In October this year, the Chinese version of "ZARA" La Chapelle's Q3 financial report showed revenue of 5.757 billion yuan, down 7.16% from the same period last year, from last year's Q3 profit of more than 200 million, to this year's Q3 direct loss of more than 8 billion. Earlier data disclosure showed that the equity pledge ratio of Xing Jiaxing, the actual controller of La Chapelle, was close to 100%. Behind the liquidation of the actual controller's pledge, there is only 1/6 of La Chapelle's stock price, and 2,400 stores will be closed in the first half of 2019.
It is worth noting that La Chapelle is not the first to suffer a sharp decline in performance. Metersbonwe is the youth memories of countless post-80s and 90s, and its listed company Meibang Apparel recently released a performance report showing that in Q3 2019, Meibang Apparel lost 238 million yuan, and the loss increased. In addition, the retail environment is weak, and lead times and destocking are a big drag on margins. Looking back at the number of stores of Meibang Apparel, it has dropped from more than 5,000 at its peak to more than 3,700.
2019 does not seem to be friendly to China's apparel industry, on the one hand, the retail environment is weak, on the other hand, the demographic dividend is gone, but the number of apparel brands is increasing year by year, and overseas brands continue to enter the Chinese market. Store closures, losses, and unsalable inventory seem to have become the three major keywords for Chinese clothing brands in 2019. Judging from the history of China's garment enterprises, more attention is paid to the scale of data during rapid development. However, in recent years, garment companies have frequently fallen into crises, unsalable inventory, store closures, etc., in the face of these, they seem to be facing a situation of transformation and change: when the market is too saturated with goods and consumers have too much room to choose, how can brands change from demographic dividend to efficiency dividend.
The Beginning of the Transformation of Apparel Brands: The Rise of E-commerce I
still remember that from 2009 to 2014, when e-commerce was booming, it was also the birth and rapid development stage of Internet brands, and overseas marketing strategies gradually entered the Chinese consumer market. These brands, who do not have a few or even dozens of brands on hand, from children to the elderly, from women to men, it seems that they want to take over 1.4 billion Chinese consumers. All brands are blindly expanding, whether it is a new Internet brand or a traditional brand, everyone is expanding their brands and categories. With the maturity of the consumer market, the barbaric development path is no longer suitable for the law of the market, on the other hand, the cost is rising, the inventory pressure is rising, and the dynamic sales turnover continues to decline.
From 2012 to 2014, Li Ning, a well-known sportswear brand in China, also experienced a crisis, with unsalable inventory, tight cash flow, poor store management, and internal and external attacks between foreign brands and domestic brands, which made Li Ning almost fall on inventory in these years. In the end, the stores were tightened, the e-commerce cleared the inventory, accelerated the inventory sales, and revitalized the cash flow, which also allowed the well-known domestic sports brand to escape from the predicament.
At that time, e-commerce became a channel for traditional brands to clear inventory, which also gave opportunities to grow in emerging channel brands such as e-commerce. The more players can enter the game, traditional e-commerce is no longer the e-commerce of the early years, for brand owners, the efficiency of these channels to inventory is too low, they have also begun to value e-commerce channels, will be explosive products, new products, and some even develop a separate product line, directly into the e-commerce channel, on the other hand, the traditional e-commerce channel de-inventory capacity has been much less than before, the efficiency is decreasing.
Does a flexible supply chain really work?
Since 2014, represented by Internet brands, they have begun to focus on a short-term and fast supply chain model, which the industry calls "flexible supply chain". According to the explanation on Baidu Encyclopedia, flexible supply chain is referred to as flexible supply chain management, which refers to the agility of the supply chain to changes in demand, or the ability to adapt to changes in demand. Changes in demand can also be called uncertainty or risk, which is a phenomenon that objectively exists in all links of the supply chain, between enterprises or between enterprises and final consumers. The increased uncertainty of demand will make supply chain management more difficult and costly.
For example, brand owners can take a small amount of money to quickly test the market response, if the sales gradually rise, then enter the mass production, if the sales are not good, immediately enter the clearance link. However, with the increasing performance pressure year by year, the processing plant has an obvious off-peak season, and the brand owner still has to predict the explosion, mass production, and reduce product costs. On the one hand, there is no deep inventory, which represents performance pressure, and on the other hand, if you do not solve the problem of unsalable inventory, it may become the straw that crushes the enterprise.
In the face of inventory, revenue and other pressures, how to speed up inventory flow, improve efficiency, and become all business points, a careless, may push the enterprise into the abyss; However, if it is handled properly, there is still a glimmer of life, and the brand strategy can be readjusted with the funds returned from the inventory, which is more in line with the current consumer market. The real meaning and value of the promotion of flexible supply chain is to help enterprises manage the supply chain, improve the efficiency of goods turnover, and the efficiency of capital use.
In June
this year, iResearch, a well-known research institution, released the first domestic inventory e-commerce report - "2019 China Inventory E-commerce Industry Research Report", which shows that the market size of inventory e-commerce will reach 150 billion in 2022; The inventory e-commerce platform of the S2b2C model represented by love inventory is becoming the "savior" of clothing companies. They are using inventory e-commerce to speed up the flow of goods and improve the efficiency of sales and capital return.
On October 9 this year, according to the information on the official website of Ali Auction, Fuguiniao Co., Ltd.'s bankruptcy assets such as prepaid bonds receivable, long-term equity investment, and inventory were unsold 24 hours after they were put on the shelf. The auction lasted from 10 a.m. on October 8 to 10 a.m. on October 9, with a starting price of 283.72 million yuan. According to Ali auction information, no one has signed up for Fuguiniao's bankruptcy assets, with a total of 91 people setting reminders and 6,334 onlookers. Fuguiniao did not find a good way to improve its own efficiency in the midst of change, whether it was goods or cash flow, which led to bankruptcy in the end.
It is reported that at present, a number of domestic clothing companies, including Metersbonwe, hope to learn from ZARA, H&M's fast fashion model, such as increasing styles to reduce the volume of single products, shortening the replenishment cycle and supply time, and reducing the price of related products, but from the current point of view, not only can no company succeed, some companies even derive a series of other problems such as rising costs and frequent quality problems. The analysis points out that although China's current clothing companies meet the hardware standards, they do not have the "software" of international fast fashion brands such as Uniqlo, ZARA, and H&M, such as controlling costs and reducing inventory. Taking the supply chain as an example, due to the large scale and large number of brand stores, the above-mentioned "fast fashion" brands have the absolute initiative in the "dialogue" with upstream suppliers, and can get the corresponding raw materials at the lowest price and speed, which is currently impossible for domestic local brands.
The revolution of clothing enterprises is not only to copy the set of overseas brands, but to find the crux of their own problems, and to find a development path that belongs to their own enterprises. For a clothing company, what is the lifeblood, goods and capital, and how to improve the efficiency of the use of the two, may be a problem that domestic brands should focus on.
Goods, for the brand, is not only the source of performance, but also the straw that crushes the life of the enterprise, how to improve the turnover rate of goods, how much unsalable inventory in the warehouse, how to scale, privacy processing, this will eventually be the enterprise to face. In addition, there is no doubt about the importance of money, how to quickly withdraw funds, improve the number of times funds are used, and perhaps reduce the risk coefficient of enterprises in enterprises. For example, a garment company has a cash flow of 10 million, and now the number of 10 million turnover in a year is 2, and the turnover occurs once every six months, and whether it can be increased to 12 turnover times a year in the future, and the turnover once a month, then for the enterprise, it can effectively solve a series of problems caused by the unsalable inventory problem caused by its inaccurate prediction of the market.
In terms of the change of thinking, garment companies are often aligned with past successful cases, but the scale effect of wolf tactics has been completely unable to meet today's consumer demand. Garment companies to save themselves, perhaps in the inventory at the same time, but also to rethink the logic of spending, improve the efficiency of capital use, as well as the efficiency of goods circulation. Reducing their own costs and quickly clearing inventory is the only way for garment companies to continue their lives, but at this time, they still can't solve the foothold of garment companies or brands in the consumer market.