CEO Ye Guofu Is A Staunch Advocate Of Physical Retailing.

The outbreak of the epidemic has led to a heavy loss of retailers under the line. So far, most enterprises have not yet recovered.

There are more than 4200 stores in the world, among which more than 1700 are located in nearly 100 countries and regions outside China, and the scale of revenue exceeds 20 billion yuan.

In response to the Spring Festival, 1 billion yuan worth of goods was prepared for famous and excellent products. The epidemic led to unsalable goods, plus the operating costs of the entities under the huge line.

"Since the outbreak of the epidemic, the performance in January has declined by 30%; in February, 2/3 of the stores in China were temporarily closed, and the sales of opened stores dropped by more than 95% over the same period last year. The drop in sales and prolonged stoppage in domestic and international warehouses also result in a large backlog of stock and a sharp reduction in cash flow. The company still has to pay huge fixed costs, such as artificial remuneration, which has huge operating pressure. " At the end of February, the name of "top quality products" was released to the employees in the book entitled "total difficulties and difficulties".

In order to reduce the pressure of business and tide over the difficulties, the famous and high quality products advocate the salaries of all employees in January should be issued 80% before tax. In 2-3 months, executives, directors and employees pay 50% salaries, managers pay 60% salaries to senior managers, and 70% pay for grass-roots workers. At the same time, the Department and staff are encouraged to stay in the field during the epidemic. According to the name Chuang Gao, the proposal was answered by 97.7% employees.

The famous brand products of tight belts are a common predicament for retailers to stop online. In order to save themselves, the famous brand has to change its strategic layout under the main line of attack and increase investment in the channel of e-commerce.

1. Mobile communities surged 300%

Ye Guofu, a famous and excellent CEO, is a staunch supporter of physical retailing. It has repeatedly expressed its attitude towards the declining electricity supplier in public. Since its inception in 2013, the company has always been the core channel of offline products, and began to visit the third party e-commerce platform in 2017. However, it only positioned the online channel as a supplement under the line, accounting for less than 1% of revenue.

After the outbreak of the outbreak, the passenger flow under the line sharply decreased, and online became the only blood transfusion channel.

In addition to launching the "contactless distribution" service on the three party platforms such as starving, the US group and the Jingdong, the famous and excellent products also launched the "community marketing", launched the staff to take the goods voluntarily, and promoted the products in the way of video live broadcast, and then guided the purchase and transformation with the "name creation excellent products employees' internal purchase" procedures, and served the customers' consumption demand within the three km range of the stores. At the same time, online and offline emergency establishment of the epidemic prevention area, the introduction of market masks, alcohol disinfection products, boost sales transformation.

Ye Guofu originally disdained to be a community electricity supplier. "When we talk about community e-commerce, we will think of micro businesses." In the past, we could not see this kind of thing, unwilling to do it. Now we feel that we should focus our reform on this place. Ye Guofu said that the store itself is a huge flow of entries, the name of the product has accumulated 25 million members in the past few years, but the member stickiness is not enough, through the community to strengthen the viscosity of this way, can enhance the customer's repeat purchase rate.

Ye Guofu believed that "in the past, the average performance of a store in one month was 50-60 yuan. If we do a good job in community marketing, we can create a new name and double the performance."

With the help of the community electric providers, the online business of famous and high quality products increased by 300% over the epidemic period. It is estimated that the proportion of online sales will increase to 10% in 2020.

The famous and excellent products revealed that the planned development line is exclusively for commodities, and at the same time develop a group of "online franchisees" or "partners" through the social crowdsourcing mechanism, and build the social networking business of famous and high quality products to meet the online consumer demand.

　 2. The price of new products has increased by 600 globally.

The unit price of famous brand products is generally not high, and the business mode is based on efficient supply chain and rapid expansion to achieve small profits and quick turnover. However, in the past two years, in order to raise the unit price of customers and get rid of the label of "ten yuan shop", the name "Chuang Gao" has launched many products of more than 100 yuan.

Ye Guofu felt that after this epidemic, consumers' inherent life style and consumption concept were broken and reshaped, and they would spend more money in every detail and return to the pursuit of the best value for money.

For this reason, the famous and high quality products plan to cut more than 100 yuan products, and the newly developed products will be reduced by 20% to 30%, so that more than 95% of the products will be focused on less than 30 yuan to seize the global users and market.

The overall profit margin of the famous brand products is 8%. Will the price cut the profit margin?

Famous and excellent products said that the space for price reduction was mainly generated from the procurement side. "For example, we may have 10 suppliers in the past category and provide OEM services at the same time. Now, by optimizing suppliers, we will focus our orders on 3 or less suppliers, placing large orders to measure the price and squeeze out the price adjustment space for the terminal sales."

In overseas markets, there are more than 1700 stores in the overseas market, and the income is about 30% of the total performance. In March of January this year, the overseas market was not affected, and the sales performance increased by 30%. However, with the spread of the epidemic in March, the overseas market began to be affected.

"Our key overseas markets are Southeast Asia and South America. The impact of the epidemic is not very obvious. In some countries, such as Australia, we have urgently prepared a batch of mask products, and the sales are good. In Indonesia and India, we have arranged the electricity supplier channel before the outbreak. " The name of the company said that the epidemic also proved that the decision to "go out" was correct. The globalization of domestic and overseas layout has made the business and revenue structure of the famous company more balanced and has a stronger ability to resist risks.

With the improvement of domestic epidemic situation, the domestic stores with more than 90% famous brand products have resumed their business. In addition to Hubei Province, the daily sales performance of the stores has been restored to 50%, and the weekend sales performance has returned to 70% to 80%. The stores of individual stores, such as Xinjiang and Kashi, have reached nearly 60 thousand yuan in daily sales, and have recovered to the level before the epidemic.

This has brought confidence to the continued expansion of the name Chuang Hao products. In Ye Guofu's view, physical retail sales were hit hard during the epidemic, but it was also the best time for shopping malls and stores to have the lowest rents and the best retail layout. It was an opportunity for new store expansion.

"Originally planned to open 600 stores worldwide this year, we doubled the target and opened 1200 stores." Ye Guofu said publicly in mid March.