Smithsonian VS Uniqlo: Big Running Track

The trajectory of the two best brands in the Chinese market may provide some inspiration to the Chinese casual wear enterprises in distress

One is the best casual wear brand in China, and the other is the casual wear of Japan. The running track of the two may give some inspiration to the Chinese casual wear enterprises in distress.

Metersbonwe: Making "Light Assets" Worse

Nike, the world's largest sports shoe manufacturer, does not own a shoe factory. Philips in the Netherlands does not have its own production line. In 1991, American scholar Roger Negeer proposed the concept of “virtual management”. In 1996, Zhou Chengjian did not know this concept, but the Metersbonwe he created had begun to use it intuitively. Zhou Chengjian outsourced the production-related heavy asset business to various types of processing companies and handed over product sales to various places. The chain operation channel itself focuses on resources and energy for product design and development and brand marketing, and avoids risks in production and sales.

On August 28 last year, Metersbonwe was listed on the Shenzhen Stock Exchange. Zhou Chengjian’s family also became the richest man of “Hurun Garment Rich List” with 17 billion yuan in assets. Why is Zhou Chengjian's IPO? “In the 80% capital raised by the listing, 15% of the funds will be invested in the construction of information systems, and 85% will be used for channel construction.” The MTR Bentley prospectus shows that it has to go against the market to expand. Zhou Chengjian believes that this is aggravating. Assets are a good time.

“A lot of Chinese companies’ monetary tightening in 2008 was the most time when they were short of money. Funds were not abundant from the entire society. Things would be relatively cheap at this time. But at Metersbonwe it was the richest time, so this It is our advantage. What we need to do is to make good use of every penny," said Zhou Chengjian. His ideal is to be a global tailor, but Metersbonwe is the number one in the casual wear market, but the entire industry is still in complete competition and there is no leading brand that has an absolute advantage.

“China's garment industry and traditional Chinese industries have static advantages over any other country. Upstream is the manufacturing power of the world, and the downstream is the largest consumer of the world's 1/5 population. No country has such good resources and opportunities. But there is no brand in China that has become an influential brand in the world. Most of China’s markets are occupied by those brands that are made in China by 90%. This is both an opportunity and a challenge.” Zhou Chengjian said that Metersbonwe’s The goal is a compound growth rate of more than 30%.

He explained the target of 30% compound growth rate: "A good brand, the market share must reach a proportion of 3% to 4%, it is a continuous brand that can be recognized by consumers, from 1% to 3% At 4%, the space is very large. From a static point of view, sales of 5 billion yuan will be achieved today, and 15 billion yuan will be needed in the future to reach 3%. From the perspective of dynamic market development, the Chinese garment industry has seen several The compound annual growth rate is about 15%, and the compound growth rate of casual wear is even higher.At the same time, the consumer demand of the young consumer groups in the 1980s and the 1990s has a strong natural demand, whether it is located in the 18-25 years old. 'Metersbonwe', or positioned in the 22-35 year old 'ME&CITY', has huge market potential.” Statistics from the market research company Euromonitor show that the total retail sales in the domestic casual wear market have been from 2001 to 2006. The compound annual growth rate is 15.31%. It predicts that the annual compound annual growth rate of total retail sales in China's casual wear market will be 14.10%. It will reach a scale of 605.3 billion yuan in 2010, and will account for the overall regulations of the domestic apparel market. Of 58.97%.

Since 2007, with the endogenous growth of the domestic market and the influence of multiple unfavorable factors on clothing, domestic trade has gradually become the main battlefield of Chinese clothing. The consensus reached within the apparel industry is that under the influence of uncertainties in international trade, rising raw material costs, and weakened labor cost advantages, the apparel industry began to change from a production-processing type to a brand-processing and trade-type. The characteristics of this new stage are: On the one hand, due to the increasingly close connection between the apparel industry market and the capital market, the domestic apparel industry has the tendency of resource concentration and market concentration; on the other hand, due to the development of the national economy and the internal development of the garment industry, Balanced, the industry has a lot of new opportunities to be tapped.

Metersbonwe used virtual operations to effectively integrate resources and achieved rapid growth. But now, the company's "virtual channel" business model is facing challenges. The entire apparel industry has evolved as a whole to an era of light assets, with no difference, and competition has intensified. Today, with chain operations increasingly becoming the mainstream channel for market channels, Metersbonwe's uncovered rate in the secondary market is 33%, and the non-coverage rate in the tertiary market is 64%. Metersbonwe is on the channel value chain. There is still huge space. However, in 2007, Metersbonwe joined the franchise system with a weighting of 87.16%, which contributed only 62.2%.

After experiencing the growth stage, the company's resources and operating center will inevitably shift to the “heavy assets” growth model. For example, the garment industry retail giants such as ZARA generally use direct sales stores as the main sales model to obtain stable store resources. Zhou Chengjian has long recognized this point. From 2001 to 2007, the compound annual growth rate of Metersbonwe Direct Stores was 33.44%, which was significantly faster than the compound annual growth rate of 29.95% in franchise stores. Taking out most of the funds raised to buy and hold 50 commercial properties in important cities, although not in line with the light assets strategy that Metersbonwe has always upheld, it is suitable for the current development needs of Metersbonwe.

For buying stores, Zhou Chengjian explained: “For a brand like Metersbonwe that wants to be a hundred-year-old clothing retailer, a fixed business location is indispensable. Although the company's direct-operated shops have an average lease term of 6— During the past eight years, the shops in prime locations in prime locations are very precious, and it is not ruled out that there is no way to renew contracts or rents will rise significantly in the future. Only by way of purchase can these scarce resources be obtained in a timely manner and the network of directly operated stores can be stabilized. From the perspective of simple financial reporting, we compared the advantages and disadvantages of the two ways of buying shops and leasing shops. Taking into account the continuous increase in domestic store rental prices and the need to depreciate assets for annual purchases and other factors, we came to the conclusion that buying shops is more advantageous. It does not focus on the possibility of future value-added commercial stores."

The establishment of large-scale direct-operated stores will also help to enhance the brand image. “For casual wear retailers, such as our store, which is the main business site, we also need to consider the incitement of the surrounding market sales caused by the purchase of these stores. The leveraging effect of revenues has been seen in the past experience in the construction of direct store networks. Although the direct investment stores have a low return on investment and a long investment recovery period, they have established a brand image and provided customers with a more perfect consumer experience. It is helpful to strengthen the confidence of the surrounding franchisees. The leverage effect is ultimately reflected in the growth of sales performance."

The more practical situation is that the two brands “ME&CITY” and “Metersbonwe” still share the resources of the stores, and these two brands have their own differences. The inherent mission of “ME&CITY”, which is positioned in the mid-to-high end, is to enhance the brand connotation of “Metersbonwe” to change its image of low-end leisure. Its biggest market opportunity lies in the newcomer and middle class in the Chinese workplace. The demand for clothing. It is impolite to say that they are forming the consumer groups of international casual wear retail giants such as ZARA, H&M and UNIQLO that have gradually entered China in recent years.

“The opportunity for ME&CITY lies in the fact that similar domestic brands are not strong enough. International brands do not understand the Chinese market yet, or that they do not specifically plan, manage and manage the Chinese market.” Zhou Chengjian said that the brand was not launched with whim. As it has been tried for more than three years as Metersbonwe's urban series, the transformation of the international trade environment has also brought about favorable results for Zhou Chengjian. “Now there are more than 100 suppliers of ME&CITY. Manufacturers of luxury brand OEMs have also started to build the ME&CITY brand."

The inevitable change in the channel is, “Since the spring and summer of 2009, ME&CITY will have independent stores. In October 2008, ME&CITY’s first 3,000-square-meter national flagship store opened in Nanjing East Road, Shanghai. Other stores In successive renovations, we expect to open 25 to 50 ME&CITY boutiques of similar size in 2009. After all, the demand for 3,000 square meters of storefronts is not something ordinary agents can afford, considering the initial dissemination effect of the brand. At present, Metersbonwe can only be self-employed, and the heavy investment in brand promotion will inevitably gradually increase "light assets."