Direct Mode To Solve The Problem Of Clothing Brand Inventory Will Face High Cost Challenges.

Famous footwear industry

The end of season sales promotion of Daphne is booming, and the franchisee who fought with Daphne has gone through two days of ice and fire.

Not long ago, Daphne's 17 franchisees brought complaint materials to the Shanghai Bureau of industry and commerce. They reported that Daphne was suspected of breaking the rules and banned the dealers. The Complaints Bureau of the Shanghai industry and Commerce Bureau received complaints from the franchisees.

Subsequently, Daphne's shares fell all the way, down 1.24% on the same day, and then fell 1.76% again.

In 2012, when the economic situation was bad, the inventory problem Daphne encountered was particularly obvious.

It is understood that by the first half of 2012, Daphne's average inventory turnover period rose to 202 days rapidly, compared with 149 days in 2011.

At present, Daphne has 4958 Direct stores and 1010 franchises in China.

In the first half of 2012, with the accelerated pace of joining the direct battalion, 411 new outlets were added, 45 franchised stores were reduced, and the proportion of core brand shops increased to about 83%.

The reporter called Hunan Daphne office, the other side said that although the franchisee was on the decline, "but normal sales activities have not been affected, Daphne headquarters and franchisees also signed a contract from three years to one year, one sign."

Reporters have been contacting Daphne media director at Shanghai headquarters, but the phone has been unable to get through.

In view of the fact that Daphne has suspended its franchising business, the reporter contacted Daphne to join the management department. The other person, who did not want to be named, replied: "at present, the headquarters has indeed suspended the franchise business. As for other ways of cooperation has not yet been released, the company's main push will be direct business."

Daphne group recently issued a media statement, said: in view of the recent confusion due to the different cognitions of the joining contract, due to the fact that a small number of contracts have expired or are about to expire, our company has not only expressed regret, but also has instructed relevant departments to properly handle and deal with the franchising clauses and related legal issues that the franchisees are concerned about.

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

"I'm not going to be a Daphne anymore."

Mr. Chen, a dealer in a three line city in Fujian, told reporters that "there is no sense of cooperation."

Mr. Chen regretted the reason for his exit. "There are both reasons for brand management and profit margins."

In fact, not just Daphne, but now almost every fashion brand developing into scale is actively reforming its own channels, such as Semir, Muse, and so on.

And the development of direct operation system can solve the problem that almost every fashion brand is facing - inventory.

"From the franchisee to the brand business, every role is afraid of inventory.

Many brands are like this. Franchisees think that they have made money, but the real money is actually the remaining inventory after the cost recovery.

What's the point if inventory is not converted into money? "Clothing brand Luo Meng is currently thinking about how to reduce inventory," his top management told reporters.

At present, there are only two brands that can solve inventory problems in the Chinese market -- ZARA and UNIQLO, all of the two international brands adopt the same sales mode.

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In 2012, when the economic situation was bad, the inventory problem Daphne encountered was particularly obvious.

It is understood that by the first half of 2012, Daphne's average inventory turnover period rose to 202 days rapidly, compared with 149 days in 2011.

Daphne has even been "drastic" by franchisees.

Due to the sluggish sales volume, the franchisee even broke the order after ordering, so the high inventory was left to Daphne headquarters to handle.

And clearing inventory problems, direct camp mode will undoubtedly show good advantages.

Reporters found that ZARA, a fashionable brand with light stock, adopted flexible policies to deal with inventory. This policy changed almost every Monday.

For example, a pair of trousers, ZARA will take a weekly discount, starting from 499 yuan price discount, first hit 50 percent off, 249 yuan, a week later, this price changed to 219 yuan, after two weeks to 189 yuan, and so on, weekly reduction of 30 yuan, and ultimately promote sales, complete the task of clearing inventory.

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Direct stores face high cost challenges

The most direct problem is the location of Direct stores.

However, a problem faced by open stores is that good shops have already been fully occupied, and it is difficult to find a storefront with brand matching in business districts or shopping malls.

A few years ago, in order to rapidly improve the market share, Daphne quickly promoted channels, and had made favorable conditions for franchisees.

A franchisee told reporters that the terms of joining Daphne were 20 thousand yuan, 3 years, and 5000 yuan (refund). The cost of the decoration was about 900 yuan per square meter. The company offered a unified training and management. Regular regional directors were responsible for supervising and adjusting the display.

Goods for futures, the price is 4.5 to 50 percent off, the end of the year rebate 20% to 30%, the overall calculation, take the goods equivalent to 66% off.

It also has regional protection for local franchisees.

In the twinkling of an eye, the promise of that year has vanished into thin air.

It is noteworthy that most of the current termination of cooperation by Daphne are three tier city franchisees.

At present, the three line city's channel is very important to every fashion brand.

Including Daphne, Muse, bang Wei, Lining and other brands are making plans for sinking channels, of which three line channels and four line channels have become the "land of the army".

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 proportion was flat compared with the same period last year).

According to the initial cooperation agreement, the three line cities take the franchise mode and take regional protection for local franchisees.

While Daphne was trying to sink the channel, the other side was restricted by regional protection.

Therefore, how to improve the executive ability of the cities under three lines has been obviously restrained by the development ability of the franchisee. Daphne

It may be a wise choice to choose an integrated channel at this point in time.

"If we can seize the opportunity and make our channel more flat, we will get more profits if we keep the terminal price unchanged, that is, the profits from the franchisees will be allocated to the manufacturers."

Marketing expert Pan Wenfu said, "no matter what, the channel revolution is a painful process, and it is also necessary to prevent the possible retaliation of franchisees."

However, Yang Yeqing, a brand marketing expert, told reporters that the cost of cancelling franchisees is amazing.

It used to be a general with a group of soldiers. Now that every soldier has to interact directly with the brand, or every soldier develops by himself, how much is the cost of management? "He even thought that if it was not handled well, it might mean the death of the brand.

Mr. Li, a luxury brand North China agent, is not optimistic about the way in which a brand opens a direct store. "The most direct problem is the location of a direct store.

Through the investigation in recent years, we have found a problem, that is, the good location of shops has long been occupied, so it is difficult to find a store that matches the brand in the business district or shopping malls.

And even if we choose the storefront, "from signing, decorating to logistics construction, it will take several months, which is a profit challenge that a listed company can not avoid".

On this issue, Daphne took a more relaxed action, so it only took the actions of cancelling franchisees in Hunan, Hubei and Hebei, and did not accomplish overnight.

Franchisees were once the top customers of brands. At the moment, in the face of their own development and external competition, brands had to take extreme measures to further their channels to ZARA and UNIQLO's international brand models.

"Actually, it hurts."

A Daphne franchisee told reporters.