The Development Mode Of Hai Lan's Family Under The Crazy Shop

In the past few years, many domestic enterprises have been running into difficulties in the clothing and footwear industry. Hai Lan's home But crazy shop. In 2014, there were more than 460 new stores, more than 260 new stores opened in 2015, and 650 new stores opened in the first half of 2016. This is what we call "Hai Lan", the main business of men's clothing, to compete with UNIQLO. What kind of company is the Hai Lan home? What is its business and business model? Why do other businesses in the industry run difficulties and when they get into trouble, they can still continue to sing like other foreign fast fashion brands in China's domestic market?

　　 Industry situation

Due to historical reasons, domestic clothing companies have chosen different business models, which are mainly divided into Franchise mode Mainly in the United States, costumes, Semir costumes, seven wolves as the representative and the direct camp mode is the main (to card Nu Di Road, as the representative of the shares).

Compared with the direct business oriented mode, the franchising mode, because there is no need for brands to find their own stores, can make use of the existing sales channels of franchisees to realize the rapid expansion of stores in the short term, thus achieving rapid expansion of sales revenue, rapid accumulation of capital and rapid improvement of brand influence. This mode is widely used by many Brand Company.

However, because franchisee ownership is all the franchisee, franchisee and brand business interests are not unified, brand operators are difficult to form effective control over terminal stores, so it is difficult to have unified control in entity channel image, goods management, sales data and so on, let alone have a keen feedback on terminal sales, and make a quick response to changes in consumer demand. "Connecting but not locking" has become a common phenomenon. Once the boom in the industry has declined, the expansion of stores has entered a flat period, bringing inventory backlog and other problems. The disadvantages of franchise mode are gradually showing up. In the past few years, the United States, Semir and seven wolves, which are mainly based on the franchise mode, have encountered operational difficulties.

In the past few years, three major clothing brands, UNIQLO, H&M and ZARA, have been demolished in China. These three companies all adopt SPA (SpecialtyStoreRetailerofPrivateLabelApparel, "private brand professional retailer") mode. The core is "manufacturing and retail integration". Outsourcing of production links, brand building and terminal operation basically adopt direct battalion mode, which has strong control over terminal sales channels, high degree of supply chain and inventory management, and quick response to changes in consumer demand.

　　 The business mode of Hai Lan's home

The home of Hai Lan Light asset mode operation The company has no production links, stores are mainly franchising models, and there are very few direct outlets. The sales link adopts the mode of consignment, and the settlement of the tail accounts is carried out after successful sale.

Hai Lan's home mainly adopts a retail oriented credit purchase mode. In addition to paying a small part (usually not more than 30%) in advance when goods are in storage, the payment of the goods is guided by retailing and combined with the actual sales situation of the goods. Because Hai Lan's home has mastered the quality of sales channel resources, has a good brand image, product sales situation is good, suppliers give the company better credit support.

The retail oriented credit purchase mode has reduced the capital occupation of Hai Lan family's procurement link, and further promoted the low cost expansion of Hai Lan's home. Because Hai Lan's home controls sales channel resources and brand, it achieves high cost performance in the retail sector.

In order to make full use of the channel resources of the Hai Lan home, put more marketable goods in the store, reduce the occupation of channel resources by the unsalable commodities, and at the same time, in order to make the suppliers more responsible and better protect the quality of products, the Hai Lan home and the suppliers signed the purchase contract with the provisions of the "returnable goods returnable" terms. Except for the unqualified products and the goods with quality problems that could be returned, the goods that were still unsalable after a certain period of time (usually two marketable seasons) could be returned.

Since the end of 2012, Hai Lan's home has taken major reform measures in the procurement process. Hai Lan's home is combined with its main suppliers to negotiate and negotiate with upstream suppliers of raw and auxiliary materials. After obtaining the price discount, the supplier of the sea LAN home supplier will sign the purchase contract with the raw materials supplier respectively, thus effectively reducing the cost of production of the Hai Lan home supplier. On the other hand, after grasping the price information of raw materials, Hai Lan's home office can control the price of suppliers' garments more effectively, avoiding the problem of high price of suppliers affecting the price performance of products.

The decline of procurement cost brought about a decline in sales prices, thereby stimulating the growth of clothing sales. The rise of clothing sales has further led to a substantial increase in the volume of purchases. The main suppliers' operating rate has been more saturated, and the proficiency of employees, utilization of raw materials, and clothing yield have been greatly improved. The scale effect also reduces the production cost of the suppliers, thus reducing the purchase price of Hai Lan's home. The reduction of procurement cost provides space for Haolan's home to reduce the unit price of products under the premise of keeping the gross margin of products basically stable. Haolan's home has greatly promoted the sale of products through the improvement of the price performance of products.

The purchasing mode of Hai Lan's home, the interests of suppliers and the interests of Hai Lan's home are closely combined, forming a community of interests. Hai Lan's home can make full use of the clothing production resources of the suppliers.

Hai Lan's family mainly takes the mode of separation of ownership and management rights in the sales link. The company owns the management rights of the stores, and actually controls the sales channels. Although franchisees have the ownership of the franchisees, they do not have the specific management rights of the stores. The management of all the stores You Hai Lan's home is fully responsible. The recruitment, training, hiring, dismissal and management of franchisees and management personnel, the remuneration standards of managers and salesmen, the specific business activities such as stocking, replenishment and seasonal replacement during the agreed period are all managed by Hai Lan's home on behalf of franchisees. Hai Lan's family actually controls sales channels, which is a direct business mode.

Under the joining mode of Hai Lan's home, there is no requirement for franchisee's experience in garment industry. In fact, franchisees only need to undertake rent or depreciation and related expenses, and do not need to participate in the management of franchised stores. This greatly reduces the threshold of joining, and can maximize the use of social resources to speed up the layout of Hai Lan's home marketing network. This is also the reason why Hai Lan's home can be opened quickly every year.

Hai Lan's home does not set up agents at all levels. All franchisees sign the franchise contract directly with the company on each franchisee, and the franchisee has directly faced consumers, forming the most flat sales level of "supplier Hai Lan home - store consumer", and the shortest sales link means the minimum step by step increase in price. At the same time, Hai Lan's home and its franchisees do not bear the risk of unsalable inventory. When they sell goods, they do not need to increase their risk premium on commodity prices. As Hai Lan home reduces sales and inventory risk premium, it can reduce the retail price of goods and give the best to consumers, and the high cost performance of goods can promote the sale of goods.

Therefore, Hai Lan's home has innovative management mode to fully integrate the resources of the entire industrial chain, and the interests of suppliers, franchisees and Hai Lan homes are directly linked to the final sales of products. The industry chain partners, under the assumption of limited risks, establish a win-win relationship with retail oriented resources. All resources are allocated to promote the final sale of commodities, and each of them performs their duties and benefits and develops jointly, forming a virtuous circle of the industrial chain.

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