How Can Daphne Shoes Come Out Under The Decline?

The main reason for the sluggish sales is that China's economy continues to slow down and consumer desires are weak, the winter temperature is exceptionally warm, and the "double eleven" online promotion has diluted the flow of physical stores, as well as the early discounts offered by peers to make the competition more intense.

Vigorous

Once swept across the chain retail business and super industry.

As "the shoe king of the masses"

No exceptions.

In its quarterly bulletin of operations, it is clear that the number of closed shop in Daphne group has exceeded the total of the first three quarters in the fourth quarter, reaching 405 (384 Direct stores and 21 franchisees), and the whole group has altogether closed 805 outlets (692 Direct stores and 113 franchisees).

Faced with this situation, it can be said that Daphne has come to pay for the crazy expansion of the year.

The objective figures of these stores are obviously more valuable than the grand plan of opening stores.

Multilateral siege

In the earnings report, the two core brands of "Daphne" and "shoe cabinet" declined in the same period last year in the first three quarters of last year, and gradually expanded from 15.9% to 17.7% to 19.7%.

However, the fourth quarter sales have not been able to deliver good news recently, a drop of 20.2%, and a year-round decline of 18.5%.

As a result, Daphne issued a profit warning.

Of course, causal links are by no means accidental, and Daphne is quick to give answers.

The main reason for the sluggish sales is that China's economy continues to slow down and consumer desires are weak, the winter temperature is exceptionally warm, and the "double eleven" online promotion has diluted the flow of physical stores, as well as the early discounts offered by peers to make the competition more intense.

Daphne international pointed out that the benefits of accelerating the closing of the business haven't been reflected in the operating profit margin, and the sales have plummeted, and the average selling price has also decreased.

Meanwhile, according to Daphne, sales have rebounded since January 2016.

However, the increase in gross margin is limited because the company continues to offer discount promotions.

Although the weather is cold and this year's Lunar New Year is earlier than last year, sales will remain flat in the 1 quarter of 2016.

Mr. Liu, who has been in the Daphne hall for more than 10 years in Beijing, told reporters that "the market has not been good for two years. In recent years, shoes have been new, sales are catching up immediately, and fewer and fewer people are shopping now. Online shopping has become the main way of buying."

At present, the low-end women's shoes market is homogenized, and the brand personality is poor. So we have to rely on price war to attract customers, and the result of price killing is to nibble on business profits or even lose money.

He said, compared with 5 years ago, the area of the nearby business district has nearly doubled, but the total sales volume of the shopping mall has increased by nearly 7%, and the profits of the shopping malls have been diluted. The rent of the shops is growing at a rate of 10% per year, and the cost burden has increased again and again. Some brands with less obvious advantages will be eliminated directly.

As a matter of fact, Daphne's closure of poor performance stores is nothing more than a timely stop loss option. Turning off unprofitable stores will significantly reduce inventories, labor costs and return on investment, and focus on shops that can run well and efficiently.

In addition, the impact of electricity providers is also one of the reasons.

Daphne's products are mainly aimed at young people, while young people are also shopping more online, so Daphne's customers are shunted.

"Consumers with a unit price of less than 300 yuan are most concerned about prices, and they are not so concerned about the quality of service and the fashion of shoes.

At present, the mainstream of online sales of shoe products just meets the psychological needs of these consumers, and has taken a large number of customers to make these women's shoes brand more difficult to survive.

A Daphne store staff told reporters.

Xiong Xiaokun, a light industry researcher at CIC, believes that this is also related to the extensive expansion of the major shoe companies in 2012.

At present, the development of online channels is good, and most offline stores have become consumers' "shoe testing rooms".

BELLE also admitted in the annual report that due to the rapid expansion of the past few years, the department store channel has the difficulty of being inefficient in the new store and diluting the passenger flow in the old store.

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Go straight to camp

The brand of women's shoes, founded in 1990, has also seen an unlimited market, from 5 billion 290 million to HK $3, to HK $8 billion 580 million in 3 years, to 10.26% in sales and to 29.48% in 2 years.

The dividend from the market has given Daphne a taste of sweetness. In order to fully occupy the market, Daphne began to open its stores on a large scale. Since 2003, Daphne has expanded its speed with the speed of opening 150 stores in the mainland every year, and has rapidly expanded its market share in the two or three line market, which has become an important source of profits for Daphne.

Daphne's customary use of retail outlets, intensive store numbers and high frequency appears as a major marketing tool in the eyes of consumers. It is called the most primitive growth mode.

"This is at the moment when we are caught in the tide of closing shop."

Zhao Ping, a well-known consumer expert, said.

In the era of the Internet, in the face of the new market background of the prosperous electricity supplier, the traditional mode is in trouble, and the product lacks individuality. The momentum has begun to weaken, and the performance decline of Daphne has already appeared in 2012.

There was a sharp contrast between the brilliance of the past and the embarrassment of today's customs.

In the comparison of data, it is easy to find that Daphne's franchise system is declining.

In 2012, Daphne closed 113 franchises all year round; in 2013, Daphne reduced 114 stores and increased 64 outlets; in 2014, Daphne closed 174 stores and opened 257 Direct stores; as of December 31, 2015, Daphne group had 5597 core sales outlets, including 5056 Direct stores and 541 franchisees, with less than 10% stores.

In the early days of Daphne, the proportion of its franchisees was about 80%.

Insiders believe that Daphne's closure of franchisees to intermediation is intended to unify channels and enhance management efficiency.

In the past, we changed the multi-level sales chain, which was directly controlled by the brand dealers and reduced the circulation links, so as to win higher business profits.

From the perspective of brand development, joining and direct mode have their own adaptation stage. Joining is more suitable for brand start, while direct camp is more suitable for brand maturity.

The disadvantage of affiliate mode is that on the one hand, it will increase the circulation cost; on the other hand, franchisees pay more attention to short-term interests, while brand businesses value long-term interests, and the two will often conflict.

In the past two years, disputes between Daphne and franchisees have been continuous and deadlock.

As customers' demands for goods, services and retail terminals are getting higher and higher, enterprises begin to understand that they want to occupy the market. They must be guided by "customer needs" and provide goods and services that best satisfy the needs of the target customers.

Terminal as the ultimate contact point between goods and customers is particularly critical. Whoever controls the terminal will control the consumers.

Therefore, Daphne closes the franchisee actually is a strategic decision, the brand will finally choose to go straight battalion pattern, the brand business only then controls the terminal, can form the benign cycle.

However, franchising has also brought challenges to the human, material, financial and channel control capabilities of enterprises.

Daphne will now move to direct camp as a way out, but it is not the only one.

Seek breakout

Facts are in sight. Sales decline year by year, cost rising, and Internet business impact are driving the retail industry to the path of self pformation.

In the future era of price performance and product customization, how to make adjustments is the problem Daphne needs to face.

It is worth mentioning that, despite the decline in Daphne store performance in recent years, the 2015 fourth quarter and year-round online sales have increased, and in Tmall's "double eleven" activities, Daphne brand has won the category of women's shoes champion.

Only, e-commerce business in Daphne group's sales ratio is not high, its growth can not offset the negative effect of the physical store passenger flow to be diluted.

For 2016 is not the pformation of online sales questions, Daphne responded by the end of March will formally announce the business business plan.

The rapid rise of fans economy makes the traditional economy also take advantage of the situation.

Compared with other shoe brands, Daphne seems to be especially keen on the star effect. It regards star endorsement as a big weapon in the business war, trying to win a wider market for its own by celebrity endorsement, and thus defeats its competitors.

Once invited SHE, Rene Liu and other Taiwan stars to speak.

At present, the new round of endorsement includes Nicholas Tse, Liu Shishi, Gianna Jun, Gao Yuanyuan and so on.

And made a model innovation to endorsement, and entered into a joint venture with stars. For example, the new brand of Daphne and Gao Yuanyuan circulate each other, and share 50% of each other's shares.

Objectively speaking, endorsement fee is indeed a major investment, and how many fans can be pformed into consumers?

AOKANG, the shoe brand, once invited Korean pop star Kim Su Hyon as spokesperson, which instantly attracted fans' attention.

According to AOKANG, only one endorsement fee costs 11 million yuan.

But it's hard to say whether the effect can be directly proportional to the cost of hitting it. How much does it cost to invest? How many pairs of shoes do AOKANG need to sell to earn 10 million?

In the face of difficulties, the footwear and clothing industry is constantly seeking new profit points. Besides developing the inevitable choice of online channels, many enterprises choose to develop sideline sub cards.

BELLE's own brands include BELLE, Teenmix, TATA, Staccato and more than 10.

Although Daphne is still the core brand, and sales account for more than 90% of the group's revenue, it is also trying to diversify its brand operation. The group has 10 brands, including Daphne Daphne, shoe cabinet Shoebox, Daphne, Zhen Daphne.Gene, Ru Renee, sweet Beibei SweetBayBay and so on.

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But the industry believes that the implementation of multi brand strategy will cause many problems for shoe companies.

Many different brands coexist at the same time, shoe companies need to invest more, and the existence of multi brands increases their risk of competition. The most important thing is the serious homogenization of products of major brands.

There are prophecies that now is the time when women's shoes shop starts to break out. In the next 3 years, women's footwear industry will enter the stage of survival of the fittest.

At present, reducing the number of franchisees, opening more direct stores, and expanding the number of stores to upgrade the quality of stores is becoming a train of thought for many brands to adjust.

In fact, last year, the whole women's shoes industry had a hard time.

China's retail business data for the third quarter of the 2015/2016 fiscal year show that footwear sales in the same month in September 2015 dropped by 10.4% in the month of September 2015.

Saturday (11.71, 0.31,2.72%) reported in the three quarter of 2015, the company's ~9 income fell 3.47% in January 2015, and net profit fell 17.79% compared to the same period last year.

But it is worth noting that although the shoe industry is in a slump, consumers are ushering in their peak time to choose their right.

Therefore, the pformation and upgrading of the traditional retail industry can only be done by making efforts to become a cost-effective place and allow consumers to patronize.

After all, it is the kingly way that products are favored by the audience. Whether Daphne can break through this can only wait and see.