Direct Stores Become The New Favorite Of Daphne, Thousands Of Franchisees Fall Victim To Pformation

In order to promote its direct mode this year, Daphne suddenly announced that it would unilaterally announce its termination with franchisees, which led to a strong rebound in many franchised stores and gathered in Shanghai for discussion in August 27th.

It is reported that Daphne may take compensation in order to quell the anger of franchisees.

In the past three years, the thousands of franchisees who laid the market base for the three or four tier cities for Daphne seem to have completed their mission in Daphne.

It is the most realistic choice for Daphne to make direct efforts to abandon the franchisee, and from this point of view, the franchisee has become the first victim of Daphne after its initial pformation.

Expanding the two or three line market franchisee was a pioneer.

On the evening of August 27th, a chain hotel, 116 West Tianshan Road, Shanghai.

Ma Tai, from Zhongxiang, Hubei, was one of the Daphne national franchisees who arrived in Shanghai that evening. She was so excited that her forehead was blue. "Daphne just kicked us away like this. What is it?"

It is understood that Ma ti is so excited because Daphne decided to terminate its three year franchise contract.

According to Ma Ti, he invested 500 thousand yuan in Daphne stores in Zhongxiang in 2009 and has not yet recovered the cost in three years.

If Daphne does not renew its contract at this point, its 500 thousand yuan investment will be wasted.

Zhongxiang, Hubei, is a county-level city (usually a four tier city), which is subordinate to Jingmen (prefecture level city, three level city). It is located in the central part of Hubei Province, the middle reaches of Hanjiang River, with an area of 4488 square kilometers and a population of 1 million 21 thousand and 900 people.

"In the past five years, Daphne has focused on developing the market in the past -- the business of second tier cities tends to be saturated and its growth is limited.

They want to move to the three or four tier cities with larger business increments, but Daphne can't understand the local market's characteristics, scale, consumption ability and actual incremental space. "(Daphne) uses these people who are very familiar with the local market to join them in the first half."

On the same day, Liu Shi, a Daphne franchisee from Huangshi, Hubei (prefecture level city, three tier cities), told Xiaobian.

Daphne's latest three years' earnings report shows that since 2009, Daphne has shifted its focus of market development to three or four tier cities (i.e. prefecture level and county-level cities).

As of June 30, 2012, Daphne's core brand business, that is, Daphne brand, had a total of 4078 outlets in the three to six tier cities, an increase of 190 over the same period last year (an increase of almost 68.33% from 2011), accounting for 68.33% of its total sales outlets in the mainland (the ratio was flat compared with the same period last year).

In August 30th, Zhao Ye, director of marketing department of Haotian Management Limited, told Xiaobian, "with the continuous warming of the domestic market, the competition between domestic and foreign brands in the Chinese market is becoming increasingly fierce.

The saturation of domestic front-line market and the gradual increase of business cost make the two or three line and even smaller market become the new growth point of garment industry.

The penetration of sales channels into three or four tier cities is known as "channel sinking".

Zhao Ye told Xiaobian that the channel sink has become the same choice for garment enterprises. The consumption potential of the three or four tier market is far greater than that of the second tier cities.

It is understood that the implementation of the channel sink strategy also includes BELLE shoes and Saturday footwear industry, as well as nine herd kings, seven wolves and Li Lang, including Adidas and Nike.

among

The shoe industry is Daphne's biggest competitor in the mainland market.

Franchisees lead to high storage and direct stores favored by the company.

According to Liu Shi's little editor, at the end of August, a total of more than 800 Daphne's franchisees came to Shanghai. However, it is understood that the franchisees who want to renew their contracts with Daphne are mainly concentrated in Hunan, Hubei and Henan. Most of the franchisees signed a contract with Daphne in 2009.

Zhao Ye pointed out that the form of franchising can quickly open the target market in the short term, but this is a double-edged sword. "Franchising contracts will affect the overall market strategy and the flexibility of strategic adjustment."

The consequence of adjusting the overall market strategy is to form a high inventory risk.

In September 1st, Xu Ning, who was in the Daphne market department at the end of 2008-2011, said to Xiaobian, "because of the fact that it is impossible to contact the final customers through direct stores, the sales leadership is in the hands of agents (franchisees), which makes Daphne unable to understand the market demand, and can not adjust the design style and sales price, resulting in high inventory."

After three years of franchisee promotion, the average inventory turnover period of Daphne increased rapidly to 202 days in the first half of 2012 (149 days in the same period last year), or even exceeded the cycle of TPG Capital in 2009.

As of June 30th this year, Daphne's stock was HK $2 billion 371 million, accounting for 46.68% of the total revenue, compared with HK $2 billion 59 million in 2011, accounting for 52.27%.

In the first half of 2010, TPG upgraded its supply chain management system, with a stock of only HK $929 million, accounting for only 29.18% of revenue.

In the latest half year, Daphne reported that the group believed that the stable shop expansion plan was very important for sustainable development, so it took a strategic opening up plan to focus on developing direct stores.

"This will not only enhance the long-term development of the brand, but also help the group to respond quickly to market changes."

Xu Ning said, "obviously, the phrase" developing a direct store "is conducive to the group's rapid response to market changes. It shows that Daphne's determination to terminate the franchisee's plan has been decided, and its channel pformation plan, which was launched three years ago, has also been completed.

From the point of view of the meaning of this sentence, Daphne has realized the negative impact of franchisees on them.

In fact, Xiaobian found that Daphne has terminated the franchisee qualification of franchisees in a certain area.

stay

Before the establishment of the Nanning branch, all the franchise rights are sold to the regional franchise business.

Since 2000, Daphne brand shoes have been booming in Guangxi, so that they are in short supply. But because the franchise has been sold and the deadline is not yet available, these profits can only be handed to franchisees.

By the end of 2002, Daphne's franchise contract in Guangxi was terminated. Then Daphne Guangxi branch was established. In 2003, Daphne Guangxi branch achieved 200% rapid growth.

To be ungrateful to the franchisee for compensation

From the recent three years of earnings reports, Daphne reduced the number of franchisees in the first half of this year.

As of June 30th, Daphne group had 5968 core brand sales outlets, including 4958 direct shops and 1010 franchised stores, which reduced 45 stores and 45 outlets in the same period. At the same time, it increased 411 Direct stores. The proportion of the core brand of the group's direct store increased to about 83%, up from about 81% at the end of 2011.

While reducing the number of franchisees, Daphne has also increased its sales efforts to reduce inventory, and the promotion of promotional activities is inseparable from the reduction in the number of franchisees.

Xu Ning said that the intensity of the promotion process is inversely proportional to the number of franchisees.

In the latest half year, Daphne reported that the average selling price of the core brands dropped by 3.9% in the light of the challenges faced by the Chinese women's shoes Market in the period and the increased sales promotion efforts of the group.

The effect of this measure is that the share of stock account for operating income dropped from 52.27% in the same period last year to 46.68% this year, and its revenue grew by 33.4% over the same period last year.

The "Lining", a deeply troubled sports brand, is being affected by its dealers and affects its speed of response.

Wan Ge, a consumer industry analyst at the group, said that Li Ning Co's 8255 stores are in the hands of more than 2000 dealers. Every decision made by Lining needs repeated games with dealers, "the management efficiency of terminal channels is very poor".

"Li Ning Co is the example of Daphne."

Xu Ning said Daphne had to digest its inventory of up to 202 days' average cycle, and it would launch a larger scale promotional campaign, which would attract strong opposition from franchisees.

It is understood that the 99 yuan promotion price of Daphne Direct stores was collectively protested by franchisees.

Liu Shi and Ma Ti talked about this measure, the tone was fierce. "Our price has reached 119.50 yuan, which does not include freight, labor cost, store rent and so on. They sell 99 yuan in the direct shop. What do we do?"

Xu Ning said, "rather than being promoted.

It is better to put aside their own efforts, just as many of the franchisees' contracts expire, and Daphne moves in the right direction.

Liu Shi and Mattie told NetEase finance that their contracts with Daphne expired this year, hoping that Daphne could continue to renew their contracts or compensate them to offset losses caused by Daphne's unequal price for similar products.

Liu and Ma two said that if Daphne did not agree with their request, it would not rule out the possibility of bringing it to court.

However, Daphne's strategic layout and vague expression of information show that Liu Shi and Ma ti's previous wish almost failed to achieve the possibility; after that, Daphne has declared its willingness to make reasonable compensation.