The Revelation Of The Rise And Fall Of Wei: From The Global To The Cheap, Where Is The Defeat?

In February 26th, L Brands, the parent company of the underwear brand Vitoria, announced its fourth quarter and full year earnings in 2019. Meanwhile, L Brands announced that the sale of the sale will be completed in the second quarter of 2020. Prior to this, it was priced at $1 billion 100 million for "cheap sale". What did the underwear brand of the world go through from prosperity to decline? What did it bring to China's underwear brand?

According to the financial report, sales of L Brands in the fourth quarter of last year were 4 billion 700 million US dollars, down 3% from the same period last year, and the net loss was 192 million US dollars. Among them, its sales volume was $2 billion 275 million, down 10% from the same period last year. In the whole year, the sales volume of L Brands was 12 billion 900 million US dollars, down 2.3% from the same period last year, and the net loss for the whole year was US $366 million, which was 643 million US dollars in the same period last year.

Because of the decline in performance, it has become a burden for the parent company. This is also the main reason why L Brands wants to sell it. In February 20th, L Brands announced that it would sell 55% of its shares to Sycamore Partners. After completion of the transaction, the company will divestiture from the L Brands listing business and enter the privatization process.

It is worth mentioning that in the above transaction, the valuation of the sale was only 1 billion 100 million US dollars, far below the analyst's estimated 2 billion -34 billion US dollars, which is only 1/7 of the annual sales volume of the peak. What is the reason why the underwear brand, which has been established for 43 years, is declining from prosperity?

　 Brand is popular all over the world.

In 1977, the appearance of delicate and sexy image gradually changed the concept of underwear for consumers. In 1995, it launched its first annual fashion show to enhance its brand influence. Over the next 24 years, the show became one of the hottest labels of the brand. In 1997, the "angel" underwear series was launched by Wei Ming.

The show has been regarded as one of the most successful marketing tools of the brand. L Brands has greatly enhanced the transmission effect of TV through the way of TV and network. In 2010 and 2011, the show broke through 10 million of the ratings, and welcomed the peak of the audience. In 2016, the show was broadcasted in more than 180 countries and broadcast more than 100 billion times worldwide. The high profile and high flow of the secret show led to the rising sales of the brand. In 2009, it sold 600 underwear per minute. In the 2016 fiscal year, the brand achieved sales of $7 billion 780 million.

A marketing professor told the China Commercial Daily reporter that the popularity of the "Wei Mei" brand has been widely known to the world, and that it has done a great job. The experts believe that the show can show the delicate and sexy underwear of the brand, convey high-end and luxurious brand positioning to the outside world, and then arouse consumers' desire for shopping, which is a typical marketing case in the clothing industry. In view of China's underwear market, fresh brands can do mass marketing propaganda. Some of the head enterprises still stay in the form of basic marketing such as TV marketing and store promotion. These marketing means are hard to stimulate consumers to buy products. Brand familiarity and recognition are also one of the restrictions on the market share of underwear brand expansion in China.

Besides underwear brand, it also developed several business lines. Swimwear was once one of the core businesses of the company. In 2016, the business accounted for 6.5% of the total sales of the company and its annual sales volume was around 500 million dollars. Last year, it announced the restart of the business line. At the same time, the secret directory has also been valued by consumers. Consumers can send orders through magazines by pictorial catalogues. In 1997, the sale of 450 million copies of the secret directory had brought $661 million to the company. In addition, it also has many lines of perfumes, skin care products, clothing and so on.

The business scope of Chinese lingerie, Ttiumph, ancient and modern Chinese lingerie brands are mostly lingerie and home furnishing. The marketing experts admitted that the concentration of underwear industry in China is relatively low, and the competition pressure of enterprises is huge. When the enterprise develops to a certain scale, the market share is stable and the funds are sufficient, and has active fans group, the development of multi business lines is an expansion strategy.

　 Wei faces challenges in the future

The decline in the ratings of the show is one of the performances of the decline. From the peak of the 10 million viewership to less than 5 million of the 2017 viewership, 2018 ended the grand underwear show with the worst results of 3 million 270 thousand viewership. Last November, the company announced that it had completely shut down the secret show.

The cold shoulder of consumers to the secret show is not the most terrible. The continuous decline of its performance is the important reason for its being abandoned. In the 2016 fiscal year, the company's sales volume reached US $7 billion 780 million, and the growth rate has been changed since then. In fiscal year 2017, the sales volume of the company declined by 9% compared with the previous year. In fiscal year 2018, the operating profit of the underwear business was only $512 million 400 thousand, down 45% compared with the 2017 fiscal year. Data show that during the 2016-2018 years, its share in its most important US market dropped from 33% to 24%.

The sex scandal of the top executives seems to be the last straw in the brand. For underwear brands with women as target customers, internal executives are exposed to sexual harassment, latent rules and demeanor, plus women's perfect figure. Undoubtedly, they will have a huge negative impact on the brand.

Cheng Weixiong, general manager of textile and clothing brand management and Shanghai Liang Qi Brand Management Co., Ltd., in an interview with the China Daily News reporter, said that the main reason for the sale was that the brand value fell sharply, the product was aging, and it could not match the needs of consumers, and the decline of its global performance was also expected. At the same time, Cheng Weixiong said frankly that the younger, experience and brand value of the brand need to be upgraded, which is very challenging for the new owner of the brand.

Throughout the women's underwear market, the definition of beauty has changed. While more and more people are concerned about the comfort of products, the persistence of "sexy" style will inevitably lead to the loss of large numbers of customers. Cheng Weixiong believes that China's underwear brand is closely related to changes in consumer demand, brand positioning, user research, to bring consumers technology and scene experience.

The marketing experts also told the China Commercial Daily reporter that the successful marketing of the secret show is based on consumers' pursuit of products. Once consumers lose interest in the brand, any marketing way can hardly change the customer's loss. In addition, the target customers of underwear brand are special, and the brand should better reflect the value of women. However, the damage caused by internal scandals against the brand image is difficult to repair in a short time.

According to AI consulting data, from 2014 to last year, the annual composite growth rate of the global underwear market was about 7%, and the growth rate of China's underwear market was relatively obvious. Last year's market size was about 200 billion yuan. At the same time, the market share of China's underwear brand is very low, and the overall industry dispersion is relatively high.

For Chinese underwear enterprises, the rise and fall of Wei is not only a mirror, but also a valuable course.