of a garment enterprise.

Since last year, the inventory of many domestic clothing enterprises seems to have suddenly exploded. "It was not easy to survive the financial tsunami, but also encountered the European debt crisis." Wang Qianjin, an analyst, pointed out that the rising labor costs, raw material prices and changes in the trade environment have made the business environment of clothing enterprises in the past two years "changeable".

The export orders of some garment enterprises dropped sharply this year, and a large number of goods were forced to be sold domestically. In addition, the economic downturn and relatively weak consumption caused a large amount of inventory backlog.

Experts pointed out that under the situation of economic downturn, the turnover of product inventory slowed down, which not only occupied the working capital, but also led to the inability of enterprises to update their products. Without new products, they would not be able to attract more customers, and the performance would decline, which would aggravate the dilemma of capital turnover, and even lead to the end of the entire business.

In addition, most garment enterprises in China plan to produce the quantity, but they still use“ order-placing meeting ”The mode of producing products half a year to one year in advance depends mainly on downstream distributors rather than consumers to provide market information. Enterprises often judge the consumption situation because of asymmetric information, and their product output is far greater than the actual market digestion, which leads to inventory backlog.

Leisure and sportswear are fast moving consumer goods, which will depreciate rapidly once they are out of season. Moreover, the characteristic of garment enterprises is to constantly introduce new products, and cannot clean up the inventory before putting it back into production. Continuously carry out supplementary production, and finally lead to the inventory "rolling up". The other factor is logistics. The average delivery time of most clothing enterprise headquarters to branches is 15-20 days, and the frequency of branches to channel outlets is 3-5 days. This not only reduces the speed of new products coming into the market, but also leads to the inventory backlog of the headquarters and branches.

According to the annual report of Li Ning, the average inventory turnover days of Li Ning in 2011 were 73 days, 21 days more than 52 days of the previous year, and almost twice the turnover rate of Anta Sports; The high inventory increased the inventory provision of Li Ning to 188 million yuan in 2011, a 63.48% increase compared with the same period in 2010. It is conceivable that Li Ning's inventory.

According to the 361st announcement, the brand's inventory in 2011 reached 4.512 billion yuan, 81.8% higher than the 2.482 billion yuan in 2010; Anta's annual report also shows that as of December 31, 2011, Anta's inventory amount was 618 million yuan, a year-on-year increase of 36.1% compared with 454 million yuan in the same period of the previous year.

In the opinion of industry experts, the high inventory is a comprehensive reflection of clothing enterprises' problems in brand, design and channel. Behind the short-term sales peak brought by crazy discounts, the marginal effect of clothing brands is decreasing, and it is easy to damage the brand image. All major brands are carrying out promotions and discounts at different levels to digest inventory, and some brands are even offering discounts on new products. This method mainly relies on discount promotions to solve inventory problems. In fact, it is a temporary solution rather than a permanent solution. Although it can solve the urgent needs of enterprises, it is not a long-term solution.

Wang Qianjin pointed out that in the long run, we should strengthen product innovation Design Reducing homogenization and establishing a fine inventory control process can enable enterprises to "sell for one and earn one" rather than "buy for one and get one free".

Therefore, it is far more strategic to control and prevent the production of inventory reasonably and seek for development in another way than to digest inventory. For example, e-commerce in full swing can ease the inventory pressure of enterprises, but it is not a panacea.

Wang Qianjin believes that most Chinese garment enterprises do e-commerce not to build online brands, but to add a de stocking channel. If we take this as the goal for a long time and fight against the price, it will do great harm to the brand. If the control is not good, e-commerce channels are more likely to cause inventory.