Zhou Lichen: New Leader Of Hailan Family

In 2002, on Zhongshan Road in Nanjing, there was a men's clothing store called "Hailan home".

A small brand from Jiangyin City, Jiangsu Province, with its accurate positioning, superior cost performance and rampant advertising war, it quickly gained its reputation and rapidly increased the number of stores in the country, becoming the number of domestic men's clothing categories in the mass selling mode.

In 2014, Hailan home was listed in A-share market by backdoor.

On April 28, 2020, Hailan home released its annual report in 2019, with revenue of 21.97 billion yuan in 2019, up 15.09% year-on-year; net profit was 3.211 billion yuan, down 7.07% year-on-year; according to the Chinese men's wear market report released by Euromonitor, in 2019, Hailan home brand ranked first with 4.7% market share, ranking first in the market share for six consecutive years.

With the high penetration of e-commerce and the rise of the post-95 and Post-00 generation groups, Hailan home, which has been in existence for 18 years, is also facing great crisis and challenge. Young consumers complain that Hailan home is full of local flavor, and the brand tone is seriously backward. Moreover, the media disclosed that since 2014, the inventory pressure of Hailan house remained high, resulting in serious turnover obstacles.

In 2015, the share price of Hailan home, which just landed on the A-share market, reached a record high of 19.1 yuan. Five years later, Zhou Jianping, 60, founder of Hailan group, announced his exit and handed over the position of chairman to his son. By this time, the share price of Hailan home had fallen to 6.7 yuan.

Inventory dilemma

In recent years, clothing brands are in a difficult situation. When the brand tonality itself can not keep up with the development of the times, the style can not catch the trend and meet the consumption demand of young people. In terms of channel and marketing communication, it is almost inevitable that a large number of small and micro brands on the e-commerce platform attack, and the decline or even bankruptcy of traditional clothing brands is almost inevitable.

In 2002, Zhou Jianping visited Japan and studied the model of UNIQLO. Zhou Jianping felt that UNIQLO quickly attracted a large number of target groups through its rich SKUs (number of single items) in a cheap way, which was fast fashion and fast fashion. After returning home, Zhou Jianping felt that he could learn from the operation mode of UNIQLO, focus on the business men's clothing category, and become men's wardrobe.

As a mass selling clothing brand, whether UNIQLO or Hailan home, the key to the operation is to "fast" and constantly bring forth new ideas. However, this quick word must be played well. Controlling inventory and speeding up turnover have become the most important ability.

In the year of listing in 2014, the inventory problem of Hailan home has already shown. The inventory balance in that year has reached 6.068 billion yuan, and in 2015, it has directly increased to 9.58 billion yuan. By 2019, its inventory will be 9.04 billion yuan, accounting for 41.1% of its revenue in 2019.

From the perspective of inventory data, the proportion of inventory of Pilang accounted for only 1.9% in the inventory of clothing industry in 2019.

There are two modes of cooperation between Hailan home and the supplier entrusted by upstream: returnable and non returnable. In order to reduce its own inventory risk, hailanzhi home and upstream suppliers adopt "return oriented, non returnable as auxiliary". For the returnable inventory, Hailan home can cut the bid and return it to the supplier, who will bear the risk of unsalable.

By the end of the second quarter of this year, 4.4 billion of Hailan home's 8.4 billion Inventory were returnable, which could be returned to suppliers without any loss; while among the 3.986 billion non returnable inventories, Hailan home had only 73.706 million depreciation reserves, that is, the book value remained above 80%.

As for the clothes returned to the suppliers, they were reduced to the point of being sold at a low price after being cut off. However, these products were sold in the stores of Hailan house, but the brand trademarks disappeared. These "unidentified" clothes sold at a low price and those authentic products once filled the market, disrupting the channel and damaging the brand image of Hailan house to a certain extent.

Inherent deficiency of brand tonality

Brand aging is the most fatal pain of Hailan home, a man's wardrobe that has been sold for 18 years.

Hailan's home has learned that it is the same as UNIQLO in its model, but it has not learned the fashion of UNIQLO in terms of brand positioning. Because Hailan home is positioned in business men's wear, its mode of mass selling implies another fatal brand defect: the low and medium end. Although UNIQLO is also a mass market player, it is younger and builds the brand connotation of fashion and trend.

In the low-end market position, Hailan home is subconsciously equated with low-end and cheap goods by more consumers. Over the past 18 years, in the process of operation, Hailan home has just seriously neglected and failed to give the brand more connotations, such as quality, fashion and trend. Once they feel that they are cheap goods, when the original part of consumers have achieved consumption upgrading, and the current young consumers no longer recognize such positioning, the dilemma of market target population vacancy becomes more and more obvious.

On October 20, Hailan house officially announced that Jay Chou became the new brand spokesman.

From 2006 to 2011, Hailan home was endorsed by Yin Xiaotian. The "two visits to Hailan house a year" and "men's Wardrobe" have made Hailan home a popular choice for men aged 30 to 45 years old to buy FMCG brand clothes. At that time, the brand of Hailan home was in its infancy. This advertisement also directly hit the pain point of male consumers. Men didn't like to go shopping. As long as they visited Hailan home twice a year, they could buy the clothes they needed.

However, from that time on, the impression of Hailan's home was solidified and labeled as "straight man aesthetic" and "father".

From Yin Xiaotian to Du Chun, then to Lin Xinhua and today's Jay Chou, the image spokesperson is only a small part of the brand core. For Hailan home, the most important battlefield lies in the consumer's brain, that is, to change the consumers' existing cognition.

For the current Hailan home, the most important problem is obviously to solve the problem of brand. How to eliminate the inherent deficiencies brought about by the mode of mass selling?

First of all, there should be a measure of trafficking.

In addition to affordable or cost-effective selling points, Hailan home needs to care about, what else can it give consumers? What is the brand value? Fashion, trend, delicacy or wise vision? If the brand is regarded as a person, Hailan home can not be associated with "cheap" or "low-end goods".

Secondly, how to make all external communication contacts of Hailan home more tasteful, look exquisite and high-end (with force grid).

For example, the logo of the current home of Hailan is yellow and blue, too thick and earthy. For example, the image of the store, the clothing of the shopping guide are not tonal.

Third, the product side is the key.

Although it is a mass selling type, it is not always to win with a huge number of SKUs. When the product styles are diverse, they impact on the core style. There is no characteristic and personality. It is difficult for consumers to make their own choice, which also causes the risk of overstock of high inventory for enterprises. It is necessary to select and optimize SKU, provide high-quality products in a moderate range, create two or three popular products, and slim down the original product library.

Fourth, brand upgrading or developing a second brand.

According to media reports, since Zhou lichen became the president of Hailan group in February 2017, Hailan home has successively cultivated home brand Hailan optimization, baby brand British style and women's clothing brand ovv, expanding the group's brand matrix, making efforts on women's and infants' products, trying to turn "men's Wardrobe" into "family's Wardrobe".

However, such a multi brand strategy is a set of chaotic tactics, and does not focus on the original brand value of Hailan home. It is difficult for consumers to accept men's wear category to household, even women's clothing and infant products. (the main reason is that Hailan home brand itself is not a high-end brand). As far as Hailan home is concerned, it can develop a second brand similar to "Hailan optimization", which still focuses on men's wear and still adopts the mass selling mode, but the product grade and brand image are upgraded in an all-round way. We can optimize stores nationwide, upgrade and upgrade, from logo to store image and then to products, and change to second brand management.

Commander in charge

On the evening of November 25, Hailan home announced that Zhou Jianping, the founder of the company, formally handed over the enterprise he founded to his 32 year old son Zhou lichen, who served as the chairman of the board and a member of the strategic committee.

Zhou lichen graduated from Tsinghua University in 2010. After graduation, he entered Shanghai Zhixin capital, a VC firm in Shanghai.

In 2012, Zhou lichen returned to Hailan group and began to contact the company's business, successively taking over the advertising department, information center, commodity center, e-commerce and other departments. Zhou lichen is more focused on the needs of young people, turning the channel from CCTV in the past to local satellite TV, and deeply binding with popular variety shows to enhance the brand's influence in young groups.

On February 8, 2017, Zhou lichen, 29, took over the post of president of Hailan group from his father. Subsequently, Hailan home put on a new label of "innovative and functional", and expanded to categories such as women's clothing, children's clothing and home life, from "men's Wardrobe" to "family's Wardrobe".

In April 2020, Zhou lichen personally went to the live broadcasting room to carry out live broadcasting with stars Liu Yan and Yang Di. According to statistics, during the two-hour live broadcast, the number of onlookers exceeded 3 million, the number of interactions exceeded 4 million, and the total channel sales on that day exceeded 40 million.

However, according to media reports, Zhou Jianping's handover is not a complete decentralization.

Zhou Jianping signed equity transfer agreement with Zhou lichen and Zhou Yanqi respectively. Zhou Jianping transferred 23.1% equity of Jiangyin Hailan Investment Holding Co., Ltd. (hereinafter referred to as "Hailan Holdings") to Zhou lichen and 0.9% equity of Hailan holding held by Zhou Jianping to Zhou Yanqi.

After the completion of the transaction, Zhou Jianping, Zhou lichen and Zhou Yanqi respectively hold 28%, 27% and 5.9% of the shares of Hailan holding. Zhou Jianping, Zhou lichen and Zhou Yanqi are the persons acting in concert, and Zhou Jianping is the actual controller of the company. In addition, Hailan group holds 40.88% of the equity of Hailan home and Rongji International (Hong Kong) Co., Ltd. holds 25.64% of the equity. The actual controller of Rongji international is Zhou Yanqi, Zhou lichen's sister. As a result, she holds 28.05% shares in the listed company and becomes a shareholder of Hailan house.

Although Zhou Jianping officially handed over his duties, he was not thorough in major decisions of the company. If Zhou Jianping and Zhou Jianping can not reach an agreement on a motion, they should maintain Zhou Jianping's right to control Zhou Jianping

Brand is fundamental

Whether Zong Fuli of Wahaha or Zhou lichen of Hailan family, the "second generation of enterprises" have begun to take over, but whether they can support the sky opened up by their parents again is a great challenge.

Wahaha has existed for 33 years, Hailan home has existed for 18 years, and the aging brand is the trouble of these fast-moving brands. The brand of the previous generation, the brand of local flavor, and the brand of dad are the cognition and brand association of the young people to these brands.

It takes time for people to change the stereotype. If the traditional enterprise is a big tree, only the brand is fundamental, channels, products, marketing and so on are just branches.

To change and adjust the strategy, we should first make clear where the current brand problems are, what kind of brand the market and the future need, and how to build a new brand association. After such a strategic direction is determined, we can carry out pruning, pruning, sprouting and secondary growth of branches around the root.