Benchmarking LVMH And Kering, Why Is There A Group Of Brand Management Groups In China?

The position of the richest man in the world has changed hands many times between Bill Gate and Bezos. But now it has third candidates. Arnott, the head of the LVMH group, has been on the top for 107 billion dollars this year.

In November, LVMH group spent 16 billion 200 million US dollars on Tiffany revenue, becoming the largest M & A case in 2019. In fact, every brand of this fashion giant was not created by Arnott, but it did not affect his "Godfather" in the fashion industry. LVMH, Kai Yun and Li Feng, these high-dimensional players, have jumped out of a single industry and become a brand management group.

Meanwhile, China's fashion industry is just beginning because of the international giants. How should many designer brands emerge in the past two years to pick up the "Pearl" on the consumption crown? How should we grasp the opportunities in the changing situation of China's fashion industry?

Recently, Zhang Jun, a partner of Bailian fashion industry fund, and the founder of Dong Fang Huang, ONTIMESHOW, co-founder of the largest fashion exhibition in China. With regard to the core dimensions of fashion brands, channels, and entry, we discussed with two of them deeply, hoping to find a way of development that belongs to China's fashion industry.

Zhang Jun believes that the downward cycle of the economy will not affect the development of the fashion industry too much, and there will be more opportunities for buyer shop formats in the two or three tier cities. At the same time, the innovation of brand concept of the new crowd will boost the outbreak of designer brand.

Bailian hopes to seize this window period, extending from a channel enterprise to the upstream brand and content, exploring the new format of department stores and the way to transform the brand management group.

Dong Huang also said that there are many fashion brands in China, but there are few valuable brands. Fashion and commerce are not a thing, there are many places that need to be crossed. Excellent entrepreneurs should consider from the three dimensions of design, brand and business. This also gives the value of eco oriented enterprises in the fashion industry chain.

Through more than two hours of deep communication, we find that the value and market space of the fashion industry are far from being fully excavated compared to the popular racetrack competing in the Red Sea. From the example of Bailian fashion industry fund, we can see that the designer brand with clear pain, clear demand, and industrial capital with channel resources are shining different sparks. Integration with more new formats in the fashion industry chain will also be the next important transformation and upgrading idea for commercial real estate.

We believe that after 35 years of deep ploughing of entrepreneurs and industrial capital, the fashion industry will usher in an unprecedented outbreak.

How to layout a closed loop of fashion industry

Bailian is the largest state-owned commercial circulation industry group in China. The impression we gave before is that we have lots of commercial real estate resources on hand. In fact, Bailian has been working for a long time in department stores.

In the present era, as a state-owned enterprise, it is also thinking about how to meet the new changes. So these years, after gradually improving the terminal sales channel, Bailian is exploring how to go upstream, that is, brand and content. It also promotes the fashion industry as one of the most important strategies of the group's "13th Five-Year plan".

But the domestic fashion industry is still in the initial stage and imperfect stage, so our current direction is not only for the C terminal, but also for how to help the B terminal, so that the resources of Bailian can develop the whole industry.

1. Against the standard, there is a huge space for China's fledgling fashion industry.

In fact, as a whole, we have many different places compared with the mature fashion industry market abroad, which conceals opportunities. The first is the brand level. The overseas fashion industry has been developing for many years, and the whole division of labor is very meticulous and perfect. And in every field, there will be businesses such as services or empowerment.

With these resources, the more powerful industry can successfully hatch or invest in acquiring a brand. Finally, some large luxury brands, such as LVMH and Kering, were integrated, or brand management groups.

And domestic companies are still doing their own brand operation and management. The characteristics of the domestic market are large and dispersive, and every market segment has opportunities. This leads to many brands, often in a specific market, but not to the height and power of brand management.

Moreover, every part of it is not very professional. If the professional third party companies can serve these brands well and help them enlarge, at the same time, larger industries can lay out every link to hatch, invest and acquire these brands. In the future, it is possible to achieve excellent Chinese brand management group.

So we feel that the biggest difference between the fashion industry at home and abroad is that there is still much room and potential to tap. In fact, many foreign fashion brands have been formed abroad, or luxury brands such as luxury brands.

And the changes of the crowd. A trend in China is that the consumption of new crowds is becoming more and more confident now. They are willing to accept some brands of new national products with good quality and good design. This is not the same as in the past.

In the past, the impression was that domestic brands are for the public, low-end and inferior brands, and high-end fashion brands are dominated by foreign countries. But now the new crowd, especially after 90 and 95, has been more and more willing to accept the fashion brand of domestic products, and the whole industry is on the outburst node.

Channels will also be different. Mainly because the development of domestic electricity providers is too fast, no longer need to do the same as abroad, first line down, then go to the distribution, affiliation, joint venture. Instead, the domestic market will generate some light assets operation mode. For example, I have good originality or good brand combination ability, then we can quickly build the brand by means of online operation with the help of e-commerce platform.

In fact, we have seen that some brands use this model very well in the field of subdivision. Supply chain is not their own, offline channels, stores do not need to open up, these two pieces of the past is to create a fashion brand the most important two parts, now in China, these can be done by outsourcing or cooperation mode.

For many potential and attractive new brands, it can develop very fast. This is also the reason why capital is willing to pay attention to and invest in fashion.

2, space + fund + channel, Bailian how to layout the closed loop of fashion industry?

So what did Bailian do around the fashion industry? First of all, Bailian has created a "fashion center" under the line. We transformed Shanghai's southern Suzhou road 955, an abandoned British old warehouse, into a fashion to create space.

Since the founding of Yanqing Li, many designer studios and brands have been introduced, as well as some third party enterprises, so that they can gather in offices for publishing, exhibitions, exhibitions and so on. So, now Yanqing has become a famous fashion industry center in Shanghai. Later, it will plan two and three phases to create a future offline landmark.

To this end, Bailian has also set up a fashion industry fund, which has a wide investment scope. We all look at the direction of big fashion, including clothing, shoes, luggage, beauty and so on. But the most important thing is the field of clothing, after all, its space is bigger. Specifically, there are two main points in our investment: one is the designer brand that connects to the ground and the commercial potential; the two is the eco enterprise that can empower these brands.

At present, domestic designers are faced with many difficulties. The simple division of the industry is the four links of design, supply chain, marketing and sales. Designers often have good ideas, but they face enormous shortcomings in the latter three stages. Therefore, Bailian will invest in the layout of some empowering enterprises. The core is to help them to enter the market. This is also the reason why we look at ONTIMESHOW and Nound Nound.

Finally, combined with some channel resources of the group, the whole fashion business closed loop is formed. Bailian has the most powerful ole system in China, and is also a large department store. In business, whether it is procurement, product sales or extension stores, can give the brand more resources support.

For fashion brands, many of them still have to go offline. If you want to shop independently, even if you have your own closed loop, the cost will be quite high, and it will not decrease with the expansion of volume. The support of commercial real estate resources can actually bring great help.

Though from a long cycle, it will return to an equal consideration, but the problem is, if everyone has only one copy period, then Bailian's support is most likely to help the brand run out quickly in this replication period.

3, Bailian's wildness is likely to become a brand management company in the future.

Let's talk about Bailian's bet on the fashion industry. Actually, there are two expectations.

First, from a realistic perspective, Bailian hopes to have many brands that support and incubate itself in its own shopping malls, shopping centers or department stores. These distinctive brands can bring very different competitiveness to commercial real estate.

Second, Bailian Group is really taking the fashion industry as a very important development strategy. So at a certain stage, Bailian is willing to make a big business segment in the brand and content.

In fact, Bailian has many channel brands, including Wu Liangcai glasses and so on. Can it also have some product brands? This is a perfect opportunity. After that step, Bailian could really become a leading brand management company in China, not just commercial real estate or ditch companies. It has its own brand, can also use its resources to hatch, empower, and invest in mergers and acquisitions to enlarge it, this matter has great opportunities.

Why fashion brand investment pays more attention to designer brand

1, in the large stock market, to tap the potential of subdivision increment.

Everyone is saying that it is now in an economic downward cycle. Is it not appropriate to invest in some fashionable brands with premium? Because consumers may not be able to afford to spend so much leisure money, and at the same time, they become rational in their cognition.

I don't think so. Cyclical factors do have an impact on all industries, but if you really look down again, you will find many local opportunities.

Designers brand positioning in the entire fashion industry is more accurate, products also have the appeal, but they are still relatively small in the domestic scale, in fact, there is still much room for growth in the industry, not because of the downward trend of the economy.

Over the past two years, tidal shoes and tide play, including beauty make-up, have become very popular. This confirms our previous view that the market is constantly moving, and the brand concept of people is constantly changing.

Moreover, these new people are willing to try out some distinctive brands, and even do more exaggerated, more personalized self-expression, which is an important reason why tide cards can rise.

If there is still such an opportunity, I think there will be. Like the development of an enterprise, it is a S curve. At the beginning, it needs a relatively long preheating process. It will suddenly break out at a certain time point, and then it will ease down after a certain period of time. It will even drop a little, but it still stays at a much larger scale than the original market.

So what we need to do is to find the next S curve's inflection point in this cycle. Bailian looks at the underlying logic of fashion industry, because fashion brands have the potential to tap the incremental potential in a large stock.

2, why did Bailian focus on the designer brand?

If you want to go deep into fashion brand, it can also be divided into many categories, for example, it can be divided into two categories: luxury (or light luxury brand) and fast fashion. The designer brand is located in the middle of the two.

Why do we focus on the designer brand of the middle stage instead of pure high-end luxury or fast fashion? There are three main reasons:

First, the development of fast fashion is relatively slow. In fact, the biggest market share of fast fashion brands is the clothes that have not been branded before, or the shops on the street or wholesale markets. You can regard this format as the lowest buyer shop.

In the past few years, the fast fashion investment is relatively large, the shop opening speed is very fast, everybody is in the horse race enclosure, now must come to an integration and the elimination stage, therefore it is in a contraction state, if at present wants from 0 to 1 becomes a mature fast fashion brand, will be slower.

Second, the audience of luxury goods is not so wide. For luxury brands, the market is always there. But after all, most people, or because of purchasing power, or from their brand cognition, they will be willing to try some brands that are not luxury goods, but also can express themselves. In the middle, designer brands have opportunities. And from the point of view of the commercial real estate industry, this is more appropriate than purely high-end luxury goods, because it can attract more people.

Third, designer brand will not fall into the homogenization competition of products. If you choose to be fast fashion, the future competitors to consider are UNIQLO and ZARA giants. They have great advantages in product supply chain, marketing and brand building. What are you going to compete with?

Fashion channel sink, buy mobile phone in two or three tier cities

1, opportunities for the sinking of fashion brands: Chinese market + desire cycle

Just now, the choice of fashion brand differentiation can also be done differently in the channel side. Nound Nound, which we invest in, is a buyer's shop focused on the sinking market, because we judge the bigger opportunity of this format in the two or three tier city.

Now whether the channel or a little high-end fashion brand, in fact, are considering sinking. First of all, the purchasing power of many two or three line city consumers is very strong. At the same time, they can reach the fashion brand, and the information transparency is far less than that of the first line market.

There are actually two key words behind the sinking phenomenon, one is the Chinese market, the other is the desire cycle.

China is characterized by its vast territory and abundant resources. No brand or channel has the same track of behavior in different cities, so its regional differences will be very obvious. From the business model of buyer's shop, the survival probability of first tier cities is very low, because competition is too intense, even many brands have their own outlets.

However, the competition between the two or three tier cities in this area is not very strong, including the purchase of the first tier city buyer shops. Its appeal may be not just on the commercial level, but in the layout of more two or three line cities, so as to enhance the single point release of the brand.

The desire cycle is also reflected in it. We have observed that the fashionable brands in the first tier cities have begun to move towards the cold wind. But at the same time, it is still in the early stage in the two or three tier cities, and there is a time lag in the middle.

Although this time difference is gradually shortened with the popularity of the Internet, it still exists. So the fashion brand sinking is relatively easier in the commercial system, because the whole thing has been verified in the first tier cities.

2, the future trend and difference value of buyer shop formats.

1) buyer shop format has its particularity and must be fine-tuning according to the data.

After sinking, how should a buyer shop do it? I think the core is data driven.

In the past, buyers were more dependent on buyers. Therefore, buyers have their own taste, or whether your taste is grounded or not, can represent the market demand, will be very important.

But when the buyer shop develops to a certain stage, it has to do a lot of data statistics and feedback to adjust its strategy, which is a key point to test whether a buyer team can continue to make achievements in the future.

Because buyer shops and general retail formats are different, they have two modes of consignment and buyout. If the buyout ratio is too high, then your inventory and sales rate will have a big problem, so the buyer shop must make careful planning in the early stage, and have a precise judgement of the crowd and market demand.

If you don't have the ability at the beginning, or you can't see it very well, you can choose to increase the proportion of consignment. However, there will be many problems in the later stage of development. For example, your replenishment capability will be very poor, bargaining power is not strong enough, and you can not get the top products.

So we must make a fine adjustment of the business mode through data driven. Of course, in addition to the timely adjustment of the product side, the client must also maintain well, such as doing some private area traffic management, and constantly enhance the user's repeat purchase rate. Finally, we need to see whether you can match the two, which is a combination of science and art.

2) from buying shop to buying department stores, department stores are facing new windows.

What I want to add is that by exploring the buyer's shop, Bailian can actually build a Chinese buyer's department store in the future. Including Bailian will now open their own shop, just want to do such an attempt and breakthrough.

The format of buying department stores is not yet available in China. Bailian Group was relatively innovative in the early days, and it created the first department store in China. With the deduction of time, a number of buying department stores have appeared overseas. This also lets us see China's department store format, or usher in a window of renewal.

The big department stores are very similar to the small buyer shops. What is the problem before us? It is because the original channel operators do not operate. After the completion of the business, operators and sales are put to the merchants themselves.

Therefore, the former buyer shop is making stalls, earning the trade price difference, whether the product has design capability and how many people can attract, without control. In the future, buyers can have their own drainage routines, choose products according to the type of customers they want to contact, and so do department stores.

Over time, people will remember more about the IP of a buyer's shop or department store rather than some brand. In the long run, this will bring great competitive advantages to Bailian.

Import of fashion industry, central value of exhibition

(this paragraph is dictated by ONTIMESHOW co founder Dong Huangzhi &CEO).

ONTIMESHOW is currently the largest fashion exhibition platform in China. We are entering the fashion industry through exhibitions. In this industry, B2B's offline exhibitions are still very important.

If the designer brand is just starting up, it will control the supply chain very weakly, and the bargaining power is also very low. When it comes to the retail terminal, its customer price will be relatively high. From a business point of view, it must be safer to get orders and place orders.

In the process of designer brand design and product marketing, the first step is to participate in ONTIMESHOW exhibitions so as to get buyers and get orders earlier.

So we are an entry to the fashion industry. We can observe these independent individuals from a larger perspective. Bailian also hopes to use our standardized data evaluation method to pick out the head or valuable designer brand and make early empowerment. If the brand goes to the next stage, the resources of Bailian can keep up with it.

1, supply and demand suddenly increase, ONTIMESHOW witnessed the rise of fashion industry.

And from the 5 years since the founding of ONTIMESHOW, we can say that the development and outburst of China's fashion industry has been witnessed.

In the early stages of 2014 and 2015, the market did not have a better format to undertake independent designers. Designer brand was hard to survive at that time, but our exhibition was still insisting on business. Since then, from the continuous development of 2016 and 2017 to the spring and summer of 18, the first ONTIMESHOW site expansion has been completed for the first three months.

In fact, from the perspective of an exhibition company, we can easily perceive the sudden trend of designer brand.

What is the reason behind it?

Look at the supply side first. Take the time node of the fashion industry development, in recent years, many overseas returned designers have independent ideas. They hope to express their consciousness through designer brand.

To put it bluntly, in this era, the material conditions of society or family can give them a good foundation to do such an attempt. Therefore, the sudden increase effect of designer circles is very obvious, and the designer brand that the market can see is becoming more and more.

And demand side. As a commercial body, especially to the retail end, it is nothing more than the flow of people, the unit price of customers and the rate of repeat purchase. The current trend is to target young consumers, or young consumers, or what they like is the fashion, music and visual elements linked to art. This is the most powerful point for shopping malls to drain and sell abroad. Therefore, the fashion industry can become the focus today, and is closely related to the rise of the new crowd.

This has resulted in these two years. In fact, we can see whether the traditional department stores or real estate developers are very concerned about the fashion sector.

2, to be a fashion brand, we need to grasp the commercial rhythm.

Generally speaking, designers are a special group. Not every designer can create a good brand, nor is anyone who can create a good brand know how to do business.

We have always stressed that fashion and commerce are not a thing, there are many places to cross. This is also the reason for the existence of empowering eco enterprises in every industry segment.

If we look at China's clothing industry alone, we will feel that the whole system is a very mature state. But for fashion industry, it is still at a very early stage, and the room for growth is very large. There are many clothing brands in China, but there are few really valuable brands.

To do a business, there are two modes: making brand and making products. To make a product, it is to create a product with high cost performance, and to sell it in any channel, and the purchase price is also chosen according to the price performance ratio.

Making brands is a little different. Brand management needs to insist on its own tonality for a long time. In this case, there will be some stages of trade-offs. For example, at the moment, do you want to earn more cash flow, or at the level of brand promotion?

So we feel that it is not very easy to make a commercialized fashion brand, and we need to grasp a certain rhythm in the middle. If you are too quick to pursue commercialization, it may be that the tone and style of the brand will be out of shape or mediocre, and the product will be greatly reduced. But if you have always been too small and beautiful, you can't do it very well.

3, from industrial access to industrial hub, more power needs to be connected.

To break through this bottleneck can not rely solely on designers. If you look at the mature markets abroad, the designers of the luxury brands from designer brands may be the design directors, but at a certain stage, there will be a very strong CEO and team at the commercialization level. They can make rational use of resources to build a system that matches business strategy. The ultimate premium of the brand is actually generated from here.

From the dimension of platform, ONTIMESHOW should be the largest in the industry. When we get to this node, we will think about whether we can go deep into the industrial chain to do some layout.

We are sure to make our own decisions, or we need to work with larger and resource industrial groups. That's why ONTIMESHOW chose to combine with Bailian. We hope to explore some possibilities in the industry. Because in the entire fashion industry, from design, manufacturing to sales, there are a lot of valuable resources to integrate, but it is impossible for each link to develop a new team.

If we can get through all the links in the fashion industry, we can finally become a central industry platform. And our greatest desire is to help truly talented designers to walk in the messy business system and let him put all his energy into design.