Daphne Shop: All The Stores In Taiwan Are Not Doing Very Well.

In China's shoe industry, no one can escape the torrent of the times. Once the market value exceeds HK $19 billion 500 million, how does Daphne, which has a price of HK $0.37 per share, slide from the peak of a generation of Chinese shoe king to the bottom of the valley? Let's take a deep look at the brand of Daphne shoes today.

The shoe king who is not in good condition: Daphne stores all Taiwan stores

In April 23rd, according to Taiwan media three news reports: Taiwan funded shoe factory's own parity women's shoes brand Daphne (DAPHNE) was surprised that the continuous loss will end the Taiwan agent's collection of all the stores, and most stores are now offering promotional discounts, and the salesperson has privately revealed: "some stores will be closed at the end of April, while the Taipei stores will have only the end of June. "

The growth curve of a generation of shoe king: OEM - brand, wholesale - exclusive store

Fortune: transformation from shoemaking factory to self owned brand. In the early 80s of last century, the financial crisis caused by the oil crisis swept through Taiwan. Therefore, Chen Xianmin, the unemployed uncle and Zhang Wenyi, the wife of a shoemaking family, raised 20 million NT dollars to jointly establish the Qiao Zhi enterprise Limited by Share Ltd, and formally entered the footwear industry. At that time, after 30 years of development, the footwear industry in Taiwan became increasingly mature, with excellent footwear and cheap labor. "Qiao Zhi enterprises" catch up with the express train from the nurses shoes, and gradually rely on the international brand foundry. But by the end of the 80s, with the rise of labor costs, the footwear industry in Taiwan was on the decline. "Qiao Zhi enterprises" was facing a shutdown. At that time, the mainland footwear industry was in full swing. In 1987, the Taiwan authorities opened their homes to visit relatives. Zhang Wenyi and Chen Xianmin are very sensitive in their business sense, and the two people set up the "wing en group" in Hongkong. In 1988, a shoe factory was opened in Putian, Fujian, and continued to work as an international brand. However, Chen Xianmin gradually realized that the profit margins of the OEM were limited and could not make the enterprises bigger and stronger. Thus, Chen Zhang two and Chen Xianmin's brother-in-law Chen Mingyuan decided to create their own brand.

In 1990, the "Daphne" brand was born and began to manufacture and sell women's shoes. Brand grows hard: wholesale changes monopoly, saves defeat.

For brands that are eager to open up the market, wholesale sales and franchisees are undoubtedly the best way. In the early days of development, Daphne made wholesale sales and earned the difference. In addition, in the first year of entering the mainland market, Daphne produced 10 million yuan as advertising budget. Daphne's classic TV advertising slogan "beautiful 100 points, beautiful without discount" spread.

"In terms of products, in order to reduce costs, Daphne mainly relies on its own team to design, with" basic money "as the main body, so that most women shoes die can be universal, through small changes can meet differentiation. This design idea enables Daphne to greatly improve material utilization. The complete industrial chain cost control plus the advantage of rents, so that the "parity price" Daphne also has a good profit margin.

Thanks to its excellent design, low price, perfect after-sales service policy and overwhelming advertising, Daphne is booming in the mainland market. In 1995, Daphne listed on the main board of Hongkong.

However, the malpractice of wholesale mode is gradually revealed: the brand has no dominant power and the excessive inventory risk makes Daphne have to face transformation and upgrading. In order to directly grasp the terminal sales situation and get higher profits, Daphne abandoned wholesale sales mode to transform direct stores, and spread the sales point throughout the country. In the Daphne system, there are various sales channels such as direct franchise stores, franchised stores, consignment joint ventures, self-employed agents and so on. But the result of rapid expansion is not satisfactory. In 1999, Daphne's performance had a serious decline. In order to clear the inventory, it led to the long-term discount of the brand, coupled with the problems of old fashioned shoes and grinding feet. Daphne became a "low-end brand" in the consumer's mouth. There are also $15 million of funding shortfalls and corporate executives' job hopping. Chen Yingjie, the son of Daphne founder Chen Mingyuan, was in danger. With the strategy of "making brand, not making famous brand", Daphne is positioned as a middle class women's shoes brand, and a brand new image is established. At the same time, the strategy of closing stores, promoting sales and going stock is adopted to save the losses. In 2000, Daphne turned into a profit and became one of the few women's shoes companies that own the entire industrial chain from manufacturing, design to terminal sales.

Ten years of rapid expansion: in China, every 5 pairs of women's shoes come from Daphne.

After this campaign, Daphne revival. The target audience is very clear. At that time, Daphne produced two series of "D28" and "D18", targeting women aged 20-45 and 15-30 respectively. The "D28" series is endorsed by Rene Liu, and the "D18" series is endorsed by SHE. Thus, Daphne quickly attracted a large number of women and became household names. Since the establishment of a logistics system and clear positioning, Daphne has begun a rapid expansion. It has swept the mainland market rapidly at the rate of 150 stores a year. When the channel is spreading rapidly, the problem Daphne faces is: how to fill more products for the channel and improve the utilization ratio of channels?

Since 2002, Daphne has represented Adidas, Nike and Arezzo, Canada women's shoes Aldo and other brands. In 2005, with the trend of community development, Chen Yingjie created a new brand, "shoebox (shoe cabinet)", which was set up in communities and supermarkets frequented by the public. From a multi category to a single category focus, "although the agent brand improves the store efficiency for Daphne, it has the risk of diluting Daphne's own brand. At the same time, the profit of the agent brand can not compare with its own brand after all. Therefore, at the end of 2009, Daphne began to withdraw from the sportswear market, and broke up with many brands, focusing on the women's shoes market and launching more women's shoes brands.

At that time, the shoe industry in China was in a state of flux, and Daphne caught up with the industry. In 2004, Daphne claimed that one of the five pairs of women's shoes in the Chinese market came from Daphne. Daphne found that in the second and the following cities, low rent and high flat efficiency, it gradually withdrew from the shopping mall and sank to the 18 line city streets. Therefore, the media exaggerated praise: "in any major pedestrian street in China, almost all can see the figure of Daphne."

It is reported that in the most brilliant period, Daphne can sell 50 million pairs of women's shoes in 1 years, and sit firmly in the chair of the first brand of mainland women's shoes for nearly 5 years, with a market share of nearly 20%. Thanks to the good hinterland of the mainland market, in the financial crisis of 2008, Daphne could also expand steadily. The total number of shops was from 739 in 2003 to the peak in 2012, and there were 6881 brand stores. At that time, the market value was over 17 billion yuan, and was known as "the king of Volkswagen shoes".

Behind the summit: the strategic decision of the three initiative layout

Looking at the rapid growth curve of Daphne, it is not difficult to find that before each crisis, Daphne will take the lead in the first place and take the initiative to transform its own brand, from wholesale sales to direct store mode, from multi category to single category. In the three correct strategic layout, Daphne's "high light moment" has been achieved.

However, it was difficult to slow down from the last crisis, and the economic environment of the times began to change. Daphne began to show weakness again and again. The highlight of Daphne seems to be coming to an end with the retirement of the first generation of founders.

In 2011, the electricity supplier entered the peak period of development, and people began to like shopping online. At that time, almost all the clothing companies in China met the "midlife crisis": brand aging, old products, overstock, manpower operation and circulation costs rising, and were affected by the electricity supplier.

Losses after the summit: a key step in the wrong brand deployment

After the peak of 2012, Daphne began to go downhill. According to Daphne's earnings reports over the past 2012-2019 years, Daphne has achieved international turnover of HK $10 billion 529 million, HK $10 billion 447 million, HK $10 billion 356 million, HK $8 billion 379 million, HK $6 billion 502 million, HK $5 billion 211 million, HK $4 billion 127 million, HK $2 billion 126 million.

With the decline in sales and net loss, Daphne's brand business is declining every year. Over the past 2012-2019 years, the number of shops in Daphne was 6881, 6702, 6757, 5930, 4900, 3863, 2820 and 425 respectively. In order to survive, Daphne has closed 6456 stores in the past 8 years. In 2019, it cut 2395 homes in one breath and became the largest store in 2015.

Desperate B2C platform, a failed e-commerce provider

In fact, Daphne is one of the first Brand Company to have a sense of innovation. As early as 2006, it began to set foot in the electricity supplier, and settled in Tmall in 2009. At the same time, it started to build a self operated e-commerce company "love to carry". Before and after 2010, Daphne changed the mode of completely outsourcing the business of electric business, started the innovative exploration of "whole network marketing", and signed more than 10 sales websites with Jingdong, vip.com, Holle, Le Tao, famous shoe store, Yi Xun net and so on, and walked in the forefront of the shoe and clothing industry.

However, the business layout that should have saved Daphne's business concept was plunged into the quagmire of Daphne because of Daphne's investment. In 2010, Daphne invested 30 million yuan to build an electronic business platform focusing on fashion department with Baidu, 100. At the end of 2011, Daphne even closed Jingdong, Le Tao and ho Le buy and other advantages of e-commerce distribution channels, and turned to support 100.

In 2012, the 100 e-commerce platform, which was placed high hopes, was declared bankrupt. Daphne's desperate B2C platform tried to fail, which made Daphne stagnate on the electronic business track. Because of the 100 point, Daphne's e-commerce business has failed. It was not until 2014 that the development of e-commerce was re emphasized in the annual report. But the environment of the electricity supplier has changed greatly. It is no longer the time for Daphne to dominate.

The shoe king did not fall overnight: the death of Daphne

Obviously, we can see from the earnings data over the years that in 2015, Daphne made its first profit from losing money, which became a landmark turning point of Daphne's decline. Since 2015, Daphne's performance has fallen rapidly, with a series of losses. Why do we keep falling?

"Actually, pressing camels is not the last straw, but the accumulation of previous quantities. In the years of development, Daphne has accumulated a lot of lesions, regardless of the high inventory pressure, or the huge and complex distribution system, Daphne has become increasingly weak in the market.

First of all, under the double-sided attack of the demographic dividend and the reduction of orders for internal and external sales, Daphne is still under the rapid expansion line of the store system, resulting in a surplus of channels and a decline in store efficiency.

Secondly, excessive inventory, long turnover period, and long-term clearance of inventory products. Obviously, the slow cleaning action is a conservative wrong game, although the stock has declined, but the product structure of the brand has not been optimized.

In addition, the year-round discount of the products and the continuous decline in gross profit make Daphne's average selling price continue to decline, and the gross profit and net profit margins decline, resulting in a decrease in cash flow. Moreover, long term discounts will damage brand value. Many brands often destroy their inventory or cut labels and do not let them flow into the market.

Insufficient innovation is another reason for the decline in Daphne's performance. On the product of sticking to rules, when the diversity of leisure sports shoes become the new favorite of young people, while Daphne is still focusing on the use of PU to make women's leather shoes, resulting in general decline in the word-of-mouth of shoes, based on the market has no advantage.

After the failure of the layout of the electricity supplier, after the failure of the "100 point" e-commerce platform, Daphne's electricity supplier's road has been stagnant. Even in the period of the electricity supplier bonus, there has been no movement. The electricity supplier has quickly squeezed the offline share of Daphne. Even though Daphne joined the electricity supplier in the later stage, it obviously missed the draught.

Finally, the most crucial issue is Daphne's brand management, which is the conservative thinking and slow response ability of Daphne management, which makes the brand premium capability fall to the bottom.

Thus, under the operating cost of insufficient revenue and rising prices, Daphne was overwhelmed and weakened.

How should Daphne work hard to transform?

In recent years, Daphne has introduced transformation and upgrading. From channel, business mode to store and product image are readjustment. But the adjustment and struggle in these years did not seem to make Daphne close to the glory of "shoe king" in the past.

However, Yang Dayun, a fashion industry investor and CEO international, believes that Daphne's transition to light assets is nothing more than a single shop partnership under tight funds and weak management capabilities, but there is a big problem. Brand in the market will not have too many opportunities to trial and error, the ability of partner system to resist risks is very weak. The current situation of Daphne is not optimistic. Once deep in the mire, Daphne will be very difficult to escape.

At present, Daphne's five year transformation has not yielded results. However, the brand transformation and upgrading of women's shoes BELLE in the same period has already achieved initial success. Whether Daphne can still catch up with the emerging consumers after a lot of downsizing is possible. There may be a set of successes for success, but the failed brands have their own absurdity.

The example of frney tells us that it is very important for enterprises to maintain a sense of crisis and advance early entry. But in changing opportunities, we must constantly adjust our strategy and remain dedicated and dedicated to brand products, because no one can be invincible in the future.

The era of channel brands has long passed, and Daphne's current problem is obviously not only a high cost of channels, because they have already cut down six thousand stores. "Light assets" has become Daphne's key words repeatedly emphasized in its performance report. Now we need to solve the problem of products and brands. While we are keeping our margins, we must do a good job in product design, improve the premium capability and cover operating costs.

"Always trembling and always running on thin ice", as a former national brand, I hope Daphne will not give up and continue to fight.