Can BELLE'S Privatization Syndicate Rewrite The Old Retail Elegy?

Decade,

Guo international circled the capital market and returned to the starting point.

According to the world clothing and shoe net, in July 17, 2017, BELLE international privatization scheme was approved by 98% shareholders. It will withdraw from the Hong Kong Stock Exchange at HK $53 billion 135 million valuation, close to its market value of HK $52 billion 300 million on the first day of 2007, and its market value shrank by more than 60% compared with the peak period in February 2013.

The brilliance of the play is quite different from that of the lonely.

However, judging from the current operational situation, BELLE's

The brand still occupies half of the domestic shopping malls.

BELLE, Staccato, Staccato, Staccato, Teenmix and so on, plus proxy Bata, Clarks, HushPuppie, and other brand marketing recognition is still in existence; BELLE distributor agency Nike, Adidas and Adidas, sports and clothing brands are still in the market rising period.

The last annual report of BELLE's privatization showed that in 2016, although the number of shoe retail outlets decreased by 700, the number of sports and clothing retail outlets increased by 543, and the overall stability remained. In February 28, 2017, the total number of BELLE self owned retail outlets was 20841.

As a brand operator developed in the traditional retail era, BELLE has built a relatively complete management and expansion structure of multi brand and multi business category. At the moment, although the financial indicators are not good, there are no major mistakes in the management of the company.

Perhaps everything is wrong as Ma Huateng said, "nothing is wrong."

In the past few years, BELLE's financial data has been declining for several years.

The new e-commerce has experienced super high speed growth and tends to increase steadily, turning into a traditional industry.

Ma Yun again mentioned the concept of new retail, under the guidance of it, the entity store has become the main battleground for the big business competition.

But the new retail store is no longer a simple sales center, but a user social experience center.

BELLE may have underestimated the power of technology development to change consumer habits, perhaps suffering from the "ship turning around", which has lost the wave of consumer led upgrading led by mobile Internet, and has become the representative of old retailers, facing the fate of gradual retreat.

An unassailable model in the traditional retail Era

The BELLE brand was first founded in Hongkong, and exported products to Southeast Asian market in the early years by virtue of the low cost of production in the mainland.

In the 90s of last century, Hongkong designer and industrialist Deng Yao introduced BELLE into the mainland, repositioning the mainland market, and co operating with Sheng Bai Jiao to set up a brand production and sales channel.

BELLE's early success stems from its leading mode in production, design and management.

In 1997, BELLE changed its past mix and batch mode, established a franchise system, integrated more abundant market resources in a relatively short time, and quickly expanded the market share of the brand. At the same time, BELLE chose the marketing director as the production supervisor and design director, pforming the sensitive information into product driving force, and foothold in the mainland market with the retail oriented mode.

In 2002, in order to avoid being kidnapped by dealers, BELLE started the industry again. Deng Yao, Sheng Bai Jiao and BELLE dealers jointly established BELLE investment. BELLE invested as the exclusive distributor of BELLE group, so that the company successfully took over the channel control power from the dealer.

In 2004, BELLE Group acquired BELLE's investment in all assets. The group completed the vertical integration layout of brand, production, design and retail, and took the lead in the footwear industry in the mainland to implement the "straight line chain operation mode" which integrates production, supply and marketing by relying on the production enterprises as the leader and with major shopping malls and regional distributors as the basis.

After the listing of BELLE in the HKEx in 2007, in addition to the fast opening channels, the merger of horizontal integration is more frequent.

380 million yuan acquisition of Fila, 600 million yuan acquisition of Millies, 1 billion 600 million yuan acquisition of cedar...

Plus Teenmix and other brands, BELLE has formed a super brand matrix: BELLE, BELLE, real beauty, and so on. The agency brands include Bata, CAT, and...

Basically, we have achieved the full age and full price coverage for users.

Guided by the principle of "channel to promote brand and multi brand consolidation channels", BELLE launched the strategic layout of multi brand and multi branch stores. "Wherever women go, there must be BELLE shops" because women's consumers are very random. The coverage of storefronts plays a very important role in promoting their consumption behavior.

The consumers picked up in the department stores, and finally found that they bought all the products of BELLE family.

In this way, BELLE once had the absolute advantage of brand and channel, and no one could compete in the Chinese women's shoes market.

According to the statistics of the China industry and business information center of the State Statistics Bureau, 6 of the top 10 domestic shoe leather shoes ranked BELLE group in the year of 2013. They are BELLE (first), Teenmix (second), he (third), Staccato (fourth), best picture (fifth) and sun Da (ninth).

At present, BELLE's "offering a lot of styles, introducing a large number of brands, small batch production and frequent replenishment" is very similar to the popular fast fashion nowadays.

2012 is a watershed.

The change began to emerge in 2012.

Although BELLE's revenue continued to grow by 13.5% over the same period last year, its net profit increased by only 2.3%, while the net profit growth of the company remained above 20% at this time point (except 2008).

The more dangerous signal is that in the second half of 2012, the average sales and performance of BELLE's single store declined significantly.

After 2012, the company's revenue growth continued to decline. In 2016, its revenue grew by only 2.2%, but net profit fell by 18.09% compared to the same period last year.

In fact, from 2011 to 2014, the overall supply of women's shoes in the mainland exceeded the demand, and the store grew by 52%, but the market increased by only 13%.

The overall downturn in the women's shoes market has obscure the problem of single companies. In those days, the traditional brand of women's shoes all met with "Waterloo". Compared with competitors such as BELLE, Daphne and Saturday, BELLE was also the most optimistic one.

As a result, the market share of BELLE products in 2012 was still rising, and it did not enter the downward track until 2013 reached its highest position (Figure 1).

Chart 1: the market share of BELLE products has declined since 2014.

All this announces the end of an era. "Women's shoes brand has been difficult to continue through the rapid expansion of the sales network."

In fact, since 2012, BELLE has realized the risk of over reliance on footwear business, and began to accelerate the increase of the market in the expanding sports clothing shop and slow down the shop opening speed (Figure 2).

Figure 2:2012, BELLE has accelerated the addition of sportswear shops, slowing the expansion of shoe shops.

In recent years, BELLE has continuously expanded its new sports apparel sales business, reducing the proportion of footwear business (Figure 3).

In 2014, its footwear business income accounted for 57.6% of the total revenue, but it dropped to 51.7% in 2015, and this figure was only 45.5% in 2016. In the same period, the income of footwear business decreased by 10% to 18 billion 960 million yuan compared with that of the previous year, while the sports apparel business increased 15.4% to 22 billion 747 million yuan.

However, the promotion of sportswear sales business is not enough to make up for the decline of footwear business, and it is impossible to reverse the decline of the entire company caused by the traditional retail mode genes.

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Chart 3: the rise of sportswear sales business can not reverse the overall decline caused by the traditional retail mode genes.

Also in 2012, Taobao mall officially changed its name to "Tmall", announces the opening of another era -- online retailing is being widely popularized, and offline sales are being squeezed (Figure 4).

With the popularity of e-commerce channels and the healthy environment of the mobile Internet, the cross border electricity providers have springing up rapidly. Hai Tao has also become very relaxed. Unlike the past, users browse and collect their favorite products on the Internet, and place orders and payments on the official website or cross-border electricity suppliers, waiting for the goods to be collected. The extra cost is only one to two weeks' logistics time cost.

And women's shoes have been far ahead in the cross-border e-commerce sales category rankings. The high-end market positioning of BELLE products is more consistent with the customers of Hai Tao, and its competitors are no longer just local brands.

A more important point is that BELLE group's core competitiveness and the most powerful moat - general merchandise channel has been completely destroyed, and the share of this channel is declining rapidly (Fig. 4).

Photo 4: Sales of women's shoes under BELLE have been decreasing since 2014.

The advantage channel of BELLE has been disabled by e-commerce. If the company's response is not sensitive enough, it will not be fair enough.

BELLE was a domestic retail brand that had earlier stepped into the electricity supplier. In 2009, it built its own e-commerce platform, Tao Xiu net. In July 2011, it also invested in the establishment of the B2C platform purchase network, which fully pplanted the resources of Tao Xiu net to the excellent purchase network. At the same time, it also had a layout in Tmall and other electronic business platforms.

But for a long time, because of too strong offline channels, the company's understanding and positioning of e-commerce has always been biased. In the 2012 annual report of BELLE, this positioning: "as a part of the brand's full channel strategy, the natural extension to the online channel."

In the open platform such as Tmall, we will set up a number of flagship stores to suit the differentiated product mix and differentiated pricing strategy of the consumers of these channels, and constantly train and expand the target consumer groups.

To a certain extent, BELLE will only take the electricity supplier as a channel to clean up the quarterly money, and consumers will not buy it.

In this case, the electricity supplier can not only become the main channel of marketing, but also has a negative impact on the establishment of online brand image, and almost never adopts the most influential social marketing at present.

So far, BELLE group 80% sales and 90% profit from department stores.

Although there are more than 20000 offline retail outlets, but because there is no new retail thinking, we do not know exactly who is the user, and its marketing remains in the former Internet era.

Compared with the current social marketing brand, the gap is increasing.

Deng Yao, founder of the company and Sheng Bai Jiao two people are known as "best partners" by the outside world, and two people have appeared in public more than once.

But it is worth noting that Deng Yao, who has been in office for over eight years, no longer participates in the operation of the company. The actual helm of BELLE international is 66 years old, and he has publicly stated that he will not use computers in the performance briefing. He faced the first downturn in 2015, and Sheng Bai said, "I am 65 years old, and how much longer I can spend".

In the latest annual report, the management's introspection is the most clear illustration of the decline of BELLE group: "with the rapid upgrading of consumer maturity and the changing pattern of retail channels, the group's past effective business models have been faced with major challenges, and many of the traditional success factors have gradually become inferior.

Besides the lack of channel strategy adjustment and the lack of new marketing methods, there are many problems in the core footwear business, such as brand image aging, product renewal cycle too long, lack of design sense, low cost performance and so on.

After privatization, pformation of new retail?

According to the announcement, the BELLE international takeover bid was led by high alpine capital, the founder of CDH investment and BELLE international management.

Once privatization is completed, BELLE international will withdraw from the HKEx to Private Companies. Among them, the proportion of high leverage capital to BELLE international will be 56.81%. CDH investment holds 12.06% of SCBL shares, and BELLE's international shareholders management will be 31.13% of the total.

With the completion of the privatization, BELLE chairman Deng Yao and CEO Sheng Bai Jiao will no longer hold shares in the company. The Deng Yao family owns 20.76% of BELLE international through MCIL, and Sheng Bai Jiao has a 5.98% stake in BELLE international through star castle and fortune global.

With the offer price of HK $6.03 / share, the Deng Sheng family will cash in HK $13 billion 93 million.

Where will BELLE go after privatization? BELLE said in its announcement that the high leverage capital and CDH investment plan put financial and operational resources into it, exploring new retail models, implementing a series of pformation and innovation initiatives, and putting a lot of resources into technology, logistics and talent.

In addition, BELLE's chief executive Sheng Bai Jiao also said that BELLE will integrate traditional retail and digital economy.

It is the most important task for BELLE group to take customer as the center and start the pformation of new retail mode from the aspects of products, brands and channels.

In the future, BELLE's largest shareholder, the resources of high allocating capital, is very deep in the Internet field. It has successfully invested in new technology enterprises such as trickle trip, US group, Wei Lai automobile and motorcycle company.

Analysts believe that the new shareholders will start from the electricity supplier and big data, and help the front-end sales and the back-end supply side to help BELLE understand the market and consumer demand more quickly, so that the processing of orders, inventory and other issues will become more flexible.

The privatization of BELLE also opened a new path for the retail industry to explore the pformation of "consortium + enterprise".

Over the past few years, most of the capital has been stuck in new industries such as finance and the Internet. Many traditional retail businesses have experienced a cold spell. Big tycoons, including BELLE, have seen varying degrees of decline.

Nowadays, capital is hand in hand with industry, which is a turning point for BELLE.

Traditional retail and digital attempts may pform the once large and large number of retail outlets into the flow of BELLE's new retail mode.

If the experiment is successful, the future BELLE will become the pformation sample of the industry's peers.

More interesting reports, please pay attention to the world clothing shoes and hats net.