Urban Beauty First Profit Police: Profits Fell 80% In The First Half

In 2019, after the cancellation of the "Wei Ming" show and the fall of the secret brand, the "Chinese version" of the beautiful city beauty also encountered Waterloo.

Recently, urban beauty released its first profit warning. In the first half of 2019, the expected profit will drop more than 80%. In the first half of last year, the profit was 2 billion 340 million yuan. Today, the market value of urban beauty is HK $3 billion 200 million, and its market value has shrunk by 8 billion in the past 4 months.

The exaggerated pink, the small shop, the outdated style, the everywhere discount sign, the salesperson who wears the pajamas at the door of the shop is the impression that people shop on the city beauty line. Contrary to this straightforward brand name, most of the urban beauty shops are far away from downtown shopping centers, and are concentrated near the pedestrian streets of low line cities. "Beauty" has gradually become a "little flower" in the fringe area of urban and rural areas.

Facing the market decline, the urban beauty changed the spokesperson from Lin Chiling who had been a woman to a "national girl" Guan Xiaotong. This is seen as an important step in its transformation into a younger road. But will the young girls buy their accounts after 90?

From WAL-MART security to underwear King

In 1995, Zheng Yaonan, a 20 year old Gutian native of Fujian, went to Shenzhen alone with 500 yuan. The first job was WAL-MART security.

In the market economy boom, Zheng Yaonan changed sales, and then opened a makeup shop. At one time, Zheng Yaonan saw every underwear sold for only 10 yuan in a small booth and sold 100 pieces in 1 hours. This little incident touched him.

At that time, there were two extremes in China's underwear market, such as low quality and cheap goods on the stalls or expensive underwear in the market. Zheng Yaonan grabbed the gap between the markets. In 1998, the beauty of the city was set up, the main intermediate underwear. There are reasons why Zheng Yaonan has become "the most understanding woman". At that time, urban beauty also pioneered the "one stop shopping".

Zheng Yaonan, founder of urban beauty

"Traditional underwear shops only make bra, but the demands of consumers are diverse. After coming to the store, they need not only bra, but also socks, underwear, pajamas, warm clothes, etc., and even buy underwear for men. "According to Sina Financial reports, this is Zheng Yaonan's insight into the underwear market. Nowadays, in urban beauty, brassiere, underwear, household clothes, body shaping clothes, thermal clothing and so on are nearly 10000 styles.

"Fast fashion, high price, popularity, one-stop", this way let urban beauty quickly occupy the advantage in the market. In 2012, urban beauty signed Lin Chiling as the spokesman of the image, which brought the explosive growth of performance rapidly.

In 2014, urban beauty became the "underwear first stock" listed in Hongkong. At the peak of its popularity, it began to expand rapidly. In 2015, it opened the "Wan Dian plan". At its peak, there were more than 8000 stores, and some snacks from Shaxian County.

In 2016, urban beauty occupied the first share of China's underwear market, with a market share of around 4%, more than second to fifth.

And the poor boy who had only spent 500 yuan to go on the market in the South came to the Hurun rich list in 2014 with his 3 billion 900 million fortune.

Runaway beauty

Like many traditional brands, the law of "ups and down" shows signs in urban beauty.

In fact, urban beauty has been volatile since 2016. The operating income was 4 billion 512 million yuan, a decrease of 8.9%, a profit of 305 million yuan, a decrease of 55.7%, almost to the waist. That year, the city beauty began to close, so far three years, nearly 1000 stores.

Zheng Yaonan, founder of urban beauty, believes that when others are shrinking, they are the best time to expand themselves. 2008 in the wake of the financial crisis, urban beauty began to expand, expanding from nearly 50 in 2003 to 6272 in 2014.

The rapid expansion of the storefront makes the city beauty become China's "underwear king", but extensive management has made it lose control.

City beauty's offline stores are mostly joined. Its 2018 annual report shows that there are 5899 stores in 7305 stores, and the main street shops are mainly scattered, and are used to book some outdated styles that some familiar customers like.

Because it is difficult to standardize the management of franchisees, the style of shops under the line is also difficult to unify. Some shops will be covered with red carpet at the door, and colorful balloons will be hung. The sound of discount promotions will rise one after another, coupled with the old style, and gradually hook up with "low".

In order to clean up inventory, city beauty takes a discount promotion strategy. In this way, not only the brand image has been damaged, but also the performance has been affected. Its gross profit margin declined from 2016 to 2018, falling to 41.7%, and it is expected to continue to decline in 2019.

The redemption of "beauty"

Price performance has been the trump card of urban beauty. However, in the face of the new generation of young consumers, this card is not enough.

"Consumers are more price driven to interact with urban beauties. In the future, we need to combine fashion elements and sell products without discount. For example, to give consumers a fashionable bag, let them feel value for money, this is more valuable than direct discount. Sharan Stern, who joined the urban beauty as a part-time chief strategist in 2018, said in an interview with the media.

In Vitoria's Secret predecessor, CEO, the first task of urban beauty is to become more fashionable.

With the upgrading of consumption and the rise of new consumer brands, the competitive environment of underwear market has changed dramatically. 6sixty 8ight, inside and outside, Wacoal and other brands are becoming better. UNIQLO, Zara and other fast fashion brands are also eyeing the plates of underwear.

In addition, more and more underwear brands choose to hatch in the transformation of e-commerce platform. Compared with discounts and promotions, they have more ways to play, for example, they are more suitable for young people's preference in visual design, and make use of new marketing methods such as social networking, live broadcasting and so on. According to the interface news, the management of urban beauty is not sensitive to new things and new concepts, and seldom comes into contact with the new platform, such as the vibrant jitter nowadays.

In the past year, urban beauties have also made drastic reforms to enhance their brand image. First of all, we will drive the street store into the middle and high-end shopping malls. Instead of using the name "urban beauty", instead of choosing "Cosmo Lady" brand to enter the mid-range shopping center. In September this year, urban beauty will also set up GIPO life hall, with an area of 300 square meters, which is nearly 10 times the area of ordinary stores.

City beauty has also renovated pedestrian street stores, upgrading warehouse type stores to sensory shops. In the first half of last year, 98 self operated stores and 634 franchised stores were renovated, and new smart retail businesses were also innovating.

In addition, Tmall and other e-commerce channels have also become one of the main sources of urban beauty growth in 2018. In the face of early warning of declining performance, the move of urban beauty is to appoint a new chief executive to continue to lean towards shopping centres and e-commerce channels.

Today, the signing of young actress Guan Xiaotong as a new brand spokesperson makes the urban beauty return to people's vision once again. However, how to reverse the brand image and allow young consumers to accept it is still the most important question before it. Author: Zhang Hangying