Market Analysis: Where Are The Top Garment Brand Enterprises In The Next Ten Years

The sound wave is not big, the recovery is sharp. Swing 2020, mature men's wear market, live out a curve.

In the first nine months of this year, China's total retail sales of consumer goods fell by 7.2% year-on-year. However, in August, the retail sales of clothing, shoes, hats, needles and textiles above the quota increased by 4.2% year-on-year, and in September, it increased by 8.3%.

Before 2012, the growth mode of this curve was quantitative extension expansion - increasing the number and area of stores, the number of brands and increasing the unit price of products.

However, with the rapid increase of quantity, overstock of inventory, decline of store efficiency and multi-channel impact of e-commerce, men's wear enterprises turn to optimize channels and supply chain management. At the same time, limited by the limited customer gathering capacity of single brand, new category development has been developed iteratively, which is in full swing.

In the future, the curve of men's wear industry will continue to move forward in the fluctuation. What kind of transformation and growth strategy will the head enterprises who go to the midfield sacrifice?

"LAN Hai" wardrobe

Full category coverage, channel expansion and scale-up

Hailan home, the market share of men's clothing industry. Category power, small step trial and error it, positioning for the mass clothing enterprises. At the same time, we will expand the number one brand of luxury and women's clothing, and consolidate the first place in the market.

? brand combination: main brand Hailan home is the main revenue

The main brand Hailan home was established in 2002, and its proportion in total revenue has always been maintained at about 80%, but the proportion of stores in 2015-2019 has declined as a whole.

Based on the abundant cash flow brought by the main brand, Hailan home expanded the leisure Women's wear brand Aiju rabbit, and began to develop into a new brand of light luxury men's and women's wear.

Different from the men's wear market, women's casual wear market competition is more intense, and Aiju rabbit's progress is not smooth, and the gross profit rate has decreased year by year, with a year-on-year decrease of 16.16%, 3.86% and 7.71% in 2015, 2018 and 2019, respectively. In the third quarter of 2019, Hailan home transferred 81% of Aiju rabbit's shares and divested it.

In the light luxury camp, the new brand of Hailan home shows enough vitality.

In the first half of last year, the revenue of light luxury women's clothing brand ovv reached more than 60 million yuan, a year-on-year increase of 625%; the revenue of light luxury men's clothing brand AEX exceeded 15 million yuan, with a year-on-year growth of 238%; in the first half of this year, despite the epidemic situation, its light luxury women's ovv still achieved revenue of more than 80 million yuan, a year-on-year increase of 22%.

? channel portfolio: offline channel revenue accounts for more than 90%

From 2015 to 2019, the proportion of offline revenue of Hailan home has always exceeded 90%. The importance and competitive advantage of offline channels are self-evident.

In order to meet the full category coverage and transformation strategy, the group has adjusted the scale, structure and type of offline channels

In terms of scale, the total amount increased but the growth rate declined, and the location of new stores was more cautious.

In terms of structure, we should optimize the number of stores in stock and increase the proportion of stores in shopping centers. On the one hand, it is necessary to close the inefficient or loss making street stores and reduce the rent of the third and fourth tier street stores; on the other hand, the proportion of the number of shopping centers in the first quarter of this year has increased from 15% in 2018 to 21%, and the quality of store and logo design has been improved.

It is worth mentioning that at present, its new light luxury brands ovv and AEX are mostly located in the first and second tier high-quality product line shopping centers in China. For example, ovv has been stationed on the third floor of Shanghai Jing'an Joy City. The shop decoration is simple and bright with Nordic style. There are light luxury clothing brands such as Mo & Co, dazzle and Calvin Klein on the same floor.

In terms of type, it creates o2o sales services, links traditional e-commerce, social e-commerce, we media and offline stores, and transforms online traffic into offline sales.

As of 2019, Hailan home has more than 2000 stores to realize the service of "placing orders online and delivering to nearby stores". Its online sales will exceed RMB 2 billion in 2020.

? supply chain combination: upstream binding suppliers, downstream joint franchisees

Behind the development of all categories and channel adjustment of Hailan home, there is a light business model and strong capital operation.

Upstream strong procurement, binding the interests of suppliers, "return oriented, buyout supplemented". The main brand Hailan home mostly uses the credit mode, and returns the original price of unsalable products to the supplier, so as to reduce the inventory risk and improve its capital operation efficiency.

Downstream direct business, with the help of franchisee funds to achieve scale expansion and contribute to high revenue. The franchise stores are controlled by direct marketing, the sales settlement is conducted with franchisees by the mode of entrusted sales, and the stores are managed uniformly with terminal pricing power.

The combination of the upstream and downstream supply chain makes the number of stores and operating revenue of Hailan home grow steadily.

It is not difficult to see from the above that the market share of clothing industry is the first all year round, and Hailan house has formed its core barriers in brand, channel and supply chain. To some extent, it is like an all powerful king who can attack in many directions.

China LiLang

Relying on the main brand to explore new series and find new growth points

LiLang, who advocates "simplicity is not simple", is a men's wear brand listed on the Hong Kong stock exchange of China.

In 1995, LiLang (Fujian) Fashion Co., Ltd., the first company of LiLang in China, was established and began to sell men's wear products under LiLang brand (LiLang).

In 2000, LiLang took the lead in putting forward the concept of "business leisure" men's wear, and changed LiLang's English brand name to "lilanz" in 2008 to become the company's main brand.

In 2016, relying on the main brand lilanz, China LiLang launched the "light business" series - "little LiLang" less is more, further opening up the needs of young customers and expanding market space. As of 2019, the number of independent stores in light business series has reached 290, with an increase of 78 during the year.

Despite the impact of the epidemic, the survival of the fittest, by the first half of 2020, the number of young business stores has been optimized to 268.

In terms of store profitability, 50% of the stores with more than one year's operation are profitable, 30% are flat and 20% are in deficit. The transformation of light business strategy has achieved initial results.

This year, LiLang put forward the concept of "new business" to meet the dress needs of business people on more occasions, and refined seven new business people's values, including "cultural confidence, international vision, cooperation, focus on clothing, continuous learning, and healthy life with positive energy".

? in terms of channels, "de department stores" should be centralized towards shopping centers

To implement the "de department stores", LiLang closed the inefficient long tail stores that were mainly distributed in the third and fourth tier cities, and upgraded to high-end department stores and shopping centers in the first and second tier cities.

The main brand lilanz has closed stores for four consecutive years since 2012, from 3227 in 2012 to 2400 in 2016. In 2017, it resumed its net opening. In 2019, there will be a net increase of 145 to 2815 stores across the country, mainly in shopping centers.

Mapping / commercial real estate headlines

? customers: young white-collar workers with light business series to fill the vacancy of main brands

Less is more light business series is mainly aimed at the first and second tier urban white-collar workers aged 25-35. The product design is simpler than the main series, with a sense of fashion and cost performance, which can fill the vacancy of the main series of young customers.

Based on this positioning, most of the shopping malls selected for light business series are young people gathering places, such as Shanghai Jing'an metropolis, where chaopai brands are clustered, and many light business brands such as less is more and Lily are all located on the second floor of the project.

In addition, some stores of less is more will be located next to its main series lilanz stores for collaborative operations.

To sum up, China LiLang's transformation road does not rely on the development of new brands, but on the new series of main brands, using the accumulated brand loyalty to increase the competitiveness of new series, and at the same time, "de department stores" in the channel, and gradually expand to the first and second tier large shopping centers.

The change of the nine Kings

The main brand is younger and the new brand is expanding rapidly

"The world's leading men's pants expert" jiumuwang, on the basis of retaining the traditional business men's wear, has launched a number of young sub brands to enhance competitiveness with multiple product lines.

? brand combination: the main brand jonoe is younger and tends to develop new brands that are easy to scale

Based on the main brand, since 2015, jiumuwang has continuously launched new brands with younger style, forming a double line pattern of classic main brand and young Deputy brand.

1. The main brand jiumuwang is younger, and the proportion of total revenue is decreasing year by year

As can be seen from the above figure, in 2019, the main brand jonoe accounted for 83.8% of the company's total revenue, which was significantly lower than 97.9% in 2015. In order to reverse the situation, the main brand jiumuwang has launched grey label series (suitable for people aged 25-45) in addition to the Black Label Series (suitable for people aged 30-45) to adapt to the trend of brand rejuvenation.

2. New products of big push: new products of big push

In 2017, jiumuwang launched nastypalm, a sub brand, but its revenue and stores have always been difficult to achieve, and the gross profit margin is far lower than other new products. Two years later, nastypal was suspended.

In contrast, the young trend vice brands fun and ziozia promoted by jiumuwang in 2015 have a lot of brilliant report cards.

By the end of 2015, the revenue of the stores increased from RMB 245.6 billion to RMB 2.474 billion.

The revenue of sub brand ziozia (consolidated in the second half of 2018) in 2018h2 and 2019 was 49 million yuan and 104 million yuan respectively. The number of stores increased from 108 in 2018 to 139 in 2019, an increase of 28.7%.

? channel optimization: close down the small and open up the big, close the deficit to promote profit

1. Shop category

As of June 2020, there are 1190 department stores, accounting for 51%; 804 street stores, accounting for 34%; and shopping center stores (including OLE) only account for about 15%. In the future, it plans to increase the proportion of stores in shopping centers to improve store efficiency.

2. Main and secondary stores

The number of main brand jonoe stores has decreased year by year, while the number of sub brands fun and ziozia is increasing. With the deepening of the transformation, the proportion of leisure young vice cards will continue to increase, and the scale ability and high gross profit advantages will gradually show.

Men's wear in midfield

From extensive extension to intensive growth

It is not difficult to find the common features in channel and brand of Hailan home, China LiLang and jiumuwang

In terms of channels, offline stores were optimized, loss making department stores and street stores were closed, and they were transferred to the first and second tier high-quality shopping centers. At the same time, the online layout was strengthened to link the offline customers to a wider range.

In terms of brands, they have iterated out leisure young products that are more in line with the mainstream of consumption.

However, from a practical point of view, they still have their own characteristics in terms of channels and new brands

1. Starting point of new category

Based on the original leisure men's wear, Hailan home has launched new brands such as light luxury men's wear, women's wear, children's clothing and Hailan's preferred home furnishings;

China LiLang develops new series under the main brand, relying on the brand loyalty formed by the main brand to help the development of new series, and the development of non core business slows down;

In view of the large-scale capacity and high gross profit advantages of the new products, jiumuwang will make strategic adjustments in the short term for the new brands that can not provide high gross profit and are difficult to form a scale;

2. Shopping center location preference

Hailan home: the main brands prefer the core position in the regional emerging business circle; AEX and ovv, the sub brands of light luxury men's and women's wear, are mostly located in high-end high-end shopping malls in high-end cities such as Nanjing and Hefei.

China LiLang: the main series prefer the regional business districts of first and second tier cities, while the layout of core high-end business districts is less; the new light business series widely distributes Wanda, Wuyue, Tianjie and other product lines of non first tier cities, and a small number of first tier city landmark mall.

Jiumuwang: it is still in the early stage of transformation, and there is no obvious large-scale layout for high-end shopping centers. At present, the main layout of non first tier cities, Wanda Plaza, Tianjie and other mature mall product lines are the mainstream choice, and the main brand has this feature even more. In addition, they will choose to settle in some ollay type malls.

In fact, the transformation of the three men's clothing giants is the epitome of the changes in China's men's wear industry.

In 2019, the scale of China's men's wear industry will reach 595 billion yuan, with a year-on-year increase of 3.84%, but the growth rate is 3.34% lower than that of the previous year. CR10 (the top ten companies with market share) in men's wear industry increased from 12.9% in 2012 to 17.5% in 2017, and the competition is becoming increasingly fierce.

The men's wear industry, which has entered the midfield war, has become the decisive match point with the effective growth of categories and the accurate expansion of channels. The emerging categories grow in the emerging channels, and the new categories that can grow from the new channels have become the key to the success or failure of the strategic transformation of traditional men's wear enterprises.

On the one hand, the coverage of traditional men's wear consumers should be expanded with new categories. In terms of the growth rate in the past five years, the growth of high-end and medium-grade business men's wear has shrunk, and the growth rate of public leisure clothing can maintain double-digit. This is closely related to the change of the main body of the workplace staff, which has been dominated by the post-80s, 90s and 00s.

On the other hand, the new channel is transformed into the last core link of transformation. Consumers change in different places, making new categories emerge in new channels. This is the decline of traditional department stores and the spring of shopping centers. From 2014 to 2018, the number of shopping centers opened increased year by year.

In 2013 and 2016, the proportion of shopping center channels exceeded that of traditional street stores and department stores.

This channel conversion is not only reflected offline, but also more obvious channel integration. With the rapid development of the Internet, online shopping has made a great progress. In only ten years (1999-2009), the proportion of online shopping has been from 0 to 28.9%.

Looking at the new decade, who can master the creative ability of new categories, who can grasp the high initiative in channel expansion, will gradually win in the sticky midfield battle and become the "king of the king" in men's wear.