How Should Chinese Clothing Brands Save Themselves?

Successful

There are two sources of competitive advantage: Soul designer drive or consumer insight drive.

The former is represented by designer brands such as Zegna and D&G, while the latter is represented by retail brands like ZARA and UNIQLO, relying on efficient value chain operations to win with accurate and timely consumer insights.

The vast majority of Chinese clothing brands do not possess the two elements mentioned above, but have achieved the success of the past ten or twenty years by creating the so-called "high visibility and high channel penetration".

This mode gives the main commodity design work to the supplier, and focuses on advertising heavily in the media, and develops large scale distributors and stores to achieve rapid sales growth.

In the early days, the mode really saved the cost of design, development and self built sales network, catering to the consumers' single pursuit of "popularity" at that time.

However, this development mode is hard to keep up now.

From the consumers' perspective, Chinese consumers' attitudes and tastes on clothing have gradually been in line with international standards.

With the massive entry of international brands, the increasing popularity of Chinese consumers' overseas tourism and the accelerated spread of information platform, the manipulation space of local brands at the brand level is getting smaller and smaller.

Consumers no longer believe in online marketing such as advertising, but are able to communicate clearly and consistently with the brand, personality and positioning of products, stores and services.

These changes make local brands suddenly "acclimatized" and are at a disadvantage in the competition of international brands with emphasis on design and personality, and prices are constantly being explored.

On the other hand, with the slowing down of the macro-economy, the problem of business mode accumulated for a long time is also exposed.

First of all, clothing enterprises are generally facing the same store growth slowdown.

Over the past 10 years, China's main local sportswear has been fully funded through listing and so on, so it has expanded rapidly with large-scale advertising, developing distributors and opening stores.

However, over the past two years, the overall decline in the sports apparel industry has slowed down most of the company's sales growth.

In addition to Lining, the 361 month 11~12 sales in 2011 dropped sharply, and the channel inventory ratio increased to 4.2 times in the fourth quarter. The number of new stores was also reduced to the lowest level ever recorded. In 2011, there were 958 stores with 958 net sales in 2010, while 229 in 2011 alone. Sales of PEAK were expected to grow in number, and three production bases before the investment slowed down.

Second, stock surged.

Li Ning Co semi annual report 2012 showed that as of June 30th this year, the company's inventory was 1 billion 138 million yuan, the number of days of inventory turnover increased from 72 days in the same period last year to 95 days.

The clothing industry and its upstream

The half yearly inventory of the 80 listed companies is up to 67 billion 166 million yuan.

In the clothing industry alone, the stock of 11 companies including YOUNGOR, Hong Kong Group, China group, Mei Bang dress and Semir apparel all exceeded 1 billion yuan.

Behind the serious problem of inventory is the stubborn disease in the development of the local garment industry: the homogenization of products is serious, the brand advantage is not obvious, and the substitution is strong; the industrial chain is too long, which leads to insufficient brand demand for the end consumers, while the demand fluctuation of the industrial chain terminal is multiplied in the upstream.

Third, the fast fashion business model, represented by H&M and ZARA, is growing rapidly.

Since the beginning of this year, the international fast fashion brand has accelerated the pace of occupying the Chinese market.

In China's fashion apparel industry, production and sales ratio is maintained at 60% to 70%, which is a good level, while ZARA's production and sales ratio is above 85%, and there is almost no inventory pressure.

It is not easy to replicate fast fashion mode. Fast fashion integration platform is a powerful operation machine, which includes 5 links: consumer insight, product design, sales and marketing, and supply chain retail management.

In the consumer insight stage, the store manager has more decision-making power, stores strictly manage the flow of stores and products sold, and continuously track customer trends.

In the product design process, the brand will develop new products according to the existing fabrics, yarns and accessories, and listen to the store manager's opinions while developing multiple product lines.

Sales and marketing will closely integrate the design and production process, shorten decision-making time as much as possible, establish flexible supply chain and new supplier relationship, and manage fast fashion supply chain and traditional supply chain.

In the last stage of retail management, the brand has more "pipeline" that needs to be managed, has more accurate forecasting ability and replenishment mode, at the same time, it can increase the frequency of delivery.

Because there are no distributors and other links, the low price of fast fashion brands also has an impact on local brands.

Fourth, the importance of shopping malls is increasing.

At present, frequent discounts and promotions in shopping malls cause impact on stores and other channels, and make manufacturers unable to unify retail prices.

This seriously affects the price strategy and profit margin of the manufacturer.

Finally, the proportion of China's apparel online shopping to the overall clothing market will be further improved, which poses a great threat to traditional clothing enterprises.

How to save oneself

The successful business model of garment enterprises has shifted from the initial stage of the past to the external market driven stage to a business mode competition stage based on customer experience and combined with competitor evaluation and capability / cost.

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Looking at the relatively successful brands, what they have in common is that they make full use of differentiation strategy to compete.

Specifically, first of all, garment enterprises should liberate themselves from the lengthy industrial chain (brand dealers, franchisees, distributors and consumers), open up the industrial chain, increase and maintain the right proportion of direct operation, and realize the virtual inventory management mode.

Secondly, change the past situation of consumers' lack of knowledge, and gradually understand consumer segmentation and value appeal.

Thirdly, we should change the pattern of "one lot of goods", provide different products designed for different customers, and design differentiated products for target customers on the premise of a clear understanding of the consumer segmentation market.

We should form differentiated competition with competing products so as to minimize the negative impact of high level of storage in the industry.

Finally, we introduce advanced retail management, use the same tools to manage wholesale business, and use scientific data analysis tools to formulate ordering and replenishment strategies.

We should improve the VMI (Vendor Managed Inventory) mechanism in the direct store system and achieve the pfer of goods in the system.

The VMI mode is gradually extended to franchisees and distributors.

It is worth mentioning that clothing enterprises can also draw inspiration from the futures business mode and turn to spot futures mixed management to manage inventory problems.

Taking the luxury industry as an example, the supply chain and product series are subdivided on the basis of the needs of the category combination, thus increasing the breadth and depth of supply, improving the passenger flow, the number of visits per season,

The number of times and the average sales volume will be changed from irregular to controllable.

Of course, clothing enterprises' "self-help" needs a process, and it also needs to formulate reasonable growth targets.

At present, clothing consumption may enter a low growth period for a long time, and the penetration of channels has reached a certain limit. Enterprises need to predict future growth goals more rationally.

(China fashion brand network)