How Can China's Shoes Become Self-Improvement?

To date, there is no information about the eight months' rent information of Hongshan Town factory in Shishi, Fujian province. The old owners lagged behind, and the factory area, which was 28 thousand square meters, was very depressed. The tenant was surprised by the phone call. He told AI financial services that the factory had been vacant for several years and mortgaged it to the local government a few years ago.

This is not the factory area, but the whole rich bird. In August 26th, a generation of shoe king Fu Fu bird finally crashed, officially disappearing the identity of Hong Kong stock listed companies. On the evening of that evening, the reorganization of rich birds was also rejected by the court and formally declared bankrupt.

Once a "man's shoe handle" in the county seat, the bird of fortune has been named "the first Chinese shoe king". Even in the shoe industry, stone lions everywhere were once the pride of the locals. It is a pity that the high light moment that landed at Hongkong's main board at the end of 2013 finally became the starting point of stall. After that, net profit dropped nearly 2/3 in the three years, and the net loss in the first half of 2017 exceeded 10 million yuan. In the mid term report, the total liabilities amounted to nearly 3 billion yuan.

In the six years on the market, the rich bird is well known to the outside world for a long time, and it has been closed for nearly three years before bankruptcy. Moreover, because of too much debt, the children of Lin Guoqiang, the founder of rich birds, even gave up the inheritance of their father directly.

The lucky bird is not the first shoe king reported to be stalling. The previous brands also have BELLE, Daphne and so on. The former's performance slump has been delisted from Hong Kong stocks, and the latter has suffered a lot of closes. Dark clouds have been shrouded in the top of Chinese leather shoes, and big leather shoes enterprises are not good enough, not to mention small leather shoes enterprises. Most of them are struggling to walk.

It is undeniable that every stalled shoe king has its own problems, but it can not do without the influence of the environment of the industry. The decline of department stores has made the leather shoes lose the advantage of channel, and the rise of leisure sports shoes industry has occupied the daily use of leather shoes, and finally formed the situation that this Chinese leather shoes can not work.

　 Abandoned leather shoes

Zhang Yunxia, who sold the kissing cat for seven or eight years, found that leather shoes were becoming more and more difficult to sell. When they first entered the shop, they sold tens of thousands of times, which was very normal. They dropped to five thousand or six thousand yuan last year. This year, most of them are sold, and on average, they can only sell more than four thousand yuan a day.

Zhang Yunxia's kissing cat store is located in a department store in Beijing's Fourth Ring Road. A few days ago, the store was still decorating. A customer bought seven pairs of shoes, which made her feel overjoyed. He said, "sell more than 10000 in a dark way."

BELLE is not far away from the kissing cat counter. 170 square meters of stores display men's shoes, women's shoes, and more and more sports shoes. In the ordinary mass department stores, there is a clear chain of disdain between the leather shoes brands. As a group army, BELLE has a dozen brands of different brands, usually occupying half of the shoe area, worthy of contempt at the top of the chain, followed by Saturday, kissing cats and other brands, brand stores can be next to BELLE, but the location and area are slightly inferior. At the bottom of the chain, there are some green leaves. Although they have brand names, they have no reputation and influence, but they are mostly middle-aged and old shoes that focus on cost performance. They can only appear in the middle island of the floor.

In terms of sales, the top of the chain is much stronger than that of the middle and lower end. For example, Zhang Yunxia's kissing cat sells an average of 1.2 million per month, and on the same floor, the average BELLE can sell to 2.3 million per month, but BELLE's anxiety is not less than that of a kissing cat.

In the five years of BELLE's sales, Linda Wong has gone through different types of stores, MALL stores, shopping malls, map brand collection shops, single brand stores. BELLE has about 120 stores in Beijing, and its mature business circle and its good stores can earn more than one million yuan a month, with only a few tens of thousands of stores in the outer suburbs. The average monthly income of Linda Wong's store is 2.3 million yuan, although it is much higher than other brands on the floor, but it is only half of the previous level.

Zhang Yi is the Department Store responsible for leather shoes operators, witnessed the leather shoes in the mall parabola, "before 2011, especially in the 2008-2011 years, the sales volume is about 0.8-1.2 times now." This is almost the same as Wang Hui's memory. She worked for ten years in the leather Sales Department of Shuang an mall, Beijing, and felt that 2013 was a watershed. After a large volume of traffic and a good sale of shoes, it was normal for customers to buy three or four pairs of leather shoes at a time, and some brands had annual sales of about 10000000 yuan, but now it is hard to reach this scale.

Nowadays, the good time away from leather shoes is very far away.

In May 2007, BELLE international landed on the Hong Kong Stock Exchange at HK $51 billion, becoming the largest market share in the Chinese women's footwear industry. BELLE CEO Sheng Bai pepper is very confident, claiming that "wherever women go, there must be BELLE". In the five years since then, BELLE has opened up its territory, and the number of stores has risen from more than 6000 to over 1.7, and reached its peak in February 2013, and its market value exceeded 150 billion Hong Kong dollars.

But since then, with the era of channel becoming the end of the era, product development has become the core competitiveness, coupled with the rise of the electricity supplier, shoe enterprises have been hit, and BELLE's performance has been declining gradually. Sheng Bai Chai takes responsibility to himself. "He can't drive a computer, not even WeChat. He has not made good anticipation of market changes, and has not found a transformation path. The main responsibility lies in me."

No doubt, in July 2017, BELLE delisted with a valuation of HK $53 billion 100 million, which shrank by 2/3 compared to the peak market value. The two founders, Deng Yao and Sheng Bai Jiao, chose to empty their shares and left the market in a dark mood.

Compared with the delisting of BELLE, Daphne international is still struggling, and its share price has been in the doldrums for a long time. It has been hovering below HK $1 for two consecutive years, closing down 14.29% in August 30th and HK $0.3 per share. Although Daphne stores increased nearly ten times from 2002 to 2012 in the ten years, nearly 7000, but it also laid a hidden danger. The problem soon revealed that sales cost was soaring, demand saturation and inventory turnover days were extended, Daphne's performance accelerated down after 2015, and shareholders accounted for nearly 400 million Hong Kong dollars in the first half of 2019.

Against this background, Daphne has to start the business transformation, one of which is to optimize the structure of the store and close the stores that are not performing well. From 2015 to 2018, there were more than 3700 core brands in Daphne, with 30% employees reduced from 13 thousand to 8700. But with little success, capital is still not buying. Now, the market value of Daphne International HK $495 million is less than 3% of the market value of HK $17 billion at the peak of 2012.

The market performance of several other shoe brands is also hard to say. AOKANG international, which was listed in April 2012, surged to 53.43 yuan / share in mid 2015, and its market value exceeded 20 billion yuan, but after 2015, it slipped all the way. Now it is less than 10 yuan / share, and its market value is less than 4 billion yuan, which has shrunk 1/5.

The red dragonfly, which was newly recruited as spokesperson for Angelababy, and whose advertising fee increased greatly, did not go public in June 2015. It soon reached a peak of 34.44 yuan / share. However, since then, the share price has gone down and down, and it has remained at about 7.16 yuan per share after four years. Compared with the peak period, it has shrunk by nearly 80%, and the market value is only about 4 billion 100 million yuan.

The brand of the kiss Cat brand is also no exception. The share price trend is also downward sliding. The 22.16 yuan / share of the peak two years ago has dropped to 6.29 yuan / share today, a sharp decrease of more than 70%, and the market value is only 2 billion 700 million yuan.

In the past, BELLE, Daphne and kissing cats once appeared in the department store where Zhang Yi was located, but the area was limited. Over the past decade, the poor brands had been retreated many times. At present, only a dozen brands have been retained in the leather shoes area. Daphne has withdrawn many years ago, and the brand of specialized men's shoes has almost disappeared.

Nowadays, the contribution of shoe category to shopping malls in Zhang Yi's shopping malls is also reduced from the annual peak of $40 million to the current about twenty million yuan. The feeling of Linda Wong and Zhang Yunxia is that customers are more cautious about buying leather shoes and are not ready to sell them.

　　 Leisure sports shoes

Leather shoes do not sell well and consumption habits change is not unrelated, people increasingly prefer leisure sports shoes.

In the BELLE store, there are two shelves displaying sports shoes. From the perspective of appearance, sometimes the most popular old shoes, hot coconut shoes and small white shoes in the past two years all seem familiar. Linda Wong pointed to daddy's shoes and said that in the spring and Autumn period, the money went quite well. Linda Wong said that the old man's shoes were made in 2017. They were comfortable and looked small. The shoes of 39 yards and 36 yards did not look very different. They were very tall. They had fine legs and good clothes. Twenty or thirty year old young people could wear them, and forty or fifty year old people could wear them.

Such a "perfect" shoe must occupy the C position and display it in the prominent position at the door. But the secret is not only that BELLE knows how to stroll on this floor, almost every family has a popular sneaker style, but old shoes are just one of them.

Leather shoes enterprises want to seize this new trend, from the mass parity brand to the high-end brand, have launched leisure sports shoes. In the beginning of 2016, Wang Hui noticed that every shoe area she managed began to add casual style shoes. For example, GEOX, "with customers' needs, everyone did this style. No one wanted to miss the trend."

In the 38 quarter of this year, Shuang an shopping center specifically promoted small white shoes, and at least ten shoe brands participated. Excluding men's shoes, this means that at least 1/3 of women's shoe brands have launched small white shoes. "Although the sales of leisure sports account for a small proportion in leather shoes brands, the growth is fast. For example, it may have accounted for only 1% of sales, and now it has doubled to 5%. "

Colourful sports shoes and leather shoes appear on the same shelf, which seem very illegal. But this is an important factor in the downward direction of leather shoes. More and more people do not like wearing leather shoes, and the substitute is sports shoes.

The data have witnessed all this.

BELLE international in 2015 -2017, revenue growth all the way from 8.7% to 2.2%. 2016/2017 is the key node in the first half of fiscal year. During this period, sports and clothing business accounted for half of the total, rising from 49.2% last year to 56%. For the first time, it exceeded the sales scale of footwear business.

BELLE's earnings before the delisting showed that compared with the same period last year, the sales revenue of BELLE footwear business decreased by 12.7% in the six months ended August 31, 2016, declining for three consecutive years, while sales of sports and clothing business increased 14.9%. Among them, the first-line sports brand Adidas and Nike grew by 13.4%, while the second-line brand Puma and converse grew by 21.2%. In terms of retail outlets, the number of shoe self-service outlets decreased by 378 during the same period. On the contrary, the number of apparel outlets increased by 105.

BELLE's business is diversified, and it can be "lost in the East", and the days of other shoe brands are not so good. In 2016-2018 years and three years, Daphne's revenue growth narrowed from -22.41% to -20.08%. Red Dragonfly's revenue growth dropped from -3.20% to -6.29%, and AOKANG's international revenue growth dropped from -2.07% to -6.70%.

In 2018, 5 leather shoes listed companies, AOKANG international and red dragonfly did not appear to be in deficit, but their revenues and net profits were in a downward trend. Daphne and 100 degrees were losing money. The only good sign was that there was a slight upward trend on Saturday, but the revenue increased by only 1.9% over the same period last year.

Unlike leather shoes enterprises, the sports shoe enterprises are thriving.

First look at the Adidas and Nike, which are indispensable to all department stores and shopping centers. In the 2018 fiscal year, Adidas's revenue grew by 8% over the same period, and the growth rate in the Greater China region was 23%, not only higher than the overall level, but also higher than the 15% growth rates in North America and Asia Pacific region. As of the second quarter of 2019, Adidas has achieved double-digit growth in Greater China for twenty-one consecutive quarters. This also means that this growth has lasted for five years.

The same is true for Nike. Its revenue in fiscal year 2018 exceeded US $36 billion, an increase of about 6% over the same period last year. On the basis of exchange rate unchanged, the growth rate of the Greater China region reached 18%, which is three times the overall growth rate. In June this year, at the spring order meeting in June, Skech announced for the first time 10 years of development in China, with an average annual growth of 73% in total retail sales.

Moreover, the domestic sports and leisure brands are not inferior. In terms of revenue, in 2016 -2018, the growth rate of Anta climbed from 20% to 44.4% and doubled. While the Lining group rose steadily from 13.1% to 18.4%, while XTEP increased from 1.9% to 25%.

This phenomenon is reasonable. Generally speaking, in more developed and mature countries, the footwear market is mainly sports and leisure, and the proportion of formal shoes is limited. With the rapid growth and maturity of Chinese consumers, the demand for sports and casual shoes will also increase with diverse scenarios and personalized aesthetic requirements.

In addition to the change in fashion trends, the improvement of sports shoe enterprises is inseparable from their positive transformation. After 2012, when the era of sales driven by channels ended, sports companies encountered the slow-moving predicament after the rapid expansion of listed companies, forcing enterprises to face up to the needs of users, especially young users. For example, Anta launched the trend sports series to attract young audiences. Lining joined the new national tide movement to redefine the brand.

This has inspired the leather shoe industry's self transformation, gradually facing the audience rather than selling itself. Linda Wong disclosed that the heel height of leather shoes is generally lower than before, and the insoles are also more soft, because the users are more comfortable with shoes than they are. The "small heels in these two years are basically 5 centimeters, not more than seven or eight centimeters in the past, and the heels are mostly small and thick, with good load-bearing properties."

Chen Tian, a shoe maker in Fujian, told AI finance and economics that in addition to pursuit of comfort, young customers also prefer original design and high-end self-contained small brands. After all, small brands demand high quality of process, quantity and quality are easy to control, and also cater for the needs of younger generation's publicity personality.

However, the serious attributes of leather shoes, to a certain extent, limit the space of their transformation. Even if some leather shoes enterprises expand leisure sports shoes business, they can hardly compete with the main shoe makers, and the road of transformation is not smooth.

The first floor hall in Beijing's Jiulong department store bridge shop is full of Fangzheng brand shoes cabinet. The staff of BELLE revealed that only seven or eight new models were available this year. Daphne staff said that the new models had not yet come up. The old ones on the booth last year and the year before last, the two booths had two hundred or three hundred pairs of shoes, and those who came to visit were mainly middle-aged women. A lot of young people gathered in the Adidas, XTEP and Hongxing Erke shoe cabinet hundreds of meters away.

A female white-collar worker in Beijing revealed that when reading, BELLE shoes were considered to be very high-end, but they did not want to buy them after work. They thought the design was more rigid, and the same price could choose the fashionable and small international brands.

In Chen Tian's view, compared with the international second tier brands, there are gaps in the design, materials and technology of domestic leather shoes. Young mainstream consumers have a high degree of awareness of international brands, and naturally do not look at domestic leather shoes. "The main problem is brand itself, low cost, high price, low quality of materials and technology."

　 Tree fall and scattered powder

As an old department store operator, Zhao Tao is not surprised at the current situation of leather shoes. He bought leather shoes recently in China for more than three years ago. In order to make new achievements, he said, "leather shoes are small in size, and the scale of the whole market is 100 billion yuan, which can not be compared with clothes, and it is mainly concentrated in department stores. Nowadays, department stores are not too good. If they do not close the door or turn to the shopping center, they will not sell well."

The development curve of leather shoes, on the one hand, and sports shoes mutually disprove each other, on the one hand, it is closely related to the development of the department store industry. Most of the leather shoes brand is straight down after 2013, which is very compatible with the development of department stores. Statistics show that the famous traditional department stores entered the customs store in 2013, 24 stores in 2013, 23 stores in 2014, and 63 stores in 2015.

Instead of department stores are shopping centers and outlets, but this is not the main position of leather shoes. An Jie, deputy general manager of a shopping mall in Hangzhou, told AI financial and social services that shopping centers generally had larger locations, rented gold and expensive decoration costs, so some shoe brands did not want to come in.

On the contrary, sports brands focus on shopping centers. They like to open large stores, and their image and explosive power are stronger. In the shopping center of Anjie, ten brands of leather shoes were introduced, and there were eight sports shoes brands, but the latter had larger area, higher efficiency and more renting capacity.

Some people describe the relationship between leather shoes and general merchandise industry as "tree fallen and scattered powder", but worse still, after the fall of trees, they are also crushed by electricity suppliers. Linda Wong has done a lot of work in recent years, trying to persuade customers to buy online. "People used to buy shoes very happy. Now we have to ask if there is any discount. If we hesitate to try it first, then turn over the phone. It must be compared with the electricity supplier."

In 2017, when BELLE started merging online and offline, public data showed that in 2017, the sales of double 11 and BELLE were 450 million yuan, and for offline stores, they had to follow the line to carry out various promotions. "If they do not synchronize, they will definitely not sell online." Linda Wong counted off his fingers. "38 is the festival, then 618. Next year, 818 is going to be done. Then there are two ten, one and two. In the middle, we have to do all kinds of thematic marketing activities.

In her view, consumers nowadays have become very smart and have caught up with activities. Accordingly, the price of shoes is going along with the continuous promotion. "There will always be small activities, so now the price will be cheaper than before, the price is not discounted shoes are not many now, members directly 12% off."

In the middle and high-end leather shoes, consumers are not so sensitive to price, but they are also brought into the price whirlpool. Wang Hui observed that shoes trading volume was small, but merchants were very sensitive to start self depreciate, and the price was not high enough to suit customers' needs. Now the positive price is equivalent to the previous twenty percent off, and the result of saving the volume of transactions is "sales are not as high as before."

With the decrease of retail outlets and the decrease of selling prices, leather shoes have entered the situation of falling volume and price, while rents and labor costs have increased year by year, resulting in a sustained decline in profitability. AOKANG International's net profit in 2017 was only 226 million yuan, down 25.8% compared to the same period last year. Although it continued to streamline sales and management costs in 2018, net profit still fell, and more serious, down 39.53%.

From 2015 to 2018, Daphne averages nearly one thousand stores a year, and its employees are also greatly reduced, but net profit has not improved. The net loss in 2017 is HK $734 million, down 10.4% from the same period last year, and the net profit in 2018 has gone up by 35.4%.

More shoe brands are still struggling in the process of falling, hoping to catch a straw. Zhao Tao believes that the brand concentration of leather shoes is relatively high. Once these brands decline, the situation of the whole industry is not very optimistic. This is the case from the first tier to the four or five tier cities, and there is no way to improve it.

In fact, leather shoes industry is not completely without a way out. There are many famous leather shoes enterprises in the world, such as Lang Danze, Fendi, and Ferragamo. Most of them walk on the luxury line of high quality, rely on manual customization to ensure quality, and sell their identity. Many of them still operate in the whole category, not limited to leather shoes.

But China's leather shoes enterprises almost take the mass line and win by price. During the years of development, especially during the peak period, they did not devote much effort to product quality, stepped out of the differentiation, and took the high-end line to meet the needs of business people for leather shoes, which caused a dislocation between supply and demand. What caused this situation is that Chinese leather shoes enterprises do not make leather shoes as a hundred years' career. Many enterprises blindly diversify in the process of development, and ultimately affect the development of the main industry.

Take the birds and birds for example. In 2015, when the assets and liabilities ratio reached 45.18%, the company also set foot in the financial field that they were not familiar with. In May, they invested $10 million to invest in the P2P platform and win the society. In October, they became the largest shareholder of the latter. They only saw a short period of investment income and did not see the risk. Today, the win win society has long ceased operation; Ding Dong wallet is unable to mention thunderstorm due to overdue period. In August 24th, 4 of its actual controllers have been controlled by the police.

(Zhang Yunxia, Linda Wong, Zhang Yi, Chen Tian, An Jie, Zhao Taojun are aliases).