"Weight Bearing" Restructuring Domestic Sports Brands Into Growth Track

After years of high inventory, declining performance and intensive negative news, the local sporting goods market is finally showing signs of recovery.

Recently, the semi annual report released by several listed companies in the industry shows that the business performance of Anta and PEAK has entered a new growth track.

Just as

Ding Shizhong, chairman and chief executive of the board of directors, called "not learning Nike". The recovery of the local sporting goods industry has strong Chinese characteristics.

Compared with Nike and Adidas's "light assets" mode, Anta and PEAK are becoming more and more important in their business assets, and they are more deeply involved in every aspect of the industry chain, including production and sales.

In the view of the industry, under the premise of brand and resources being lost to international brands, deep ploughing on the upstream and downstream of the industrial chain makes local enterprises more effective in cost control and channel pformation, and easier to help enterprises out of the mire of industrial recession.

China's sports brand has seen a rare achievement recovery in recent years.

The financial reports showed that Anta's revenue in the first half of 2014 was 4 billion 120 million yuan, up 22.4% over the same period last year, net profit 803 million yuan, an increase of 28.3% over the same period last year; PEAK's revenue in the first half of the year increased by 10.1%; XTEP's (XTEP stores) group's total revenue increased by 1.8% compared to the same period last year, and its profit decreased by 16.6%; 361 in the first half of the year, the growth rate was 4.6%, and the net profit was 263 million yuan, an increase of 263 million over the same period.

Since the 2008 Olympic Games, the rapid shrinkage of demand has caused the sports industry in China to suffer the most serious decline in performance and high inventory in history.

According to the statistics of reporters, only one year in 2012, the number of stores listed in 6 industries such as Lining (Anta franchised store), Anta, XTEP and so on was 5000.

Signs of recovery in the sports industry have emerged from the earnings of major companies in 2013.

In 2013, Anta, PEAK, XTEP and other brands were still on the decline in terms of revenue and other data, but the decline has narrowed considerably compared with the previous years.

Zhu Qinghua, a light industry researcher at CIC, said that after years of struggle, the sports brand industry showed signs of recovery, mainly because the Chinese economy began to pick up, and the market environment for sports brands improved and consumer demand rebounded.

At the same time, in the low period of the industry, the adjustment of the internal management adopted by the major sports brands seems to have achieved initial success.

Nevertheless, the closing of many companies is continuing. In the first half of this year, XTEP international closed 50 stores, and closed 159 stores at 361 degrees.

Lining also failed to reverse the trend of losses. In the first half of the year, although the company's revenue grew by about 8%, reaching 3 billion 137 million yuan, the loss reached 586 million yuan, which was higher than the full year loss in 2013.

In sports products industry, Anta's financial data is undoubtedly the most bright spot, and its profitability is second only to the peak of 2011.

Industry analysts said that Anta's performance was warmer than its positive channel pformation.

Since 2012, Anta has begun to pform its retail strategy from the original brand wholesale mode to the brand retail mode, and actively helps dealers to maintain their competitive edge.

In addition to implementing flat organization, monitoring retail sales and improving store management, Anta also analyzes market data by analyzing ERP data, and provides more precise guidelines for dealers.

Anta dealer told reporters that a very big change is that former brands can only manage a few limited distributors and have no management of retail stores.

But now it will not only organize human resources to assist distributors in marketing, but also make suggestions on details such as distributors' products.

PEAK is also undergoing similar flat channel reform.

"For example, distributors in Taizhou, Zhejiang, were formerly distributors in Hangzhou, but now they are directly responsible for the company."

PEAK official said that the move would help reduce the cost of communication between distributors and companies and improve the terminal reaction speed.

Before some large distributors, the scope of control is smaller, management can be more elaborate, and the efficiency and output of stores are bigger than before.

Sports industry marketers Ma Gang said that with the intensification of competition and the shrinking demand, the growth period of sporting goods (gold stores) has passed. This also means that the era of frenzied shop opening of major brands is over. Instead, it is the refinement management of various enterprises to realize the pformation from scale to profit.

It is expected that in the next few years, the shutting down activities of various enterprises will continue.

But at the same time, the upgrading and pformation of stores will become the key task of various companies.

Another factor that supports the recovery of domestic sports brand performance is attributed to the industry's control over the supply chain.

Ding Shizhong has recently proposed that "we cannot learn the Nike model completely. If that happens, we will be finished."

As we all know, the mode of Nike and Adidas in sports products industry is "light assets": we must seize the links in the design and promotion of the industrial chain, and will pfer production and sales to external companies.

In contrast, the business models of domestic enterprises have become more and more important in recent years.

Anta means that from the upstream procurement, R & D, design, production, downstream brand marketing, channel distribution, and then to the relevant after-sales service, Anta participates in every aspect of the industrial chain.

PEAK executives said that PEAK and Anta both have their own factories, which can adjust production rhythm through their own capacity and help clean up inventory, and there is more room for maneuver when the industry growth rate declines.

For example, when the market changes, Anta and distributors adjust the number of orders that have not yet been produced, so as to reduce potential stock.

At the same time, its own capacity can also enable enterprises to make quick replacement orders according to market demand, so as to enhance business efficiency.

Channel reform is also an embodiment of "assets becoming heavier". Not only is it closer to the distributors, but also in order to strengthen the control of the terminals, various enterprises have increased the proportion of Direct stores in recent years.

"This will also be the trend of the industry."

Ma Gang believes that compared with Nike and Adidas, local sports brands can not compete with them in the development stage or the brand influence. This also determines that local sports brands can not be applied mechanically in business mode.

On the contrary, if local brands consolidate the foundation of production, sales and after-sale links, their future competitiveness is likely to form the core competitiveness of foreign investors.