Li Lang'S Big Cut Shop Transformation: Wholesale To Retail

"We have already bottomed out, and the big shuffle of garment industry may end in the second half of this year."

Hu Chengchu, executive director and vice president of Li Lang (China) Co., Ltd., said at the headquarters of Fujian, Jinjiang.

In March 9, 2015, China announced its annual performance report for 2014, with a turnover of 5.8% to 2 billion 433 million yuan, with an annual profit of 555 million yuan and an annual increase of 7.5%.

In the first half of last year, the net profit of the company was 248 million yuan, up 2.4% from the same period last year.

From 2009 to 2014, the profit growth rate of the company remained at an annual compound growth rate of 9.4%, and the net profit compound growth rate was as high as 12.9%. The net interest rate remained at above 20% level.

According to the performance in the first two months of 2015, the same store sales increased by 5% to 6%, and the annual growth rate is expected to reach 5% to 8%.

China's chairman and executive director, Mr Wang Dong Xing, said that although the men's clothing industry was in serious decline, the company did a good job in clearing inventory in 2014, and implemented a policy of "upgrading quality without raising prices", which greatly improved the product's performance price ratio and competitiveness.

Hu Chengchu believes that all this stems from the optimization and carding of the retail network by the group, thus effectively reducing operating costs and increasing profit margins.

"We have changed since 2013, and now we are constantly revising. The key is that the market environment has changed. At the outset, the supply of goods has been oversold, and the market has shifted to" selling products ". In the future, we should not only change the sales mode, but also look at the product strength.

Hu Chengchu said.

In those days, the rise of China's local clothing brand collectively, and Jinjiang, Fujian became China's menswear brand town.

Li Lang is rising at this stage. Just like other brands going out in Jinjiang, it began to build a network of stores and stores throughout the country.

Without thinking, China's economy has entered a low pition period. The once thriving traditional clothing enterprises began to face a crisis.

"Chinese men's clothing brand wants to get out of the predicament, the core of which is to change the" brand wholesale "mode and change to the" brand retail "mode, once the era of extensive expansion has ended.

Zhao Feng, a well-known clothing brand manager, told the Economic Observer newspaper.

Over the past 30 years, Chinese men's wear has gone through the process of wholesale market and brand wholesale. The weakness of the sales of men's clothing industry is mainly that the traditional extensive expansion has not changed. All clothing brands focus on "brand wholesale" while ignoring "brand retail", which eventually leads to a lot of backlog of stores.

Wang Liangxing, President of Li Lang (China) Co., Ltd. used the "omni-directional and revolutionary" to describe the change of the garment industry.

He said, "now that a brand is successful, we must do well in all aspects of R & D design, quality, price, terminal window image and operation capability."

Looking back on the changes in the past two years, Hu Chengchu also believes that the reason why Lee Lang took the lead in getting out of the industry is mainly from two aspects of pformation of channels and products.

First of all, the pformation of the channel, Li Lang established the "wholesale to retail" mode.

Since 2013, Li Lang has begun to consciously change terminal stores and boldly abandon some low profit stores.

Data can well reflect this pformation.

In 2014, the brand of "LILANZ" reduced 397 terminal stores throughout the year.

In the past, due to low rent and labor costs, the cost of opening stores was low. Whether franchisees were professionally dressed or not, they could easily get higher business profits by opening a store, so a large number of non professional franchisees poured in.

With the rise of online shopping, the high cost of physical stores starts to highlight, and the market has higher requirements for franchisees' professionalism. The retailers who do not understand the clothing retail business begin to have a dilemma, and this embarrassment is finally reflected on the brand.

The management of Li Lang is deeply conscious of the need to change.

In fact, Chinese men's wear brands are aware of this problem at the same time, but there are few real reforms in place.

In 2014, Li Lang implemented the business policy of supporting distributors to optimize the store network, and made a drastic reform of the main brand "LILANZ", closing down unprofitable shops, merging or resetting inefficient shops.

As of the end of December 2014, the number of shops in the group was 3079, of which the number of LILANZ stores decreased by 397 to 2783 throughout the year, and the number of L2 stores increased by 21 to 296.

According to statistics, in 2014, a total of 680 LILANZ shops were completed, and the remaining 250 to 300 families were expected to be completed in the first half of 2015.

The results began to appear.

According to the data released by Li Lang, the sales volume of the main brand "LILANZ" in 2014 was 2 billion 200 million yuan, an increase of 5.2%; the sales volume of the sub brand L2 was 224 million yuan, up 17.3%, accounting for 90.4% and 9.2% of the group's total turnover respectively.

The coat is still the main sales product, accounting for 69.6% of the total turnover and a 11.5% increase in sales.

While closing down the low efficiency terminals, Li Lang began to enter shopping malls in key cities, and set up a large shop.

In the 2014 annual report, Li Lang also said that this strategy will continue in 2015, and it is expected that the number of such shops will increase by 20 to 30 in 2015.

For the rapidly growing Internet sales, Li

Be cautious.

"I think the O2O of the Internet is just a false concept, because at present, China's online sales market is still dominated by discount sales, and the profitability of merchants is low, so there is no plan for online sales.

Hu Chengchu told the Economic Observer newspaper.

At present, the two brands of LILANZ and L2 have already opened flagship stores on the Internet. L2 has also been selling on many network platforms, but in addition to non seasonal products, the price of products sold online is consistent with the prices of physical retail stores, which has kept the electricity supplier business in a certain profit margin.

According to statistics, at present, the annual profit of the company is about 3000 - 50 million.

Even in the lowest stage of clothing industry, many men's clothing brands are using the Internet to clean up inventory, but Leon still insists on adopting the traditional "order system" to help agents solve inventory problems.

Before the Spring Festival every year, the Welfare Association, which is held in Jinjiang, Fujian, has become an influential activity in the local area.

At that time, Li Lang put all the inventory of the agents together for sale.

According to statistics, before the Spring Festival of 2015, the "Welfare Association" sold 150 million stocks in 45 days, although the major men's wear brands held similar activities, but only the "Welfare Association" had the best effect.

According to the plan, 2015

The overall number of stores will no longer be substantially closed, and the number of stores will remain at the same level as the end of 2014. However, plans to open large stores in shopping malls of provincial and prefecture level cities will continue to focus on four provinces in Henan, Shaanxi, Hunan and Hubei.

Contrary to the contraction of the main brand LILANZ, L2 has become the focus of the development of the company, which is a sub brand for a young customer group of 20 to 30 years old.

In the first half of 2014, L2 sales revenue was 95 million 300 thousand yuan, up 20.2% over the same period last year.

In addition to strengthening the management of the storefront, Li Lang has also made a comprehensive reform of the supply chain, trying to reduce the intermediate links. The production cost should be kept at the lowest level and the rapid response capability should be improved.

"In the past, many of our products were not self-made, but now they are directly linked to the textile factory fabric through original design. The previous one meter fabric costs 30 yuan, and now only 20 yuan, reduce a large number of intermediate links, and the annual savings are hundreds of millions of dollars."

Hu Chengchu said.

This series of reforms reflects the effect and improves the profitability of the company.

Today, in the case of tight cash flow in the industry, the fund is very abundant. The annual report shows that as of December 31, 2014, the group has a net cash balance of 1 billion 937 million yuan.