How Can Competitors Return To Their Competitors?

Not long ago, the news about the secret of Vitoria's famous underwear brand (hereinafter referred to as "secret") ceased to host the annual big show. The former top international underwear brand has fallen into the altar, causing many sighs.

In fact, not only the international underwear brand "Wei is not the same", also facing the decline of performance, there is also a domestic underwear brand - urban beauty.

At the end of the first half of 2019, the urban beauty issued a profit warning. It is expected that the total profit attributable to the owners of the company in the first half of 2019 will fall by no less than 80%. The explanation of urban beauty is that the retail industry is affected by the economic weakness, and the rise in raw material prices and higher sales discounts have led to a decline in gross margins.

At the same time, the price of urban beauty is not optimistic. On the closing of August 7, 2019, the urban beauty received HK $1.32 / share, with a market value of HK $2 billion 969 million, which evaporated over HK $13 billion, or about 11 billion 800 million yuan, over the peak value of HK $16 billion 180 million in 2015.

　 8000 stores in 15 years

Once security boarded the rich list.

In 1998, the domestic underwear market competition was far from saturated. There was a big gap between the expensive overseas brand underwear and the cheap brand underwear.

At that time, Zheng Yaonan, 23 years old, caught up with the good time. Zheng Yaonan was born in Gutian, Fujian in 1975. After graduating from polytechnic school, a man came to Shenzhen to make a break. He once worked as a security guard for WAL-MART. Later she changed to do sales, and opened her own cosmetics shop. He noticed the gap in the underwear market and founded the Guangdong city beauty Industrial Co., Ltd., the main mid-range underwear.

The city beauty who filled the market gap quickly occupied a place in the market, and timely launched a new model that has never been seen in the domestic market - "one-stop shopping for body clothing", that is to say, underwear, socks, household clothes, body sculpting, thermal clothing and other personal clothing products are gathered in a shop to facilitate customers to purchase at one stop.

Zheng Yaonan once said in an interview with sina finance, "traditional underwear shops only make bra, but the requirements of consumers are diverse. After going to the store, they need not only bra, but also socks, underwear, pajamas, warm household clothes, and even buy underwear for men." Facts have proved that his strategy was correct. Under the "one-stop shopping" mode, the urban beauty gradually came to the front position of the industry, and even attracted the imitation of other brands in the industry.

After developing to a certain momentum, urban beauty began to expand in large scale.

During the SARS period in 2003, the cost of the berths was relatively low. The urban beauty took the opportunity to increase the number of shops from more than ten to 50. In 2008, when the financial crisis happened, most enterprises reduced scale or even closed down, and the cost of purchasing was greatly reduced.

In 2014, the city beauty became the largest underwear retailer in China with the number of 7026 shops, but it has not stopped the pace of opening stores. In 2015, urban beauty launched the "Wan Dian plan" and continued to maintain high speed expansion. By 2016, the number of urban beauty stores has grown from nearly 50 in 2003 to more than 8000.

In the propaganda and marketing, the urban beauty also declined. In 2012, the city beauty announced that the famous actress Lin Chiling should be the spokesperson. In 2014, the urban beauty and the famous cartoon character Hello Kitty co operated to create a series of Hello Kitty products. In 2015, the urban beauty and Disney reached the product authorization cooperation, and merged the Disney elements into the product. These operations have greatly enhanced the brand awareness of urban beauty.

During this period, the performance of urban beauty ran all the way. Urban beauty sales reached 2 billion 916 million in 2013, and 1 billion in 2014, reaching 4 billion 8 million, and continued to grow to 4 billion 953 million in 2015.

In June 2014, the city beauty successfully landed on the main board of the HKEx and became the first listed underwear company in the mainland, with a market value of HK $14 billion (about 12 billion 500 million RMB). Zheng Yaonan also boarded the Hurun rich list in 3 billion 900 million.

By 2016, the market share of urban beauty was about 3~4%, becoming the highest brand in China's underwear market, higher than the total of second to fifth.

Profit cut

Guan Xiaotong, a national daughter, is hard to recover.

However, the strong growth momentum of urban beauty has not been maintained. Also in 2016, urban beauty sales and profits declined for the first time since listing. In those days, its revenue dropped by 8.9% to 4 billion 512 million, and its profits were cut by 55.19%, leaving only 242 million.

In the face of a sudden decline in performance, the "beauty shop" plan of the urban beauty failed to carry on and began to close. By the end of 2018, there were only 7305 stores in urban beauty, nearly 1000 fewer than those at the end of 2015.

In addition, urban beauty began to offer a lot of discounts for products. This strategy helps clean up inventory, but it has an impact on gross margins. According to the data, the gross profit margin of urban beauty in 2016 was 44.37%. After that, it fell to 41.67% in 2018, far below the gross margin level of other industries in the same industry.

In addition to their own strength, urban beauty also chose to look for "external rescue". In May 2017, the urban beauty transferred 240 million shares of 11.18% of the shares to Fosun star and invested about HK $600 million. Fosun international also became the second largest shareholder of urban beauty. In 2018, it also introduced strategic shareholders such as Jingdong and Tencent. Besides, it also hired former president of the company as a non full global chief strategy consultant and had to take the international route.

These measures have played a certain role, the performance of urban beauty in 2017 and 2018 warmer, two years revenue increased by 0.67%, 12.2%, and in 2018 exceeded 5 billion; net profit also increased by 31.01%, 19.75%, respectively, 317 million, 378 million. However, compared to the peak net income of more than 500 million of the net profit, the beauty of urban beauty is obviously not enough.

In June 2019, Lin Chiling, the spokesperson of the city who worked with urban beauty for 7 years, published his marriage. City beauty opens up new spokesperson Guan Xiaotong. Lin Chiling was born in 1974. He was 38 years old when he was a city beauty. His temperament was more mature. While Guan Xiaotong was born in 1997, he was only 22 years old. His position was obviously younger. It is speculated that urban beauty may want to push the brand younger and shift the age of potential consumers.

However, the market does not seem to buy it. 2019 in the first half of the year, net profit fell by 80%.

Rival Lin Li

Urban beauty still needs to evolve in time.

The decline of urban beauty can not be blamed on Guan Xiaotong.

There is a view that there may be several reasons for the performance difficulties of urban beauty.

First, there are more competitors in the market. Nowadays, the domestic market has been very different from the 20 years before the founding of urban beauty. More and more businessmen have seen the great potential of the underwear market in the mainland.

Since 2000, ZARA, UNIQLO and other famous fast fashion brands have been stationed in China. Their clothing has brand guarantee and low price, and underwear is within its sales range. This makes urban beauty lose its advantages as a trump card, and a group of local entrepreneurs also join the battlefield, creating new underwear brands such as inside and outside, oxygen, and Freey girls. At present, there are nearly 7000 underwear brands sold on Tmall, which are sold in all styles and prices.

In addition, the past more than 10 years have been a period of rapid consumption growth in the Chinese market, but the positioning of urban beauty has not changed enough with the upgrading of consumption. At present, the price of many products in urban beauty still stays at 50 yuan, and most products do not exceed 100 yuan. This seems to be on the low side of the current young consumers, especially the "urban beauty" in their brand names.

The radical expansion has left more than 7000 stores for urban beauty, of which nearly 6000 are franchised stores. These stores have not yet achieved a high quality unified management, so it is hard to leave a good impression on consumers. Most of the urban beauty shops are located on the street, the decoration is not elegant enough, and the service is not meticulous and meticulous. Therefore, consumers with certain economic strength are more likely to "avoid the distance".

In addition, with the change of the times, the concept of consumers has changed, and this change will be projected to the requirements of underwear. City beauty hired Guan Xiaotong, who was born for 97 years, but failed to "evolve" s in time to better meet Guan Xiaotong's demand for underwear.

After 90, especially after 95, female consumers are more influenced by feminism than women in other ages. The requirement for underwear gradually tends to be comfortable rather than outward looking, and tends to be functional rather than decorative. More and more emerging brands are catching up with this trend, offering comfortable steel rim underwear and no trace underwear, which is not consistent with the sexy route that urban beauty once preferred.