The transformation of sports brand inventory requires solid internal strength

Due to the obvious seasonality and the quick update of apparel products, how to deal with the ever-increasing inventory has become a headache for the apparel industry. The high stock inventories in the sports footwear industry are erupting one by one. After Li Ning and China moved into trouble, Anta, Xtep, Peak and other companies have not been spared.

The inventory of "Li Ning, price increases are possible", "Anta, prices never stop", "36-1, more than a dollar" ... ... Recently, with Li Ning, Anta, Xtep, Peak, 361 degrees, etc. The top five sports brands in the country have risen in price, and all kinds of ridiculing on the Internet have also gone.

Price increase is one of the direct causes of high inventory. According to statistics, in the first half of 2011, Li Ning had an inventory of up to 992 million yuan, an increase of 186 million yuan over the beginning of the year, and plans to spend about 300 million yuan to buy back “unsold products” from distributors. According to Li Ning Group's forecast, in the next two years, There is an additional repurchase of about 1.448 billion yuan worth of inventory.

In the domestic sports industry, not only did Li Ning “decline” and entered the end of 2011, the major domestic sportswear brand has announced third-quarter results successively, including Xtep, Anta, Peak and other brands all appearing to slow down.

Among them, the problem of the surge in Xtep stocks is even more serious. At the end of June 2011, inventory was 887 million yuan, an increase of 424 million yuan over the same period of last year, of which finished products jumped to 474 million yuan from the initial period of 84 million yuan, an increase of 4 times. In the first half of 2011, Xtep's inventory amounted to RMB 887 million, which represented a year-on-year increase of approximately 92%. Anta's inventory inventory in the first half of the year increased by 20.3% year-on-year, and Peake also rose alarmingly by 41%.

Recently, Hong Kong Media reported that Anta management acknowledged on the “Corporate Day” that the increase in the amount of orders in the second quarter of 2012 will be lower than the 15% in the first quarter. In the next six months to one year, the industry will be full of challenges and it is difficult to Guarantee the results of the third and fourth quarter of 2012 trade fairs. In addition, Anta had planned to increase its net sales by 600 to 800 stores in the next year, and may now adjust downwards due to the increase in the number of stores closed.

In addition, in sporting goods companies, book inventory is only part of their actual inventory, and a large part of them are already sold to dealers but not sold. In the case of Xtep's continuous development of new products, the stocks already granted to dealers are likely to face the pressure of repurchase and impairment like Li Ning, resulting in a sharp drop in net profit.

Analysis of the industry pointed out that the lack of consumer demand in the market is also an important reason for high inventory. Starting from the second half of 2009, the sports shoe market gradually recovered, and the growth rate of the whole year in 2010 was even more alarming. However, this increase was based on the overall market downturn in 2008 and the first half of 2009. It was a The replenishment process is not as demanding as the entire market as it was before and after 2003. For the round of expansion in early 2011, most companies failed to make accurate judgments. As a result, you also expanded production, and I also expanded production. When the market couldn't digest the excess products brought about by the expansion of production capacity, there was a lot of inventory.

Slowing Down In the general overcapacity of the sports brand industry as a whole, the various sports brand agents in the region, and even the overall inventory of brand franchisees in the shopping district, consumer confidence is generally insufficient, and consumer spending is generally weakened. In the consumer environment, there is no fundamental change in the overall market capacity of consumers purchasing sports brands.

Under the background of the strong grip of foreign brands such as Nike and Adidas and the high homogeneity of domestic brands and the highly homogenous nature of goods, in order to make a difference in the effectiveness of inventory processing, the inventory processing speed will become the decisive factor for the success of staged operations. To ease the pressure from distributors, Anta, Xtep and Peak have all cut their orders for the first quarter of next year, and at the same time voluntarily reduced their store opening plans for 2012.

Due to the recent consolidation of consumer retail stocks at low levels, Anta stated that it expects to achieve a low single-digit growth in the total orders in the first two quarters of next year. This will adjust the store's opening plan for the Anta brand store, which will be adjusted from 8200 to 7800-8000, Fila. And the number of stores in ANTA's Life Series and Children's Series remained unchanged.

Taking into account the deteriorating trend of the retail channel inventory backlog, Peak's store-opening plan in 2011 has also been reduced from 800 to 500-600, and the company has increased from a net increase of 400 stores per year to a net increase of 200 stores per year. It is expected that it will be new next year. Open 700 stores and expect to close about 500 inefficient or loss stores.

As of the end of June, the number of stores with a total of 7,438 stores has slowed down. The number of retail outlets is expected to reach 7,600 to 7,700 by the end of this year. The store-opening plan for 2012 is still being explored. According to the current operating environment, the estimated number of retail stores that will increase in the next 12 months is about 5%, which is significantly lower than the previously set target of increasing 800 stores every year.

Due to a serious overstock in the industry, distributors of various brands reduced their prices and promotions, and sports brands also voluntarily reduced their orders for the first quarter of 2012, pushing some of their orders to the second quarter of 2012. Anta officials said that the more fierce competition in the industry, the current retail discount will be upgraded from the previous 20% discount to 30%, while giving distributors more flexible retail discount policy, hope that the distributors to sell as soon as possible so that funds back to protect profit.

Xtep also announced recently that it will cut its orders for the first quarter of next year by 10%. Xtep had previously announced high-profile orders for the first quarter of next year, the amount of orders increased by 21% year-on-year, apparel and footwear product orders have achieved double-digit growth, the average price also achieved 8% to 10% growth. In this initiative, we have reduced the volume of orders (including footwear and apparel) by 10%. Xtep explained it as "controlling risks and ensuring the healthy operation of the entire distribution system and making terminal inventory management control in advance."

Seize the heart of consumers Recently, the domestic sports shoes brand is setting off a "domino effect" and is caught in a haze. Investment banks have lowered their ratings and share prices have fallen sharply. The reasons for this are the sluggish sales, intensified inventory, and discounts and clearances. All these push China's sports brands to the “middle-aged crisis” and the industry is fully in the adjustment period.

“We are still optimistic about the future of the sporting goods industry.” An industry source said that the current inventory is not a real market saturation, but a structural saturation. However, with the development of the market, consumers are becoming more and more “critical”, and their personalization requirements are getting higher and higher. "If sporting goods providers can provide products that are attractive enough, it is worth the wait."

The current plight of Li Ning, Xtep and other sporting goods stocks is not without historical reference. In fact, Nike, Adidas and other sporting goods "original ancestors" have also encountered high inventory problems.

In 2008, Adidas, as a sponsor of the Beijing Olympics, was overly optimistic about the market and increased its production scale. After the Olympics, it was unfortunately hit by the global economic crisis and fell into a dilemma of high inventory. It took Adidas more than two years to clear up the stock of backlogs. It can complete the clean-up of huge inventory, and the brand's appeal has played an important role.

According to analysis by industry insiders, most of China's local sportswear brands have started from manufacturing and processing industries, started as OEM OEMs, and then gradually developed into brand operations. However, the differentiation of the brand and the added value of the brand are generally low. In addition, the ability of domestic brands to innovate in product design needs to be strengthened. The similarities between brands are often repeated and the differentiation is not obvious. The phenomenon of chemicalism is more serious. It is only through some basic performance of advertisements to appeal for some differences. In fact, there is not too strong irreplaceability among end consumers. In addition, the marketing methods have also become old-fashioned, such as rushing to the rare resources of traditional channels such as event sponsorship and TV station title, even if the money is burned, the effect is getting less and less satisfactory.

Today, in some relatively developed cities or regions, there are even signs of preferential consumption for high-end and new-type goods. This kind of consumer trend from the footwear product is people's attention to the function and personality of the shoes. It is precisely because of this consumer trend that shoe companies must increase their efforts in scientific and technological research and development. In addition to product quality and functions, they must also attach importance to the enhancement of value-added products. Compared with the rise in raw material prices, R&D and innovation in technology is a bigger investment, and this has also become an important reason for many companies to increase their product prices.

The current plight of domestic sports brands is just like the early rise of Chinese home appliance companies. In order to get rid of the predicament of homogenization, companies should rethink how to pursue the next step in terms of upgrading the brand's core value, either in terms of differentiation or integration of the industrial chain.