Esprit Decline In Performance Depends Heavily On Low Price Old Renovation, Can It Reverse The Decline?

By the impact of fast fashion brands, Hong Kong's clothing brands seem to be in the doldrums.

Recently, Esprit, a fast fashion brand company, announced its interim report as of December 31, 2018.

The report said the group's revenue was HK $6 billion 766 million, a year-on-year decline of 15.84%, gross profit of HK $3 billion 471 million, a decrease of 18.37% compared to the same period last year, and the profit attributable to shareholders was HK $1 billion 773 million, down 85.85% over the same period last year.

Due to its poor performance in the global market, Si Jie has closed 38 stores in the European market since June 1, 2018 and closed 65 stores in the Asian market. By the end of September 2018, the globe had closed all its stores in Australia and New Zealand and completely quit the two national markets.

According to statistics, Esprit, a world-renowned brand of leisure fashion, has seen a lot of scenery around 2000 to 2010. However, with the rapid rise of international fast fashion brands in the global market in recent years, the leisure goods brand represented by Esprit has begun to decline, and the number of shops has been shrinking, such as JEANSWEST, bursworth, Baleno, Giordano and other brands have gradually withdrawn from the market.

The China business daily contacted Esprit's Hongkong based company on issues such as low performance.

From prosperity to decline

Esprit, founded in 1964, is an American clothing brand. In 1972, Brigitte Lin's husband, Xing Liyuan, listed Esprit Asian assets in Hongkong. After 4 years, she bought Esprit Europe Business and renamed it Global Holdings Limited.

In 1997, Si Jie and Huarun group jointly formed Huarun Huarun, and launched the retail business of brand clothing in mainland China.

At that time in China, Esprit almost became the European and American fashion initiator of the middle class consumers in China.

At that time, large shopping malls would give preferential policies to attract Esprit to enter.

At its peak, Esprit has hundreds of Direct stores and franchisees in nearly 100 cities across the country, comparable to the current European and American fast fashion brands such as ZARA and H&M.

However, since 2008, Esprit has changed from product design or style update to the past. "From the earnings reports in recent years, the performance of Esprit is in a downward trend.

Part of the reason is that their design concepts are mostly developed by foreign dressing habits, and the mainland market and consumers have changed so rapidly over the years. The design of Esprit should not be enough to cater to the rapid development of the mainland market.

Liu Xiang, the apparel industry watchdog and flash sports marketing founder, said.

According to Shi Xiaojie, a regional manager who worked for Si Jie global, told the China business newspaper that Esprit has been aging in recent years, and some of its employees are old employees who have worked for more than ten years. They are very satisfied with the status quo. Basically, the senior executives sign two or three years' contracts and earn money.

Few people really care about the development and innovation of the brand.

In the eyes of consumers, Esprit becomes a brand that lacks originality and becomes increasingly outdated.

Reporters also sent a message request to the Hongkong global company on the above questions. No reply was received before the deadline.

In addition, the reporter noted that in 2018, there were media reports that the German executives of Esprit were laid off by 50% due to the sharp decline in performance.

Earlier, media reports said that Esprit was a suspense after being taken over by the Anders Christian Kristiansen, a former British fashion brand New Look CEO, to take over as executive director and CEO of the group.

Because today, New Look has completely withdrawn from the Chinese market, and whether Esprit can preserve itself in the Chinese market has attracted many speculating insiders.

According to Shi Xiaojie, some of the middle managers of Esprit have already been replaced by former New Look.

But whether these people can reverse the current situation of Esprit is still a suspense.

Examination of business mode

"The design of Esprit is partly renovating."

Shi Xiaojie's "refurbishment" is actually the usual practice of some clothing brands.

In order to sell, many fashion brands sell their best styles in the first year to seek consumers' favor.

"The market is changing every year, but Esprit has been refurbishing the old ones in the past, a good selling style, and Esprit has been renovated for several years at least, leading to the loss of customers.

In addition, Esprit has a higher unit price than H&M and ZARA, and is better than Teenie Weenie and 100 brands in business mode.

Without the ability to change rapidly in business mode, earnings performance has gone from bad to worse.

Shi Xiaojie said.

In fact, the garment industry has already started a new business model.

Although Shi Xiaojie thinks that Esprit's management is perfect and its execution is strong, after all, the market is changing and the times are developing. Esprit's previous business model is more focused on risk aversion and innovation is not enough.

Another industry insider who has worked hard for many years in Chongwenmen, Beijing, told reporters: "in fact, many brands have already adopted partnership and package store system. Many shopkeeper are stock holders. This can not only reduce employee turnover rate, but also stimulate sales enthusiasm.

The Esprit system has remained unchanged for more than a decade, and a top-down vertical management model has been adopted.

Although management will often be "walk the shop", but flow in the form, can not understand the consumer and the market.

From the point of view of management system, Esprit should be relatively backward.

In the eyes of the industry, Esprit has no more inclination to invite members, and the way to win consumers is to take a lower discount.

In recent one or two years, Esprit, which has run poorly, opened a discount strategy. "Some discount stores in Beijing and Shanghai began selling ten or more sales in April," he said.

Shi Xiaojie said.

A Esprit insider showed the performance table of a Esprit store in Beijing to reporters. The data showed that the total sales volume of the store in 2018 was about 8 million 600 thousand yuan, slightly higher than that in 2017, and the store products also updated faster, but the inventory also increased in 2017 than in 2018.

The unit price of goods is mostly between 100~200 yuan, and consumers spend up to 400 yuan per consumption.

"Once Esprit a membership card, it takes 3200 yuan to do card to enjoy 20 percent off discount, now 90 percent off sales, this is no longer the same.

The more discount we have, the harder it will be for sales.

Because consumers will wait until the low discount time to buy, so that the decline of Esprit is even more irretrievable.

You Meimei, a loyal consumer of Esprit, said.

Cheng Weixiong, general manager of the Shanghai apparel industry management limited, is behind the business model behind the dealer system.

"Esprit has no direct battalion in China, all are distributors.

In the initial stage of reform and opening up, Hongkong brand adopted a dealer system, with only short-term effects.

Because dealers want business, not brand, which makes Esprit far away from the market and can not see the market changes.

The top-down decision-making system, coupled with the lack of customer feedback to headquarters, has become a traditional Esprit brand and is not very clear about the Chinese market. "

In Cheng Weixiong's view, making clothes looks simple and actually has a long industrial chain.

Over the years, Esprit has lost its brand positioning.

"Fashion is not as good as ZARA, tide is not as good as tide card, and real benefit is not as good as UNIQLO, so Esprit is in this round of consumption reset and business mode reorganization process, we must think which brand is to serve which level, that group, and then make its own brand planning and design research and development."

For the future, Cheng Weixiong believes that the engine of the Asian market in the clothing industry in China, if China's performance is not good, then we need to rethink the positioning in the future.