The Road Of Lining'S Rise And Fall In The Past 28 Years: From The Rise To The Continued Loss, The Final Brand Remolding

1.1 Lining introduction: domestic sports brand strong, diversified brand portfolio

Lining, the famous Olympic champion of China, was founded in 1989 after retiring.

In 1990, Lining founded Li Ning Co Ltd in Sanshui, Guangdong, and was listed in Hongkong in 2004. After listing, it has been the first place in China's domestic sports brand. It was only second in 2011 until it was surpassed by Anta.

Despite the sharp decline in net profit from Lining in the 2011 ~2014 pformation, since 2015,

The business situation has been gradually restored. After 28 years of ups and downs, Lining, a famous Chinese sports brand pioneer, still lives in the forefront of Chinese sports brands.

As one of the leading sports brands in China, Lining has set up marketing, research and development, design, manufacture, distribution and retail.

Clothing, equipment and accessories products.

The company mainly uses outsourcing production and licensed distributor mode. As of 2017, Lining's sales network was 6262, covering 31 provinces and autonomous regions throughout the country.

Lining adopts a multi brand strategy. The brand portfolio includes the brand of the Lining main brand and the third party joint venture established by independent research and development, covering professional sports, sports and leisure, sports and fashion, outdoor sports, children's wear and other fields, including Lining's main brand, Ai Gao, red double happiness, Lotto, Kaisheng and Danskin.

Focusing on the domestic low-end market, positioning the two or three tier cities:

The income of China's Hongkong and Mainland China is the main source of Lining group's revenue: Lining's total revenue in 2017 was 8 billion 874 million yuan, and its revenue in Hongkong, China and Mainland China was 8 billion 634 million yuan, accounting for 97.3% of total revenue.

Lining positioned two or three line cities: Lining's channel was mainly distributed in two or three line cities, and the number of two or three line cities accounted for 61% of total network points.

The growth of Lining's main brand's income is the main driving force of the group's revenue growth: in 2017, the total revenue of Lining increased by 11% over the same period last year, the annual compound growth rate of the listed company was 13% in 2004, the net profit in 2017 was 515 million yuan, and the compound annual growth rate since 2004 was 11%.

Among them, Lining's main brand 2017 revenue was 8 billion 819 million yuan, an increase of 11% over the same period, while the other brands' revenue was 55 million yuan, up from -39%.

Five big categories drive Lining's income growth: running, training, basketball,

And badminton is the five category of Lining brand, which drives Lining's retail growth.

National disposable income and consumption expenditure increased year by year: in 2002 ~2017, the level of consumption water in China increased year by year, and the per capita disposable income growth rate was higher in 2002 and 2007, respectively, being 13.4% and 12.2%. The actual growth rate of consumption expenditure in 2009 was the highest 10.1%, and the overall trend of downward trend after 2009.

Clothing, shoes, hats, needles and textile retail sales grew faster and warmer: in 2000 ~2007, the growth rate of retail sales of clothing, shoes, hats, needles and textiles showed an upward trend, which increased rapidly. In 2007, it hit the highest 25.5% in history. In 2008, after the decline in ~2009, it rebounded to 24.8% in 2010. The growth rate slowed down in 2010 to 2016, and the growth rate reached 7.8%.

2.2 industry pattern: sports shoes and clothing industry has a large market and a high degree of concentration.

The market size of China's sports footwear industry has gradually increased. In 2012 ~2017, the market size of China's sports footwear industry gradually increased, and the compound annual growth rate was 8.79%.

In 2017, the market of sports shoes and clothing in China was 212 billion 148 million yuan, an increase of 12.5% over the same period last year.

The growth of sports shoes and clothing plates is at the forefront of China's apparel industry. The growth rate of sports shoes and clothing market has been stable since 2014, and is in the forefront of China's apparel industry.

The concentration degree of sports apparel industry in China is increasing: the concentration degree of sports shoes and clothing market in China has increased year by year, and by 2017, CR5 and CR10 are 53.9% and 68.95% respectively.

2.3 competition pattern: brand differentiation of sports shoes and clothing in Chinese market

The differentiation of brands: the market share of Anta, Lining, 31st degree and XTEP declined in 2012. In 2013 ~2017, the share of Anta accounted for an upward trend in the range of 7.0%~8.0%, and Lining, 360 and XTEP remained in the range of 4.0%~5.5%.

In 2017, the market share of Adidas and Nike was 19.8% and 16.8% respectively, while Anta and Lining, which were second and third, were 8% and 5.3% respectively.

3 four stages of Lining's development process

Lining's development can be divided into four stages.

In 1990 ~2003 was the beginning of Lining's development. In 1990, the Li Ning Co was established. By 2003, Lining's revenue and net profit were 1 billion 276 million yuan and 94 million yuan respectively.

In 2004, Lining went public. In 2004 ~2010, the annual growth rate of Lining's revenue and net profit growth was 31% and 42%, respectively. In 2010, the operating income and net profit of Lining reached the peak of 9 billion 485 million yuan and 1 billion 108 million yuan respectively.

In 2011 ~2014, during the pformation period of the company, revenue and net profit continued to decline. In 2012 ~2014, the company lost three consecutive years, with a total loss of 3 billion yuan.

Since 2015, the company's operating income and net profit have gradually resumed, and the annual compound growth rate of revenue and net profit is 12% and 507% respectively.

The secret of 4.1 Xing: four factors create Lining's rise

The garment industry is developing at a high speed: the retail sales of consumer goods and clothing, shoes and hats and knitwear retail sales in China have improved rapidly. The total retail sales of consumer goods increased from 2.5% to 9.1% in 1990 and reached 30.5% in 1994.

In 2003, retail sales of clothing, shoes and hat knitwear grew 13.8% year-on-year.

China's return to the Olympic Games, the sports industry from a planned economy to a market economy: in 1979, the membership of the Chinese Olympic Committee was restored, and the country put forward the strategy of sports development centered on the Olympic Games.

In 1993, the National Sports Commission issued the "opinions on deepening sports reform". Since then, the Chinese sports industry has shifted from the planned economy to the market economy. China's sports industry has gradually become professionalized, industrialized, commercialized and marketable, and the market demand for sports shoes and clothing has increased.

Lining took the lead in seizing the emerging market, and was the pioneer of China's own sports brand: Jinjiang, Fujian, China, also known as "shoes capital". Hundreds of sports companies including Anta, XTEP, 31st degree, Jordan, PEAK, Hongxing Erke and del Hui were born here. These enterprises are called "Jinjiang Department".

The early "Jinjiang Department" thought that the production of sports shoes by multinational corporations was mainly OEM. Until 90s, it was influenced by the successive sponsorship of the Lining brand, and the Olympic Games spread all over the river.

Take Anta as an example, Anta was founded in 1991, but in 1991 ~1999 has been overseas OEM as the main direction of development. Until 1999, Kong Linghui signed the brand spokesperson as the image spokesperson, and then officially turned to the brand wholesale stage. Since then, the sporting goods industry in Jinjiang has entered the era of brand licensing.

In 1989, when Lining founded the brand, he began to print the two words of Lining on his clothes. After the establishment of Li Ning Co in 1990, he always took the "Lining" brand as the main driving force. No matter when it was established or listed, Lining had walked ahead of several major sporting goods brands in China, and was a well deserved pioneer of the domestic sports brand.

Relying on the sponsorship of sports events to become a national sports brand: Lining has been active in sports arena at home and abroad since 1990. In 1992, Lining became the first domestic sporting goods brand that appeared in the Olympic Games. Lining has since become the pioneer of Chinese sports brand.

Then Lining won the Olympic sponsorship in 1996, 2000 and 2004, and the "dragon clothing" and "butterfly shoes" at the 2000 Olympic Games in Sydney were also selected as "the best prize equipment".

Sponsoring various types of events at home and abroad promotes Lining's reputation at home and abroad and professionalization of sports, making Lining a well-known brand of domestic sports shoes and clothing.

Sponsoring professional competitions at home and abroad: Lining has sponsored a large number of domestic and foreign events and competitions, including basketball, soccer, tennis, track and field, tennis, badminton, pole vaulting, javelin throwing and so on, covering Asia, South America, Europe and Africa.

The cooperation with NBA and the signing of NBA star helped Lining improve his position in the international basketball tournament.

China's gold medal dream team: until 2009, Lining signed a contract with five Chinese gold medal dream teams, the Chinese table tennis team, the Chinese gymnastics team, the Chinese diving team, the Chinese shooting team and the Chinese badminton team.

Lining's brand marketing expenditure accounted for the percentage of revenue ahead of domestic brands: before 2017, Lining's marketing expenditure accounted for a higher percentage of income than competing brands, reaching a peak of 24.2% in 2013.

Domestic sports companies expand the tide of listing: in 2001, Beijing successfully bid for the Olympic Games. In 2004, Lining took the lead in Hongkong. After that, Hongxing Erke, Anta, XTEP, Anta and XTEP were listed.

Domestic sports brands accelerate expansion.

In 2008, the size of the domestic sports shoes and clothing market increased to 43.98%, and the sales of Lining, Anta, XTEP and 31st degree were 53.8%, 45.3%, 110.1%, 253.1% respectively.

The successful hosting of the Beijing Olympic Games made the domestic sports brand optimistic about the future, and all brands accelerated to expand their stores.

Lining is still the first domestic sports brand to catch up and re surpass Adidas: in the whole industry accelerating the expansion of foreign brands to invade the market, Lining is still ahead of the domestic sports brand. In 2010, Adidas, which accounted for 9.7% of the city's market share of more than 9.5%, jumped second, 13.8% lower than the 13.8% Nike 4.1%, and Anta, XTEP and 331 degrees accounted for 8.2%, 5.8%, 6% respectively.

The expansion of distribution channels and the growth of the same store together led to Lining's revenue growth: in 2004 ~2010, the expansion of Lining's channel was mainly through the increase of distribution channels, the number of distribution channels increased from 2272 to 7333, the annual compound growth rate was 21.6%, the distribution channel's same store income was much higher than that of direct channel's same store, and the rapid income generated by the expansion of distribution channels exacerbated Lining's expansion strategy of distribution channels, and 2008 of the sales channels and the same store revenue growth rate reached 53.1%, 48.4% respectively.

In 2004 ~2010, although Lining's inventory turnover days decreased, the turnover days of accounts receivable increased, and the sales capacity of distributors did not increase synchronously with the expansion of distribution channels, which brought hidden trouble for Lining's later development.

Industry scale growth rate declined: after the Olympic Games in 2008, the growth rate of sports footwear industry scale began to decline from 2011, and the scale of industry decreased in 2013.

Anta has a market share of more than Lining, and the market share of foreign sports brands exceeds that of the domestic market: in 2011, Anta's market share was surpassed by Anta and its position since then. At the same time, the market share of foreign sports brands has been far ahead of domestic brands since 2011.

Lining inventory backlog, channel contraction: in 2011 ~2014, Lining store distribution channel inventory backlog, resulting in a higher proportion of over season merchandise, dealers can only increase the discount strength, resulting in decline in performance, dealer profitability decreased, the number of distribution channels from 8255 to 5626.

At the same time, frequent discounts brought Lining into the low-end brand and affected the brand image.

Lining and other domestic sports brand inventory backlog reasons:

(1) the disadvantages of extensive distribution channels are highlighted: before 2010, most domestic sporting goods companies modeled on Nike and Adidas adopting the "light assets" operation mode, outsourcing production and sales, focusing on R & D and marketing, and expanding distribution channels as growth mode.

Lining has long adopted the mode of "Direct stores + franchised stores" and accelerated the expansion of distribution channels. In 2010, the distribution channel increased from 2526 in 2004 to 7333, while the number of direct channels increased from 351 to 582.

In the absence of effective management of supply chain and retail end, distributor led by this way can lead to lack of communication between brands and customers, and it is difficult to react quickly to market changes.

(2) the distribution of stores is short of management and retailing ability: the domestic sports brand takes the form of vigorously pressing goods for expansion. The sales way only sells the products wholesale to dealers, but pays little attention to the level from distributors to consumers. Lining's distribution shop image is obsolete, the sales level is low, the store image and retail capacity lack unified planning and guidance, resulting in the lack of competitiveness when the industry scale growth rate decreases or consumers tend to change.

(3) sports brand's excessive anticipation for the market: the rapid growth in 2008 made the domestic sports brand overestimate the market demand and increased excessive inventory.

Why foreign brands exceed domestic:

1. domestic sports brand marketing is big, design R & D investment is low, product homogeneity is serious: in 2011, the cost of advertising for 6 major brands in the country was as high as 4 billion 977 million yuan, but the cost to invest in R & D was only 900 million yuan, far lower than the marketing cost, while Adidas and Nike had decades of R & D history and channel experience, and technology and brand word-of-mouth were more trusted by consumers.

2. price war consumes brand image: domestic brands take price war and frequent discounts, which affect brand image, and are hard to get rid of the inherent impression of "cheap but low quality", which will greatly discount the inventory and even bring the brand positioning to the low end.

3. domestic sports brand positioning three or four line cities, foreign brands positioning a second tier city, from one line to the next, easy to move from the three or four line up: this point is particularly evident in Lining, who has experienced the brand remodeling. The domestic sports brand has not been able to design the R & D power and have no good products.

Brand reinventing strategy: in 2010, Lining turned LOGO into a more agile new LOGO as the prototype of "Lining cross action"; changed the slogan "everything is possible" from 2002 to "let change happen"; positioning the consumer group as "post-90s"; positioning the brand as "time, cool, global vision", greatly improving product prices, and intent on marching into the high-end market; launching a series of advertisements with the theme of "post-90s Lining" and infiltrating the theme into the sales channels.

Reasons for Lining's brand remolding:

1. the consumer spending power, which was attracted by Lining's personal image and witnessed Lining's brilliance, gradually weakened with age. The brand needed to attract new generation customers.

2. after the vigorous growth in 2008, Lining's ambitions went global. In order to achieve this goal, Lining needs to enhance brand positioning and price.

Positioning deviation, brand remolding strategy failed to achieve the desired effect: Lining's main consumer groups to witness Lining's brilliant "after 70", "post-80s", on the widely known slogan "anything is possible" and the initial Logo abandonment, as well as the spread of "90 after Lining" ads directly abandoned the "80 after", "70 after" loyal customers, at the same time, because "after 90" group did not understand Lining and Lining brand story, the rigid brand pformation did not attract the "90 after" customer base;

The substantial increase in price has abandoned the original advantages of the two or three line positioning and cost-effective, directly competing with Adidas and Nike in terms of price. The quality and reputation of the products can not be compared with those of the international brands, resulting in a great loss of consumers. Lining, who has been forced to raise his position, has not gone to "internationalization". However, the brand positioning has fallen into an awkward position, laying the foreshadowing for the "Waterloo" after that.

Why did Anta catch up with Lining?

1. the Anta channel structure is more flat: Lining's distributor extends from the large area partition, while Anta is unified controlled by the sales and operation Department of the branch. Anta also chooses to join some important franchisees, and some even reach 51% of the stock level. Therefore, Anta's control over franchisees and distributors is stronger than other domestic sports brands, and has faster reaction to the market and stronger retail capability. In 2014, Lining's inventory turnover days and accounts receivable turnover days were 108 days and 71 days respectively, while Anta was 57 days and 35 days respectively.

2. Anta's pformation is fast: Anta takes the lead in completing the pformation from brand wholesalers to brand retailers, and adopts the full value chain management mode.

Ding Shizhong, chairman of the board of directors of Anta group, summed up the following four points in the pformation of Anta:

First, information technology, through the ERP system and SAP software, realizes the information unification of most Anta stores in the country.

The two is from the previous franchisee order to a single store order.

The three is to store the retail standard to every store in the country.

The four is to return to business culture, take executives to all cities in China, do the promotion of retail landing, understand the various problems of the terminal.

3. Anta brand positioning is relatively clear: Anta's own brand has always maintained a popular positioning, in 2009, through the acquisition of Fila into the high-end market.

But Lining's brand positioning has been wavering, especially in 2010, which seriously affected Lining's brand image and confused consumers' understanding of brand style.

Lining's response:

1. optimize the channel structure: CEO Jin Zhenjun in order to avoid over reliance on distribution channels, strengthen Lining's perception of the market, directly contact consumers, and adopted a strategy to strengthen direct channel.

The number of Direct stores increased from 631 in 2012 to 1202 in 2014, a total increase of 571, with a cumulative growth rate of 90%.

2. Lining brand repositioned the low end and focused on the five core businesses: Lining repositioned the brand positioning to the mid end market with high cost performance, and accounted for more than 30% of the market share in the middle end market.

At the same time, we will concentrate our efforts on five major businesses to enhance the professionalization of Lining.

3. new fast response business mode: in order to improve the retail capacity and inventory management efficiency, Lining adopted an innovative supply mode and established a rapid response retail business platform. Lining optimized the ordering, replenishment and inventory allocation system, and forecast the demand according to the daily sales situation of retail stores, rationally allocated the inventory, and adjusted the product development wind direction and output of the supply chain.

Lining has improved but is still losing money: in 2012 ~2014, the stock amount of Lining decreased by 17%, 15%, 5%, the inventory structure was optimized, the sales volume of new products and the total sales ratio were increased, and the selling rate and retail sales also increased, and the sales situation gradually improved, but it still did not get rid of the deficit situation.

Lining still needs to change.

4.3 reason for recovery: Transformation "Internet + sports life experience provider"

Industry revival, Lining recovery: after the industry form of "closed shop tide", the main sports brand revenue and net profit gradually warmer.

As the market recovers, Lining gradually recovers, and accounts receivable turnover days and inventory turnover days decrease significantly in the industry.

Founder Lining returned: at the end of 2014, Jin Zhenjun, a professional manager who failed to reverse Lining's situation, returned to his post in office. Lining returned to CEO. After Lining returned, he changed the slogan of the company from "let change" to "everything is possible", and established the goal of providing "Li Ningpin experience value". The company pformed from sports equipment supplier to "Internet + sports life experience provider". Micro-blog opened up, with consumption and close interaction, strengthened user stickiness, restarted multi brand strategy, gained Danskin's sole operation right in mainland China and Macao region, launched self brand brand Lining YOUNG, and launched a new generation of intelligent running shoes with millet.

The significance of Lining's return:

1. stabilize the army's mind: Lining, who has experienced successive losses, urgently needs to stabilize the army's spirit, and has always been accompanied by the founder and soul of Lining, the best candidate.

2. Lining has the advantage of sports people: as a former "gymnastic Prince", Lining has the unique resources and opinions as a sports person.

3., enhance the executive ability of management decisions: Airborne professional managers face the risk of abusing Lining in the face of Chinese traditional local sports enterprises, making the decision of professional managers lack executive power, and it is difficult to ensure the efficiency of various departments' cooperation and operation. Lining's founder's identity and long-term understanding of the company and industry can improve the decision-making execution of Li Ning Co.

After Lining's return, the company pformed into "Internet + sports life experience provider": the three pillars of products, channels and retail operation capabilities, supplemented by multi-dimensional marketing strategies, and dedicated to providing Lining's experiential value combined with digitalization.

We should take a series of measures to optimize the channel structure and enhance the efficiency of the channel.

1. implementation of a single store differentiation strategy: Lining made clear the classification of stores, divided the stores into comprehensive stores and category stores, and provided flexible purchase experience according to category attributes.

2., strengthen the support and control of distributors. As of 2018, there were 31 key distributors in Lining's core brand. Through the shaping and management of core distributors, Lining grasped the information feedback of distribution channels and made reference for other distributors.

3. optimize the channel structure: Lining closes the loss shop, restores inefficient stores, promotes store location optimization and enlarging rectification, and focuses on opening up large profitable shops with experience concept to enhance terminal operation efficiency;

4. full channel layout: develop online sales channels, improve online and offline integrated operation mode, and provide consumers with full channel shopping experience.

The electricity supplier's income and income increased year by year. In 2017, the electricity supplier income increased by 30.7% compared with the same period last year, and the electricity supplier's income accounted for 19.31% of the total revenue.

The optimization of the channel structure and the improvement of efficiency brought about an improvement in Lining turnover: in 2015~2017, Lining's inventory turnover days were improved from 104 days to 79 days, and the accounts receivable turnover days were improved from 69 days to 51 days.

Build a closed loop of retail operation: strengthen the retail operation structure, enhance the retail operation ability of six aspects: Commodity planning, product development, sales combination, store sale, tail cargo handling and cash return.

Set up a fast and accurate system for listing, supplying and selling products.

1., reform the mode of commodity operation: combined with the product mix of long and short life cycle in the market, we should carry out a series of meticulous management of product design, group goods and discounts according to the differences between North and South markets.

2., strengthen the retail operation management of single store: improve the precise and fast supply mechanism, set up a single store order mode with consumer demand oriented, refine the operation service standard of category stores, and upgrade the intelligent shop management system.

3. improve the store image and enhance the display ability of the shop: develop different image stores according to different markets to meet the needs of different consumers.

4., strengthen training to improve terminal salesperson's professional ability: through the Lining training system, train online and offline integrated training mechanism to enhance the sales and service level of "China Lining service +".

Optimization of library age: in 2015, the amount of stock in the company decreased from 1 billion 418 million yuan in 2014 to 1 billion 129 million yuan, and basically remained stable. In 2015 ~2017, the inventory ratio of companies over 12 months was reduced from 28% to 14%, and the proportion of inventories in 7 months ~12 months decreased from 17% to 11%.

The company's profitability increased: in 2015 ~2017, gross margin rose from 45% to 47.1%, and net interest rate increased from 0.2% to 5.8%.

The same store and order will get better: in the first half of 2018, the overall sales of the same store achieved a high single digit growth; the Lining brand product orders of the franchisee at the order meeting (excluding Lining YOUNG) increased year by year for the 19 consecutive quarter.

Lining's orders for the 234 quarter of 2018 will achieve a year-on-year low 10%~20% growth. The first quarter of 2019, which was held in June 2018, will achieve a high single digit growth.

Sponsoring sports events to enhance Lining's professional image and gather consumers: Lining independently organized the "3+1" street basketball match, gathered young people who love basketball and spread Lining's sports spirit.

In 2017, Lining's 10 kilometer road running League was held in 14 cities such as Guangzhou, Kunming, Chongqing, Shanghai, Ningbo, Xi'an and Shenzhen, with nearly 40 thousand participants.

The international fashion week has brought an explosive concern to Lining, linking the labels of "fashion", "internationalization", "Lining" and "national goods" with Lining, changing the past consumers' understanding of Lining, and emphasizing Lining's domestic sports brand image.

5. risk warning

1., the pessimistic risk of the macro environment: domestic sports brand capacity and market concentration in the domestic, vulnerable to domestic raw material prices, industry scale decline and so on, and the pessimism of the macro environment may affect Lining's profitability and growth.

2., market competition risk: the concentration of domestic sports brand industry is high, the middle and low-end domestic sports brand products are homogenized, and the competition is intense. The high-end foreign brands are far ahead of domestic brands. The influx of foreign brands and the competition of domestic sports brands may affect the development of Lining.

3., the risk of consumer demand change: consumer preferences are likely to affect the competition pattern of sports footwear industry. Consumption upgrading may lead to consumer demand shifting from low-end products to high-end products, and Lining has the risk of consumer turnover.