Daphne'S Success From Single To Multi Brand Revolution

Parity strategy achieves single product first myth

It is a Taiwanese capital enterprise.

Chen Yingjie's mother family is a shoe family in Taiwan. Her uncle, Shun Tai Yu chairman Zhang Wenyi, runs Mitutoyo shoes, a family business, to digest excess stock. In 1990, she took the name of Daphne DAPHNE and created her own brand in the mainland.

Because of family importance,

He was trained as a successor, but when he took over the Daphne International Holdings Ltd's predecessor, wing en International Group, mainland business, it was the lowest time of the company.

At that time, Daphne's operations were in crisis. The shops were old and the styles were old. They were always on sale with a high turnover rate.

The elders at home want to let young people go all out to pull the company's mainland business out of the mire.

In 1999, Chen Yingjie, who was in danger, repositioned Daphne to replace the brand logo and shop decoration style. Daphne, who started again, began to bring back to life.

And competing with it is the development path and some other similar shoe brand BELLE.

It was also a foundry. It also launched its brand of women's shoes in the early 90s of last century. It is also the first step to open a special market in the department store.

But on the road to growth, the two companies showed very different characteristics.

In Chen Yingjie's words, BELLE is

Industry "Mercedes Benz", while Daphne wants to be "TOYOTA".

Unlike BELLE, which is in the middle and high-end line, Chen Yingjie adopts a parity strategy that is targeted at popular popularity.

At the price level, the average price of Daphne shoes is 200~300 yuan, which is almost half of BELLE's.

On the channel terminal, unlike BELLE's main shopping mall and shopping center, Daphne mostly adopts Street store mode.

In order to grasp the power of discourse and pricing in negotiations with shopping malls, BELLE has created a multi brand "shoe Empire" by means of mergers and acquisitions and agency.

At present, BELLE's own brands include BELLE, Teenmix, TATA, Staccato and more than 10. At the same time, BELLE is also a domestic agent of Bata, Geox, Clarks, Mephisto, BCBG, ELLE, Merrell and Caterpillar.

With so many brand resources, BELLE has a strong voice. Many shopping malls, in order to improve their grades and rich categories, often invite BELLE to come in with preferential rent.

In some high-end shopping centers, it is hard to see the figure of Daphne now, because the "customer price" is low, and the rents of shopping malls increase year by year. As early as a few years ago, Daphne counters were gradually withdrawn from the high-end shopping malls and began to focus on their own stores.

After gaining investment from the US TPG, Daphne increased its expansion speed and slowed down the growth of franchised stores.

Data show that at present, Daphne group's core brand "Daphne" and shoe cabinet brand "Shoe box" have a total of 4547 Direct stores, an increase of 629 from 3918 in the same period last year, an increase of 16.05%. While the franchisees, Daphne's core brand has 1055, compared with the same period last year 984 new 71, an increase of 7.21%.

Daphne said that this year will add 700 stores, Daphne and Shoe box, and all new retail outlets will be direct outlets.

Daphne has been insisting on the mass market for many years, which is precisely the lack of brand coverage of BELLE, Saturday and other middle and high-end lines.

The popular market positioning allows Daphne to choose more consumers in the form of street shops and avoid confrontation with BELLE.

And Daphne's street shops only provide Daphne brand, which helps to cultivate brand loyalty.

However, in the era of diversification of consumer tastes, especially for female consumers, it is rather naive if merchants place a brand's sales entirely on their brand loyalty.

Despite the way of parity, Daphne's profit margin is good, and its sales margin is supporting its profit margin.

Daphne's performance last year showed that the average price of its products was only 206 yuan, while the gross margin reached 61%, which was not 69% from that of BELLE last year.

At present, Daphne sells more than 20 million pairs of women's shoes every year, making it the biggest selling brand of women's shoes in the domestic market.

It is a complete industrial chain that can support Daphne's parity strategy.

In the women's shoes industry, Daphne is one of the few enterprises that have the entire industrial chain from manufacturing, design to terminal sales.

It is understood that Daphne uses a large proportion of "non dermal materials", greatly reducing the cost of materials, easy to launch products at a lower price.

After all, women's loyalty to shoes is low, and in low price markets, prices are often the first tactic.

Daphne has 3 production bases in mainland China, and most of its products are produced through their own production bases.

In order to ensure scale production, 50% of every Daphne store is unified and unified by the company, while the other 50% products can be chosen by the franchised stores, so as to ensure the diversity of the stores.

Large scale production can reduce procurement cost through centralized procurement, and its own factories can make Chen Yingjie more efficient in terms of delivery time and quality.

In addition, Daphne has 8 factories that manufacture different parts of shoes.

Most shoe related components can be fully self-contained.

Daphne has integrated all raw materials procurement and has strong bargaining power.

Reduce production costs by purchasing varieties and purchasing quantities.

In the design process, Daphne did not buy foreign designs from buyers like most women's shoes enterprises, but relied more on its own design team.

In order to make up for the lack of product line delay caused by mass production, Daphne has attracted market attention through specially designed individual series.

But most of Daphne's design concepts are designed to meet the needs of mass production.

The design concept of Daphne is somewhat similar to the concept of "modularization". Most of the women's shoes of Daphne are mainly "basic funds". There are not many popular or fashionable elements. Most women's shoes can be moulds, but they can be differentiated by adding small accessories or different designs on the vamp. This kind of design idea enables Daphne to greatly improve the utilization rate of materials, so that Daphne can still get the profit rate recognized by the industry under the "parity" strategy.

Multi brand attack still hard to shake BELLE

The parity strategy and the street paved mode make Daphne the champion of a single women's shoes brand, while BELLE, taking the middle and high-end line, relies on numerous brand resources.

However, Daphne is obviously lacking in motivation in creating long-term stable growth.

In a 2008 report, UBS said BELLE was leading the sales value of the footwear market, and its enhanced economic size and multi brand strategy will help create long-term stable growth.

Although Daphne seems more attractive in terms of valuation, it faces more industry risks, smaller market capitals, lower economic scale, smaller retail network, lack of multi brands, and uncertainty in new businesses.

UBS pointed out that in expanding the domestic market, BELLE is obviously better than Daphne.

Chen Yingjie also realized that the brand is too single to further limit the growth of Daphne international.

He also hopes to make a contribution to the channel size and make the Gome of shoe industry.

In 2008, the agent of the sports brand dragged, almost all the domestic agents have been weak, and Daphne is no exception.

Chen Yingjie decided to give up sports brand agents in an all-round way and put the focus on Daphne and "shoe box".

The birth of shoe box was inspired by its American client, Payless.

Payless is the largest footwear supermarket chain in the United States, which sells shoes that are cheap, some even less than $10, but annual sales are around $3 billion.

Chen Yingjie hoped that "shoe box" could become China's Payless.

"No shoes no," Chen Yingjie defines shoe box so that the whole family can consume it.

That is to say, shoe box is a channel brand that includes a variety of footwear products, from children to old people can find the right shoes in shoe box.

At the price level, shoe box is becoming more and more cheap. In the choice of location, shoe box will highlight the concept of community, mainly in the community and basically in the neighborhood of supermarkets. Its opening strategy is centered on residential areas.

"Close to the public life", this is Chen Yingjie's position for shoe box.

In his view, with the emergence of more and more communities, public consumption habits are moving from department stores to community business circles.

There are not many popular elements in shoe box, the main advantage is cost-effective, and more importantly, it is convenient to buy and facilitate the whole family to buy.

However, this is obviously not enough.

In 2010, Daphne international acquired HK $195 million stake in Full Pearl International Ltd60%.

Full Pearl is a BVI company. The indirect holding Shanghai Shoes Co., Ltd. (hereinafter referred to as the "love shoes industry") operates mainly in the first and second tier cities in the mainland and Taiwan and Hongkong in the retail business of high-end women's shoes.

The footwear industry has 4 brands: "AEE", "Ameda", "ALDO" and "Jessica Simpson".

With the exclusive distribution rights of two international brands Arezzo and Sofft/Born in mainland China since 2008, Daphne's brand in the high-end market has increased to 6.

The competitors that these brands are directly facing are BELLE and Saturday's brands.

Through the love of shares, Daphne obtained a team with high-end brand management experience, and the 2 high-end brands that had previously been represented by this team were managed. Daphne's original team would focus on Daphne and shoe box two brands.

Daphne has since been pformed into a multi brand footwear retailer.

Daphne group said that in 2012, it will seek diversified development on the basis of consolidating its superior business and vigorously expand its high-end brand business.

According to public information, the average selling price of Daphne and shoe box is less than 300 yuan, which belongs to the low-end brand.

Daphne hopes to expand its high-end brand business to cater to more middle class consumers.

Even so, Daphne is still somewhat "weak" compared with BELLE.

And in the middle and high-end market, Daphne's advantages are not many, and the new brand still needs to be developed. This is evident from the proportion of Daphne's total business volume last year. Up to 2011, the company has added 966 new sales points to a total of 6165, including 5602 core brand sales shops, and more than half of them are distributed in the 4~6 line city, which shows Daphne's sales are still mainly in the middle and low grade.

At the same time, high-end brands can not compete with BELLE, Saturday and other brands in the short term. After all, building a successful brand requires time to be accepted by consumers.

At the same time, in the middle and high-end market of Daphne, at the end of February this year, BELLE also launched its first low-end brand 15mins, specializing in wage earners with a monthly income of about 3000 yuan, with a unit price of about 200 yuan, slightly lower than Daphne.

BELLE management has revealed that it will open 100 popular shoe stores this year.

This means that BELLE has finally put aside its role and directly challenged the Daphne and shoe box of the popular brand.

However, Daphne regards Street Based channels as an important competition threshold.

Some analysts believe that the main street sales channel is one of Daphne's core competitiveness.

But BELLE president Sheng Bai Jiao emphasizes that BELLE has no experience in the mass market store mode (Street shop).

In March 21st, BELLE announced that it invested 880 million yuan to acquire all the shares of a company called Big Step.

This is the second time BELLE has made the purchase of Shenzhen leading sports products Co., Ltd. at the end of the year.

For BELLE, the most important purpose of the two acquisition is probably not to increase the competitiveness in the sporting goods market.

BELLE looks at 600 stores owned by Big Step.

Shenzhen is the largest sporting brand agent in Southern China.

They enable BELLE to further open up small and medium-sized urban markets and emerging communities in big cities.

More importantly, BELLE brand value has also become the biggest advantage of its entry into the two or three tier city.

In the face of BELLE's strong challenge, Daphne needs to pay more efforts and time to stabilize its core and low end market share.

Inventory worries over HK $2 billion

In June 2009, after more than 1 years of negotiations with TPG, Texas, TPG finally invested 550 million yuan in Daphne, which sent cash to Daphne, who had been threatened by the financial crisis. At the same time, Daphne finally began to "go family".

In September 2009, TPG's managing director and partner Ma Xue Zheng joined Daphne's board of directors as non-executive director, while TPG's managing director Kim Chun Chun joined Daphne as Ma's replacement director.

TPG then introduced 4 new executives, including Daphne, vice president of supply chain management and vice president of human resources for Daphne.

In this period, both the board of directors and the executive level, Daphne realized the definition of "de familial".

After TPG entered the stock market, Daphne slowed down the expansion of 3 medium and top grade brands that were not performing at that time, and gradually withdrew from the low margin agency sports brand market, ending more than 100 Nike and Adidas outlets respectively, and then took the lead in the three or four line cities, avoiding the direct competition with BELLE and other industries.

After the TPG entry, Daphne's change is still in the upgrading of the supply chain.

In the second years after TPG, Daphne's core profit increased by 20%, and the turnover days of storage and storage decreased.

Daphne has benefited from supply chain management to improve and adjust its product structure.

The annual report shows that in 2011, revenue was HK $8 billion 577 million, an increase of 29% over the same period last year, of which HK $933 million net profit, a 56.54% increase over the same period last year of HK $596 million.

Gross profit margin increased 3.7 percentage points to 61.1%.

However, in the wake of Daphne's cheering performance, the company's inventory reached HK $2 billion 60 million, up nearly 1 times over the same period last year.

Manufactured goods accounted for HK $1 billion 943 million 800 thousand, a 79.26% increase over the previous year (HK $1 billion 1 million 700 thousand).

This also makes Daphne average stock turnover period from 128 days to 172 days, which will cause considerable pressure on capital demand.

Such a high inventory will restrict Daphne's recent development. It is expected that Daphne will be in a state of cleaning up inventory in the first half of this year, which will affect the profitability of the company.

In the performance press conference, Chen Yingjie also admitted that 2012 was a year of split price promotion. This year, the same store sales growth (SSS) target was set at 12%, down from 21% last year.

With the increasing cost of materials and labor, and the slowing down of the retail market and fierce competition in the same industry, the promotion and promotion efforts of women's shoes market have generally been strengthened, bringing a lot of pressure for Daphne to further raise its gross profit margin this year.

Taking into account the increase in Daphne inventories at the end of last year, coupled with rising cost pressures, the price increase of footwear products will only increase slightly this year. UBS lowered Daphne's rating from buying to neutral, with a target price of HK $12.

Multi brand operation requires more manpower, financial and material resources, and the profit that has to be discounted under high inventory will be affected. It will also affect its strategy of "multi brand, multi category, multi class and multi roads".

Stones from other hills

BELLE's multi brand strategy

In the era of economic globalization, facing the pressure of the international market and the temptation of the domestic market, more and more shoe enterprises are not satisfied with the present situation and consider expanding the larger market space. So they create and introduce a number of brands in order to win the market share and make more profits.

Experts point out that the implementation of multi brand strategy in shoe enterprises can occupy a larger shelf space in the product distribution process, thereby compressing or squeezing the shelf area of competitors' products. It can also maximize the possession of the market for footwear enterprises, cross consumer coverage, and reduce the risk of enterprise operation. Even if a brand fails, it will not have much impact on other brands, which provides a more flexible and stable operation space for the future development of shoe enterprises.

But the implementation of multi brand strategy will also bring many problems to shoe companies.

A variety of brands coexist simultaneously, shoe companies need to invest more manpower, financial resources, material resources and energy, resulting in higher related costs. Moreover, the existence of multiple brands increases the risk of their own competition. If the distinction between brands is not obvious, one brand product will be left out of the market.

Some shoe companies are eager to make progress, blind market expansion, extending multiple brands, ignoring the image of the main brand, and causing psychological conflicts among consumers. The original market is unknowingly lost, and ultimately the gains outweigh the gains.

BELLE is one of the successful examples of shoe companies that implement multi brand strategies.

As the largest female shoe retailer in mainland China, BELLE is like a women's shoes group with heavy arms. It adopts a multi brand strategy and an independent brand strategy.

BELLE strives to make consumers have no correlation between brands.

Each brand has distinct style and clear positioning.

For example, Teenmix and TATA are all located in young women around 20 years old, priced at 300~500 yuan, Teenmix's style is comfortable and TATA is more fashionable and formal, while the main brand BELLE locates in 25~35 year old young women with a more mature and varied style and a price of 500~800 yuan. Staccato is a representative of high-end shoes, with a price of 800~1000 yuan, emphasizing the design sense and excellent manufacturing process and material.

On the one hand, multi brand strategy enables BELLE products to be targeted at customers of different ages, gender and income, thus providing customers with a wide range of customers and achieving stable profits for the company.

Moreover, because of the adoption of different sub brands, market exchange and promotion can be done directly by brand names, trademarks and advertising slogans, which will not affect the brand of any group due to the poor management of any sub brand or other problems.

Just because holding more than ten strong brand resources, BELLE is in a strong position in cooperation with large department stores, making it easier for BELLE to win many favorable conditions.

Other listed companies put their shoe factory assets into listed companies, while BELLE installed retail chains, while other enterprises invested the funds raised to production, while BELLE used to expand the network.

In every department store, you see different brand counters, but behind these counters belong to BELLE.

When BELLE controls the retail terminal of the department store that occupies 71% of China's brand women's shoes, it will firmly control consumers.

The promotion of any strategy has its important support system. If the strategic operation system such as BELLE is so big and big, if there is no strong support system, the success of its strategy is unthinkable.

What is the strategic operation of BELLE?

First of all, BELLE has obvious characteristics of light asset operation. It does not rely on increasing financial leverage to enhance the company's profitability.

Unlike Gome, Suning and other home appliance chain enterprises, they are occupying upstream suppliers' funds for expansion. The difference is that BELLE International's rapid expansion does not need to borrow chicken eggs.

It is mainly based on the rhythm of accounts receivable to synchronously determine the payment term of accounts payable, and does not expand through the funds of upstream suppliers. It can basically meet the needs of expansion by virtue of its own "hematopoietic" function.

Second, with the support of a strong supply chain system, all aspects of the supply chain from product design to development, production and so on are all undertaken by BELLE itself, which makes BELLE stand out in China's shoe enterprises.

It is also a guarantee for BELLE to get high profits.

Thus, BELLE has made enough profit in every key link of the industry chain.

For all retail outlets throughout the country, all of which are directly managed and controlled by BELLE international, the advantage of doing so is that it can directly contact with consumers, so as to get first-hand information of market dynamics, and facilitate management to make timely and accurate decisions for the market.

Through the huge sales network, BELLE international can understand the market trend and the preferences of different customers, so as to develop products that reflect the latest fashion trends. Therefore, the company can minimize the production of redundant or unpopular products and maintain less quarter discounts, and does not need to use a large number of discount policies to stimulate sales of such products, thereby maximizing the company's profits.