Where Will The Agent Mode Go In The Era Of Diversified Channels?

"Now the business is bad, the rent and manpower costs are rising, and the products are still on sale."

When a staff member of Semir store talked about the business situation this year, he lost his face.

The reality of Semir clothing, which was released in August 29th, also confirms the reality.

In the first half of this year, both Semir's clothing revenue and net profit declined.

The company achieved revenue of 2 billion 511 million yuan, down 16.54% from the same period last year, and realized net profit of 248 million yuan, a decrease of 43.22% compared to the same period last year.

This is a decline in net profit after the first quarter of this year.

Coincidentally, reporters noted that not long ago, China was well-known.

Lining, a retail retailer, released a report that its net profit fell 85% to 44 million 300 thousand yuan (7 million US dollars) in the first half of this year. It is expected that the gross profit margin in the second half of this year will be close to 44.2% in the first half of this year, down from 47.3% a year ago.

Insiders said that the high inventory and agent wholesale mode made some garment retailers fall into a more difficult position.

Agency system encounters "Waterloo"

It is understood that different from the traditional clothing production enterprises heavy asset mode, the Semir clothing of the mass leisure clothing brand is implemented by proxy system, the company has no factories, and all the products are outsourced. This light asset management mode has always been the inherent advantage of Semir clothing.

By the end of 2011, there were more than 7000 shops, of which 500 were direct stores, and 6500 were about 7%~8% stores.

Experts say Semir's clothing has been expanding rapidly over the years through a strong proxy system.

But after the scale expansion, the disadvantages of the model also began to appear.

On the one hand, in order to seize the terminal channel, Semir, as a branding company, needs to give various preferential terms to the channel providers, which will erode their profits.

A staff member of the Semir store in Xidan, Beijing revealed that some of the channel merchants were worth billions of dollars, and their days were better than those of the brand.

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On the other hand, the addition of franchisees or agents makes the middle cost too high.

An obvious contrast is that foreign fast fashion enterprises, such as ZARA in Spain and UNIQLO in Japan, have adopted the direct store mode. Most of the fast fashion apparel companies such as Semir and Smith Barney adopt the combination of direct operation and franchise, and even agency.

This makes it impossible for franchisees, agents and enterprises to form a mechanism conducive to inventory control, resulting in large inventory and long accounts.

At present, domestic clothing enterprises generally use the agent distribution mode of "brand dealers wholesalers (agents) retailers" in sales channels. This mode is slow and inaccurate in response to market supply and demand, which often causes agents to order more goods for goods to be broken, and brands to store more commodities for replenishment, which will form a "false appearance" of demand being magnified.

According to statistics, in the first half of, the stock of Semir reached 1 billion 473 million yuan, nearly 30% higher than that of the same period last year, and the growth rate was 10%.

Inventory revenue ratio and inventory turnover days have varying degrees of increase.

In the view of Zhang Chunyu of the industry, compared with foreign brands, the extensive agency mode and huge distribution network of domestic brands indirectly lead to an increasing proportion of their stocks, and the brand reputation has also declined greatly.

The owner of a sporting goods store near Beijing Sport University also said that the anti risk ability of this model is very poor compared with the foreign direct brand mode.

Once demand falls, it will lead to high inventory.

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It is worth noting that, according to incomplete statistics, China

In the industry, production and sales ratio is maintained at 60%~70% level, while ZARA's production and sales ratio is above 85%, and there is almost no inventory pressure.

At the same time, even if it is a combination of direct operation and franchise, Semir is also lagging behind its domestic rival, Smith Barney.

The reason is that in the past two years, the United States has increased investment in Direct stores, and the proportion of revenue from direct stores is stronger than that of Semir.

In 2010, for example, the United States direct store accounted for 19% of the total number of stores, while the proportion of Direct stores in Semir was only 4%.

As a result, the US state expense rate was relatively high, but after this stage, the advantages of its direct outlets were manifested: in the first half of this year, while the net profit of Semir apparel decreased by 40%, the US margin net profit increased by 15% over the same period last year.

Cheng Yuan, an analyst with Dongxing securities, said: "from the point of view of the core competitiveness of the brand, Smith Barney's ability in brand building and channel management is slightly better than that of Semir, while Semir's current channel development strategy is more suited to the appetite of the capital market, but in the long run, the risk is greater than that of the United States.

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Is the era of diversification coming?

Experts admit that in fact, even in the "channel for the king" and "win the terminal" today, the agency mode still has its reason for existence.

But at the same time, as the market continues to change, especially under the impact of the financial crisis, some garment enterprises seem to realize that the channel to maximize profits is the "King" of development.

In addition, ZARA, H&M, GAP and other European and American fast fashion brand demonstration effects, a group of hot self built "direct channel" collective hot spot in recent years is in the clothing industry: Metersbonwe in the first half of 2009 spent 517 million yuan in the national enclosure, opened a large number of Direct stores; YOUNGOR, the original 3000 stores compressed to 2000, and increase the proportion of Direct stores; Steve&Vivian, less than two years of formal operation, has opened nearly 20 outlets in the national second tier cities, including the seven wolf campaign has also started the intensive cultivation of channels, the use of local agents together with the establishment of branch offices to strengthen the channel control rights and so on, and this situation is becoming more and more intense.

Experts told reporters that, first of all, competition intensifies the terminal operation cost, and the direct channel can reduce the circulation cost to ensure the terminal cost advantage; the direct channel can also extract the successful profit pattern to be replicated nationwide; more importantly, the direct channel has broken away from the gap between the middle channel merchants, and the brand operator can control the terminal itself, more flexible and autonomous, so that the terminal operation is more refined, the market operation is more planned, planned and systematic; moreover, the direct channel is more conducive to the management and maintenance of the brand, and is conducive to the long-term development of the brand.

In fact, with the extensive and in-depth competition, the market will be further broken down, and the price performance will be more pparent, which will further promote brand business's reliance on direct channel.

Under these conditions, the traditional agents will bear the double pressure from the brand dealers and competitors. On the one hand, their own brands are going to hit the mountain and tiger in a direct channel, demanding strict expectations and high expectations for the agents (on the other hand), on the other hand, the competitive advantages of the rival brand business channel are outstanding, and it is difficult to resist the impact.

At the same time, emerging e-commerce channels are beginning to exert strength.

According to relevant reports, a recent news in the industry has put pressure on many suppliers.

Starting from this year, there will be a "one day ordering meeting" for some shoes and clothing orders.

"One day, I will go back. The previous order is one week, short for three or four days, and the opening day is very rare.

"A one-day marketing tour director of a well-known clothing company revealed that the phenomenon of" one day tour "that had occurred at the outdoor sporting goods ordering meeting has begun to spread in the clothing industry.

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"This phenomenon is very normal. Our industry believes that not only the order meeting, but also the whole agency mode, may eventually withdraw from the stage of history because of the development of e-commerce.

"Speaking of this phenomenon, Wang Jiancong, President of Shishi Electronic Commerce Association and President of racket shoes net, is a blockbuster." frankly speaking, the agency mode is only based on the fact that the market information is not pparent enough in the past.

Based on the rapid development of e-commerce, it is difficult for agents to form a price advantage.

Over time, the profit margins will be greatly reduced, affecting the survival of its market.

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The rise of e-commerce has, to a certain extent, changed the traditional cognition of brand agents.

"Guo Wei, the industry insider, said.

In addition, with the acceleration of industrial upgrading, there are a number of new channel models emerging, such as television sales, mail order sales, the emergence of brand chain direct selling stores, and so on, with their unique advantages burst out strong vitality.

To be sure, the era of diversified channels of clothing industry has arrived.

Where will the reporters observe the agent mode?

Industry development and competition intensification complement each other.

Intensified competition has also promoted the process of channel diversification.

However, experts believe that in the Chinese market, the agency distribution model will still exist and play an important role in a short period of time.

After all, the Chinese market is very huge in terms of territory and capacity, and the regional differences are great. The resource support and risk sharing of agents play a vital role in the rapid establishment of the brand kingdom. Moreover, most domestic brands are built up for a short time, and many brands are strong enough to do well in the market operation level and resources, and there is no sufficient strength to directly manage and operate the national market.

Therefore, many brands will still use the resources and strength of high-quality agents to maintain the status of the brand kingdom.

However, in the era of channel diversification, traditional distributors will face new opportunities and challenges.

On the one hand, the rise of new channels brings new opportunities for development and profit channels for agents. The new and old channels can make some excellent agents quickly win new market share and become multi brand and multi-channel agent specialized agents. On the other hand, new channels weaken the traditional proxy distribution chips, divide the wholesale market share of seats, or even be directly replaced by direct channels, which will bring heavy pressure and severe challenges to some wholesalers who are only accustomed to wholesaling and distributing.

Faced with the impact of channel diversification, traditional agents should think and change.

On the one hand, we should set up self operated stores more strategically to increase the survival chips, at the same time, strengthen the management level of terminal retail, enhance the competitiveness of terminals, ensure that the share can not rise or fall; on the other hand, we should strengthen the management of traditional channels, study the characteristics of new channels, firmly grasp the channel resources, formulate strategies, open up new channel resources, carry out multi-channel operation and improve performance; or, conditional agents can develop complementary multi brand agents, reduce dependence on single brands, or combine with other regional agents to create their own brands.