Industry Observation: Clothing Industry Seeks Development In The Changing Situation

The business capacity of garment enterprises has generally declined

In 2022, in addition to outdoor and sports apparel, a small number of subdivided fields still have growth, and the industries of men's wear, high-end women's wear, shoes, casual wear and other industries have declined to varying degrees.

Under the epidemic situation, long-distance tourism is full of uncertainty, and medium and short-distance tourism has become the choice of more tourists. Camping, hiking and other outdoor activities suitable for short and medium distance tourism are booming, driving the demand for related products and driving the rapid growth of enterprises in the track. For example, mugaodi, a camping tent brand and manufacturer, benefited from the high growth in the outdoor field. In the first half of the year, its revenue increased by 61.34% to 867 million yuan, becoming a dark horse in the industry.

Sportswear, as one of the high growth segments in recent two years, is also relatively less affected by the epidemic. According to the data of prospective industry research institute, the retail scale of China's sportswear market in 2021 will be 371.8 billion yuan, with a year-on-year increase of 19.1% (there are some factors with low base number of epidemic situation in the same period in 2020), and the CAGR from 2019 to 2021 is 7.8%. From the perspective of market growth, it is far better than the industry growth rate of 1.9% for men's wear and 2.3% for women's wear in the same period.

There are two reasons for the increase of domestic sportswear market scale year by year: firstly, the domestic residents have been exposed to more and more sports categories, and their understanding of sports has become more and more in-depth; Secondly, the wearing scenes of sportswear continue to extend to more non sports occasions. For example, more and more people wear sportswear during work.

In the first half of the year, Anta, Li Ning, Tebu and 361 degrees achieved double-digit growth of more than 15%. The consistent performance of listed companies also proves, to a certain extent, the superiority of sportswear compared with other categories.

However, the epidemic situation still puts certain pressure on sports brands. In the face of the overall downturn of consumption environment and excessive inventory, brands have to increase the discount to stimulate consumption, which makes the gross profit rate of enterprises decrease and the expense rate increase. In the first half of the year, the net interest rates of Anta / lining / Tebu / 361 degree were 22% / 18% / 10% / 16%, increased by - 6 / - 2 / 0 / 1 PCT year on year, showing a downward trend.

Men's wear, high-end women's wear, casual wear, shoes, underwear enterprises are running to the end of double decline in revenue and net profit.

According to the statistics of Haitong Securities, in the first half of the year, the income and net profit of the listed companies in women's clothing industry were 7.87 billion yuan and 470 million yuan respectively, down 10.5% and 56.7% year on year, showing a downward trend as a whole.

Among them, Goliath, which has a high online growth rate (sales accounted for 15% and increased by 64% year-on-year), has a high growth rate, but it is only 6.49%. At the same time, due to the measures of opening stores against the trend and the increase of sales expense rate, the net interest rate of high-end women's wear industry also dropped the most, reaching - 12.66%; The lowest growth rate of fashion customers in East China was - 18.63%; Net interest rate fell the least in winner fashion, down 0.18pct (net interest rate was 8.87%).

In addition, according to the statistics of Huaxi Securities, in the first half of the year, the growth rates of the income and net profit attributable to the parent of the listed companies in the leisure clothing industry, which are positioned in the mass market, were - 21.74% and - 203.04% respectively; The growth rates of income and net profit attributable to mother of Listed Companies in men's wear industry were - 5.02% and - 25.37% respectively; The income and net profit attributable to parent of Listed Companies in underwear industry increased by - 10.10% / - 47.23% year on year; The growth rate of income and net profit attributable to parent of shoe listed companies was - 10.99% / - 38.11% respectively.

On the premise that the expense of brand clothing is relatively rigid, except for a few racetracks, the weakening of profitability has become the inevitable result of poor retail sales and income decline of clothing enterprises.

New direction of clothing industry

Although the terminal consumption is weak, the clothing industry still presents a diversified consumption ecology.

　　 At the brand level, the symbolic consumption characteristics of clothing are highlighted, Brand awareness of consumers has been significantly improved. According to the statistics of McKinsey Research Institute, the sinking market shows stronger brand consumption preference in the process of consumption upgrading. 66% of consumers in the sinking market tend to buy products with brand added value in cosmetics, skin care, clothing, shoes and hats, which are higher than food and beverage, leisure and entertainment products.

The reasons are as follows: firstly, the brand with good reputation has a certain degree of endorsement on the quality and aesthetics of clothing, which saves the time of product selection, reduces the cost of trial and error, and plays a trend and aesthetic reference role for consumers with relatively few information access channels; Second, clothing products have the characteristics of symbolic consumption, which can play the role of "face consumption" and bring consumers psychological satisfaction to a certain extent.

　　 On the quality level ， Consumer attention returns to the product itself ， Pay more attention to cost performance 。 While consumers in low-level cities tend to choose brand businesses, consumers in first and second tier cities are flocking to cost-effective shopping malls. Since 2022, with the continuous growth of the number of official flagship stores opened by domestic and foreign first-line brands on pinduoduo platform, as well as the launch of pinduoduo's 10 billion subsidy activities, the sales gap between different cities is gradually flattening.

According to the report, the number of orders issued by the first tier cities in China accounted for more than 2% of the total number of new orders issued by first tier cities, accounting for more than 11% of the total number of new orders issued by first tier cities.

Clothing brands are coming. New consumer brands such as bosie and bester, as well as listed enterprises or Taobao brands such as Hailan home, baoxiniao, urban beauty, Goblin's pocket and other listed enterprises or Taobao brands entered the market rapidly to make a lot of efforts to promote the growth of brand orders with the advantage of platform subsidy.

　　 From the perspective of consumer goods ， Consumer's function of clothing 、 Professional attention increased ， Promote the quantity and price of functional sportswear and functional sports shoes 。 From 2015 to 2021, the CAGR of online sales of the two companies is as high as 28.2% and 24.1% respectively, of which the growth of unit price contributes about single digit, and the rest is driven by sales growth.

Technological innovation drives the development of clothing industry. The reform of fabric, technology, technology and tailoring makes shoes and clothing have more possibilities in the refinement of professional performance and wear matching. At the same time, the public's awareness of health and happiness has been improved, and they tend to wear more comfortable sportswear for a long time, and pursue sportswear that can meet the needs of multi scene wearing and have fashion elements.

WGSN, an online fashion forecasting and trend analysis service provider in the UK, proposed that adding outdoor elements to clothing after the epidemic has become the key to design.

It can be seen that in recent years, clothing brands with strong product adaptability, beautiful and practical, and able to support all day activities are indeed on the air. For example, Anta, a series of basketball shoes and running shoes equipped with the technology of nitrogen technology in the middle sole, the introduction of suntan clothing with micro air hole material and air permeability and cover, and lululemon, which pays attention to women's needs and solves the problem of camel's toe, have all performed well in the domestic market.

　　 On the aesthetic level of clothing ， Prominent cultural appeal ， Reflected in the clothing consumption, IP co branding and national tide elements are favored by new traffic.

Clothing and accessories as a consumer to show themselves, but also as an important latitude for people around to form personal impression and image evaluation, the value of which is worthy of consumers' attention. Under the background of the improvement of the cultural quality of the whole people and the improvement of national self-confidence, the demand for this value is growing. As a result, the demand focus of clothing consumption has gradually changed from "practical consumption" to "cultural consumption", showing a tendency to pay for the "sense of cultural belonging". According to Jingdong big data, the post-90s' preference for CO branded products reached 187, significantly higher than that of non co branded ones (99).

Among them, the fashion content contained in the cross-border fashion will be expressed through the content of the fashion and fashion of the cross-border clothing.

For example, Li Ning and Bruce Lee's co branded series impress fans through color matching, text, images, symbols and many other details; Taipingniao and "chuyin future", "Rick and modi" and other secondary IP launched series of clothing to tap the sales potential of relevant interest groups; Bosie and little prince launched the co branded Series in 2019, which still has market influence after three years.

Opportunities in change

According to the report "the trend of wealth change of Chinese families in the post epidemic era -- China family wealth index survey report (2022q1)" released by the China family finance investigation and research center of Southwest University of Finance and economics, under the repeated epidemic situation, the stability index of families with low working income is relatively low and fluctuates relatively large.

In the short term, the uncertainty brought about by the repeated disturbance of the epidemic situation and the overall weak economic environment awakened the crisis awareness of the middle and low-income groups, and were pessimistic about the future income expectations. Furthermore, consumers actively reduce their willingness to consume and reduce their expenditure, thus restraining the consumption of clothing; Or become more smart, refuse the high premium of the brand, only willing to pay for high-quality products and brands, and promote the clothing market to shuffle.

In the long run, China's economic development is still in the period of growth, and the per capita GDP level still has a large space for development. With the recovery of the economic environment, people's consumption will be diversified and upgraded. Although the growth rate of clothing expenditure will slow down, it will still increase every year.

In addition, according to McKinsey data, in the third and fourth tier cities from 2010 to 2018, the number of households with annual disposable income of RMB 140000-300000 reached CAGR of 38% (23% of the first and second tier cities in the same period).

China's third tier and lower tier markets account for nearly 70% of the total population, which is a huge consumer market. At present, these richer families account for more than 34% of the population in the third and fourth tier cities. Low line cities are still in the process of consumption upgrading. The increase of the number of middle class and the improvement of residents' income will undoubtedly promote the improvement of low-line consumption ability. Clothing industry as a typical optional consumer goods, recovery flexibility. ?

For garment enterprises, change means opportunity. In the short-term changing situation, it is still a breakthrough point for high-quality brands in domestic brands to optimize the demand characteristics of target customers with high cost performance, and build the product force into the core competitiveness.

In the long-term changing situation, in the face of diversified consumption ecology, it is the rule of Weitou's brand advantages to strengthen the brand's supply chain, marketing and channel capabilities on the basis of strong product strength, and to make up for each short board of wooden bucket.