Counter Attack Or Fall? 2019 Big Brands That Show Accidents.

The changes in the business world in 2019 were unprepared.

Some of the companies that had been watched a year ago suddenly returned to life. For example, H&M came alive and got the best growth in nearly 5 years.

At the time of high light, the company suddenly fell, WeWork's bubble broke; UNIQLO encountered the black swan event; the trend of Gucci's triumphant advance was no longer...

In short, in the age of change is normal, we need to update too much cognition. What are the "company impressions" that we really think are inaccurate? What are the seemingly difficult businesses that have suddenly been successful? What rules can we read from the changes in these consumption areas?

1. A year ago it was hot, but now Gucci is out of favor.

When you see a luxury brand moving around the street. In the next few years, it may be difficult. Which brand is facing such a "danger" recently? Gucci.

Gucci has a tendency to go out of the street too high: walking on the streets of Shanghai, Gucci's Marmont and Dionysus handbags can be seen every few minutes, not to mention "white shoes" with red, blue (or red, green) stripes. Gucci has lowered the threshold of entry money, and handbags have produced many thousands of styles. At present, Gucci's lowest price handbag (5500 yuan) is lower than that of LV (8300 yuan), which does not include Gucci's children's bag, and many adult consumers buy it. There may also be dilution of imitation.

In the pages of the "luxury Street goods list", there are 22 Gucci cases, compared with LV only 15 times. In Xiao Hong's book, Gucci is also the most popular brand (310 thousand), surpassing its rival LV (290 thousand).

Although there are many people buying it, consumers' interest in Gucci is not as good as before. In 2017, Gucci also pressed LV to become the most popular luxury brand on Google, but by 2018 it was no longer the largest number of search brands, falling to fifth.

The real luxury consumers do not want to disappear from the crowd, they will not choose the ubiquitous style or even the brand. Chinese consumers are beginning to pursue individuation on the fast food products, not to mention the luxury that originally advertised individuality and status. RBC RBC Capital Markets made a consumer preference survey in September 2019. The 750 Chinese consumers who had the ability to spend were more willing to buy Chanel, Hermes, LV, Prada and Dior brands in the next 12 months. It is worth mentioning that in the survey report released by RBC in April, GUCCI is still in the second place, but now it ranks sixth. Gucci may have lost some of its target consumers.

On the other hand, fashion trends change every few years. Gucci's creative director Alessandro Michele's complex retro style has activated the brand in the past 4 years. If there is no refreshing concept, product or design, Gucci may enter the cycle of prosperity. According to the earnings report of Gucci group's Kai Yun group, the annual sales volume is around 8 billion euros, and LV and Chanel belong to the first tier luxury brand. The growth rate is not as fast as that of smaller luxury brands such as Balenciaga or McQ in other categories.

Gucci has barely saved 10% from its growth rate of nearly 40%. If we compare the LVMH with the luxury sector and the luxury business, we will find that the two increase is staggered. LVMH's fashion and leather sector (including LV, Fendi, Celine, etc.) has increased by 20%. The growth rate of the luxury sector including Gucci, Saint Laurent and other brands has slowed to around 10%.

Although it is natural to say that the growth rate is slowing down, the Gucci deceleration is a bit intense. Gucci sales exceeded 10 billion euros, and the goal of exceeding LV may not be so fast.

Larger and larger luxury brands need to strike a balance between increasing sales and getting too much.

2, offline retail is difficult, foreign capital is shrinking, Costco and Aldi have stopped.

When foreign retailers such as Amazon, Metro and Carrefour withdrew, Costco and Aldi won the first battle in China. The opening of the first store was hot. After Costco3 months, it announced that it will open second stores in Shanghai. Aldi has also added 3 new stores to the Chinese market for half a year.

Is this because of the novice aura?

There are many reasons for their success, such as the special retail experience, preferential price and exclusive sale of their own products. But one important reason is that both retailers are selling imported products. Costco imports accounted for 40%. But some of their imports are even more favorable than online or purchasing agents (for example, Aldi sells powder like beer and Costco luxury goods), which really gives consumers a sense of giving up.

Another example is WAL-MART's Sam s club store sales in China, which has achieved double-digit growth for two consecutive quarters, far exceeding WAL-MART's performance in WAL-MART. Sam accounted for 80% of SKU imports.

How many Chinese consumers love imported products (especially fast food products)? According to Bain and kaydo's 2019 Chinese shoppers report series two, the total sales volume of China's fast moving consumer goods market increased by 4.9% in the first three quarters of 2019, but sales of imported fast food products increased 10%, nearly 2 times the overall growth rate of fast moving consumer goods. The selling of imported products is also one of the reasons for Alibaba's acquisition of NetEase koala. It takes a look at koala's first market share in cross-border electricity suppliers.

For a long time, the impression of imported products in the minds of Chinese consumers is "high-end". After the stratification of consumption, everyone is concerned about the sinking market, but in fact, Chinese consumers still have strong demand for high-end imports. The stratification of consumption also gives more opportunities for the imported products to take the cost-effective route and mid-range positioning.

In a word, imported products are a clue to the change of retailer's pattern.

3, do you think Muji is dead? Actually, it is still alive.

Almost everyone is singing bad. Indeed, Muji has already left the altar. Since the beginning of June 2018, Muji has been declining in the same store in China. That is to say, the business of the old shop that has been open for more than a year is declining, and sales growth is driven by opening new stores. This trend lasted for one year.

In the last two quarters, Muji's same store sales have dropped. In the second quarter, its old store performance increased slightly. This may be related to its recent frequent promotions. In fact, from the perspective of single store income, Muji's performance is improving. This trend lasted for 3 years. The current single store income is close to the heyday of 2015.

In order to break the impression of "expensive" inherent in MUJI products, it began to offer frequent discounts. In the third quarter (2019.9-2019.11), it made 12 promotions. Since 2019, the "three day limited" flash discount has become a regular marketing campaign for Muji.

Other lifestyle brands are in a more serious situation.

Strict selection at the beginning of the year layoffs highlighted the crisis. Before koala was stripped, in the second quarter of NetEase earnings report, the overall performance of the electricity supplier was mediocre and the growth slowed down. In October, Liu Xiaogang, vice president of NetEase and general manager of strict selection division, left. Because of "high failure", NetEase launched the "9.9 value zone" and began to sink.

The development of famous brand products is not as good as before. In 2018, just after Tencent and high altitude capital invested 1 billion yuan, the name of the best quality products came out on the market. In addition to bad money, what other reasons are there to be listed? According to "times weekly", in 2019, it was probably the worst year since it was founded.

Famous brand is a brand that intends to make fast money: not only many cottage styles, but also frequent quality problems; executives' proprietary network loan platform is a blood transfusion for a famous high quality franchisee. It is hard to say how long its vitality is. Ye Guofu, the founder and CEO of the famous product, revealed that its overall profit margin was around 8%. If it is calculated according to its income of 18 billion yuan in 2018, its profit will probably be around 1 billion 360 million yuan. However, these figures have not been externally audited.

Another lifestyle grocery business -- millet products are still growing at a high speed. In the first half of 2019, GMV was 3 billion 800 million yuan, an increase of 113.9% over the same period last year. However, it has only been established for less than 2 years, and there may be some novice aura.

Lifestyle brands (or groceries) have only been in China for 5 years. The best thing to do now is Muji. Local brands learn products very quickly, but in establishing their own style, aesthetics and life picture, they still have many needs and MUJI products to learn. Building a way of life requires long-term doctrine.

4, in the shrinking clothing market, the high-end domestic brands have emerged.

The rising price of down jacket is an important topic in the near future. Who would have thought that Boston introduced a ten thousand dollar style to the Canadian geese? In fact, it was not only Bosideng, but the price increase was the theme of domestic clothing in recent years. According to the statistics of the China National Business Information Center, the price of garment units increased by 5.3% in 2018, up 4.1 percentage points over the same period last year.

Consumers have less clothing and less clothing sales. Companies need to maintain revenue (or even grow) through expensive products. According to the National Bureau of statistics, the total sales of clothing in 2018 were 54 billion 60 million, down 24.8% from the same period last year. Clothing sales in the first two quarters of 2019 also decreased by 10.7% and 5.1% respectively.

Judging from the consumption structure of the residents, clothing is still growing, but it is the slowest growth category. According to the National Bureau of statistics, the expenditure on clothing in the first three quarters of 2019 increased by only 3.8%, reaching 962 yuan, and the growth rate was far lower than that of education, culture, entertainment, food, tobacco and alcohol consumption. The proportion of clothing in the overall consumption of residents has dropped to 7.4% from 5 years ago to 7.4%.

The reason behind "buying less" is that consumers have changed their minds and focused more on quality rather than quantity. But it may also be because of the increase in clothing prices, other required consumption and household debt are growing faster, forcing consumers to reduce the amount of clothing that can be purchased.

Clothing companies are happy and worried. For consumers at low prices, customers and price sensitive brands such as UNIQLO, consumers are less likely to buy clothes. In the latest quarter of November 30, 2019, the sales of UNIQLO Greater China increased by only 5.8%, although the company explained that this was mainly due to the depreciation of the renminbi and the impact of Hongkong's retail environment.

A year ago, the fast fashion H&M was not revived. H&M grew by 11% in the first three quarters of the Chinese market, and the products in the summer were selling well and the profits increased by 6% year-on-year. According to the fourth quarter and annual briefing, H&M sales in fiscal year 2019 were 232 billion 700 million kronor, an increase of 11% over the previous year - the best annual sales growth of H&M since 2015. It has not yet released specific results, and the recovery of H&M may be related to multi brand strategy.

Under the changing habits of consumers, Lining and Bosideng, the local brands, have found opportunities for transformation: high-end and unexpected success.

Bosideng ranked second in the 2019 double 11 women's clothing rankings, up two from last year. There has been a lot of improvement in the amount of money. In the first half of September 30th, Bosideng income rose 28.8% to 4 billion 436 million yuan. Net profit rose 36.4% to 343 million yuan. The core income of down garment business was 2 billion 533 million yuan, up 42.9% over the same period last year, exceeding the growth rate of OEM processing business.

Lining is upgrading China's Lining series by improving design and adding current elements. In the first half of 2019 fiscal year, Lining's clothing business rose 33%, and the Chinese Lining series sold 5 million 200 thousand garments and 40 thousand pairs of shoes. In the past six months, Lining's income was 6 billion 254 million 700 thousand yuan, an increase of 32.7% over the same period last year. Net profit reached 795 million yuan, nearly doubled (although profits included land sales income). Another reason for its success is the right track. Sportswear is the fastest growing category of Chinese clothing.

There are few cases of high-end local clothing brands. Whether it is Anta or Europe, such as the company is through acquisitions, foreign high-end brands (such as FILA, Miss Sixty) to follow the consumer upgrade. It is not enough to rely on consumers' enthusiasm or national identity to upgrade domestic products.