Daphne Suffers From The Pain Of Channel Change

"Now Daphne This brand is getting worse and worse. " A Daphne dealer in Hunan told reporters.

The dealer said, "The price space given to us by the headquarters is getting smaller and smaller. Recently, because Daphne's direct stores are also offering discounts, our profit space is getting smaller and smaller." However, Daphne's channel reform has never stopped.

　　 To resolve stock Problems stop franchise business

In 2012, when the economic situation was bad, Daphne encountered particularly obvious inventory problems. It is understood that by the first half of 2012, Daphne's average inventory turnover period had risen rapidly to 202 days, compared with 149 days in the same period of 2011.

At present, Daphne has 4958 direct stores and 1010 franchise stores in China. In the first half of 2012, with the accelerated pace of franchise to direct sales, 411 new direct sales stores were added, 45 fewer were added, and the proportion of core brand direct sales stores increased to about 83%.

The reporter called the Hunan Daphne office, and the other party said that although the number of franchisees is decreasing, "the normal sales activities have not been affected, and the signing of the contract between Daphne headquarters and franchisees has changed from three years to one year".

The reporter has been contacting Daphne Media Director in Shanghai headquarters, but his phone has been unable to get through. As Daphne has suspended its franchise business at present, the reporter contacted Daphne's franchise management department, and a person on the other side, who did not want to be named, replied: "At present, the headquarters has indeed suspended its franchise business. As for other cooperation methods, the company will still focus on direct business."

Daphne Group recently released a media statement saying that our company, in addition to expressing regret, has instructed the relevant departments to properly handle and respond to the disputes caused by the different perceptions of the franchise contracts of a small number of franchisees whose contracts have expired or are about to expire recently Franchisee Concerned about various franchise contract terms and related legal issues.

In fact, not only in Hunan, the number of franchisees is decreasing, and franchisees from Fujian are also beginning to withdraw from Daphne's sphere of influence.

"I have stopped working as Daphne now." Mr. Chen, a dealer in a third tier city in Fujian, told reporters that "there is no sense of cooperation." Mr. Chen expressed regret about the reason for the exit, "there are both brand management reasons and profit space problems." In fact, it is not only Daphne, At present, almost every fashion brand that has developed to scale is actively reforming its own channels, such as Sima, Meters Bonway and other brands.

The development of direct marketing system can solve the problem that almost every fashion brand faces - inventory. "From franchisees to brand owners, every role is afraid of inventory. Many brands are like this, and franchisees think they have made money, but the money they really earn is only the inventory left after taking back the cost. What's the meaning if inventory is not converted into money?" clothing The brand Romon is currently thinking about the mode of reducing inventory, its senior management told reporters.

At present, there are only two brands that can solve the inventory problem in the Chinese market - ZARA and Uniqlo, both of which adopt the same sales model - direct marketing.

In 2012, when the economic situation was bad, Daphne encountered particularly obvious inventory problems. It is understood that by the first half of 2012, Daphne's average inventory turnover period had risen rapidly to 202 days, compared with 149 days in the same period of 2011.

Daphne even suffered from "drastic cuts" from franchisees. Due to the sluggish sales, the franchisee even broke the contract after ordering, leaving such high inventory to Daphne headquarters to deal with. On the issue of clearing inventory, the direct marketing model undoubtedly shows good advantages.

The reporter found that ZARA, a fashion brand with light inventory, adopted flexible policies to deal with inventory, which changed almost every week. For example, ZARA will continue to discount a pair of pants every week, starting from the price of 499 yuan. First, it will give a 50% discount to 249 yuan. One week later, the price will become 219 yuan, two weeks later it will become 189 yuan, and so on. Then it will reduce the price by 30 yuan every week to promote sales and complete the task of clearing inventory.

　 Direct stores face high cost challenges

The most direct problem in the way brands open direct stores is the location of direct stores. However, one of the problems faced by opening direct stores is that good shops have already occupied full positions, and it is difficult to find stores that match the brand in the business district or shopping malls.

A few years ago, Daphne offered generous conditions to franchisees in order to quickly increase market share and promote channels.

A franchisee told the reporter that the conditions for joining Daphne in those years were that the franchise fee was 20000 yuan for three years, the quality guarantee deposit was 5000 yuan (refundable), the decoration was uniform, and the cost was self borne, about 900 yuan per square meter. The stores were self sought, the company provided unified training and management, and the regional manager was responsible for monitoring and adjusting the display regularly. The goods are futures, the price is 4.5~50% off, and the year-end rebate is 20%~30%. Overall, taking the goods is equivalent to 3.4% off. And for local franchisees, there is also regional protection.

In the twinkling of an eye, the promise of that year has been broken.

It is worth noting that most of Daphne's current termination partners are franchisees in third tier cities. At present, the channels in third tier cities are of great significance to every fashion brand.

Brands such as Daphne, Meters Bonway and Li Ning (3.88, 0.13, 3.47%, real-time market) are making plans to sink channels, among which the third and fourth line channels have become "the land of war".

Daphne's financial reports for the last three years show that since 2009, Daphne has shifted its focus of market expansion to three or four tier cities (namely prefecture level and county-level cities). As of June 30, 2012, Daphne's core brand business (Daphne brand) had 4078 sales outlets in tier three to six cities, an increase of 190 outlets over the same period of the previous year (the year-on-year growth was almost the same as that in 2011), accounting for 68.33% of its total sales outlets in mainland China (the proportion was the same as that in the same period of the previous year).

According to the initial cooperation agreement, the third tier cities adopt the franchise mode and adopt regional protection for local franchisees. While Daphne vigorously sinks into the channel, on the other hand, it is restricted by the protection of the franchise region. Therefore, Daphne has been obviously constrained by the development ability of franchisees on how to improve the execution of cities below the third tier.

It may be a wise choice to choose the integration channel at this time point. "If we can seize the opportunity to flatten our channel, we will gain more profits while keeping the terminal price unchanged, that is, the profits originally belonging to the franchisee will be attributed to the manufacturer." Marketing expert Pan Wenfu said, "No matter what, the channel revolution is a painful process, and we should also prevent the possible retaliation of the franchisee."

However, Yang Yeqing, a brand marketing expert, also said to the reporter, "The cost of canceling the franchisee is amazing. It used to be a general with a group of soldiers, but now every soldier has to interact directly with the brand, or every soldier is your own development. How high should the management cost be?" He even thought that if not handled well, It may mean the death of the brand.

Mr. Li, a luxury brand agent in North China, is not optimistic about the way the brand opens its direct stores. "The most direct problem is the location of the direct stores. Through our investigation in recent years, we have found a problem that good store locations have already occupied, and it is difficult to find stores matching the brand in the business district or shopping malls."

Even if the store is selected, "it will take several months from signing, decoration to logistics construction, which is also a profit challenge that listed companies cannot avoid".

On this issue, Daphne took a more moderate action, so it only took the action of canceling franchisees in Hunan, Hubei and Hebei, but not in one move.

Franchisees were once guests of brands. At the moment, facing their own development and external competition, brands have to take extreme measures to further their channels towards the models of international brands such as ZARA and Uniqlo. {page_break}

"Actually, it hurts my feelings," a Daphne franchisee told reporters.

Farewell to the era of barbaric growth

The franchise mode has enabled many brands to open dozens or hundreds of stores in China almost overnight, and eventually develop into thousands of stores and finally go public.

This coincides with the development model of China's economy.

In the previous decade, China's economy has been pursuing speed. With the rapid development of double-digit, more problems have emerged. At this time, the managers found that the enterprise was so precarious because the lifeline was in the hands of others. The boss wants to invite franchisees to eat in the best hotels and take vacations in the best hotels, because the wealth of brand dealers is made by franchisees. The more franchisees there are, it is like more workers on the production line. The brand boss can even figure out how much profit 1000 franchisees represent.

Similarly, when facing problems and difficulties, it is the time for brand owners to calm down - hundreds of franchisees, after all, are not their own people.

Li Ning, Sima, Meters Bonway and Daphne are just going public with an "empty shell". The brands that give the real core combat power to franchisees are a little guilty.

Brands and franchisees are like a couple. In the face of difficulties, there is always one person who will not persist in love. As for Daphne, as soon as the franchisee's view of love faltered, the brand dealer abandoned him without hesitation.

For brand owners, anyone with the feelings of barbaric growth era is a "fool".

No matter what franchisees have brought to brand merchants, this is a contractual marriage and a commercial alliance. Business alliance has nothing to do with emotion but money.

Therefore, the core question now is whether to make money by oneself or by marriage.

On this issue, the social phenomenon in the United States is the best explanation: so many single mothers live in the United States and raise their own children. They all have a characteristic that they don't have to rely on marriage completely economically.

Brands are completing this process, filling themselves with more core strength, and ultimately making themselves stronger.

Especially for listed companies, the lover of the franchisee in those years has become the "little donkey" of shareholders. He makes money by pulling the mill and gains weight. How can he have time to fall in love with you?

　　 Franchisees "weaned"

2012 must be a year of disheartening for Zhao Chao, a franchisee of Daphne in Hubei Province. Because this year, she will lose her qualification to join Daphne after three years of cultivation.

In the face of the huge promotion activity of 99 yuan for Daphne stores, Zhao Chao is more at a loss. She told reporters that the ex factory date of the previous batch of goods was July 12, and she received the new goods on July 20. She had hoped to take advantage of the cooling effect of Daphne's main product shoes Make a difference this summer. However, Daphne's direct store launched a 99 yuan promotion on August 17, which caught him off guard.

For Zhao Chao, the cost of 120~135 yuan for taking the goods is inversely linked to the promotion price of 99 yuan. She doesn't know how to choose whether to respond to the manufacturer's activities at a loss or to hold down the goods to ensure profits.

When he was a Daphne franchise store, Zhao Chao raised capital from his relatives in order to raise funds. Although he has been operating for three years, he has not paid off the capital.

Daphne, in order to keep its brand image consistent, requires all its franchise stores to be decorated identically, and the decoration needs to be carried out by the manufacturer. Therefore, the investment of franchise stores has exceeded 600000 yuan before the operation of a single store.

The opening was supposed to be the beginning of cost recovery, but it didn't develop as expected.

According to Zhao Chao, Daphne was on the verge of crisis because of its excessive inventory earlier. Several businessmen from Fujian went to all parts of the country to clean up its inventory, making it reborn, and forming the early provincial "Meisida" brand.

However, after the opening of Zhao Chao's new store, as soon as the new model was launched, a local Meisida store began to sell at a discount of 60%. "I couldn't do my business at all, so I went to the regional manager, who told me that it didn't matter. You can sell as much as Maxtar sells, or even lower than him, grab the market, and the company in the middle will make up for the difference," Zhao Chao told reporters, "As a result, I fought with Maxtar for two years. In the third year, Maxtar gave up the market, and the price difference company in the middle did not supply me. I think this is a long-term cooperation, and I did not ask them for it. Now I am told that the cooperation is going to end. How can I accept it?"

Zhao Chao expressed that Daphne was eager to get rid of the relationship with franchisees, "The manufacturer saw that the franchisees had opened the market through three years of development, and wanted to take over the market with zero risk. Daphne's people clearly said to me, 'It is necessary for some people to fight the world, and some people to win the world.' Take Hubei as an example. Now there are only more than 20 franchisees, and there are still many places where no one does it. If you simply want to develop direct stores, you can Go to markets that have not been developed. "

Zhao Chao also said that he no longer strives to continue to be a Daphne brand. After a long negotiation, he was disappointed. Now I just hope that the enterprise can give me some compensation, so that I won't lose money in store decoration, market development and advertising. "They clearly said that franchise stores across the country will be cut down in 2014. If I persist in doing so, they will not be able to bully me with products and prices in the past two years, so I would rather give up."