It is getting harder and harder for Chinese men to wear suits.
Perhaps 20 years ago, wearing a branded suit would be impressive. Nowadays, such orthodox dresses are no longer appetizing for most people. More often, suits appear as "work clothes" in specific scenarios: banks, insurance companies, and serious forums and venues.
Anti-traditional dress trends are popular, and many traditional suit companies have also encountered "cold eyes." Recently, the third quarter earnings report disclosed by the domestic menswear brand Youngor showed that the group's operating income fell 14.95% compared with the same period of last year, and the net profit recorded a slight increase. It is particularly noteworthy that Youngor’s revenue in the apparel sector also performed poorly, down 5.5% from the same period last year.
The performance is not only the Youngor family, the domestic clothing brands are almost in the cold test of the retail industry. Metersbonwe, a casual wear brand that once opened a store, is now experiencing a high inventory crisis; the clothing business of the Ningbo suit brand Shanshan is also hard to come by, and the company will shift its focus to new energy-making projects.
For a long time, Youngor was labeled as a “domestic menswear leaderâ€. Now, is this label still hangable?
"Three legs" walking
35 years ago, Li Rucheng, the chairman of today's Youngor Group, joined the youth clothing factory, the predecessor of Youngor Group. However, he was still a workshop-style small factory. Li Rucheng might not have thought that this garment factory would one day become a red pole. A temporary clothing business empire.
In the late 1970s and early 1980s, wearing shirts and suits became a "face" for clothing that showed wealth and social status, and Youngor started his career with shirts and suits, just in time. The social trend of the stock market, after a ride on the dust, sit firmly in the top spot in the domestic menswear market.
The data shows that as of 2012, Youngor brand shirts and suits ranked first in the domestic market for 18 consecutive years and 13 years.
Perhaps it is these that give Youngor the "three-legged" way to walk - in addition to the clothing sector, real estate and financial investment are also doing well.
For example, Youngor began to acquire land on a large scale in the early 21st century. In 2004, Youngor Real Estate photographed three plots of Suzhou Industrial Park with a total price of 1.413 billion yuan, which created the Group's first land king outside Ningbo. In 2007, it again took the Hangzhou Business School plot and won the title. The crown of Hangzhou Diwang; the most outstanding is that in 2010, Youngor Real Estate won two plots in the Shenhua area of ​​Hangzhou at a price of 2.421 billion yuan, which set a new unit price record for local land sales.
Such crazy behavior is obviously tempted by the high profits of the property market. In 2009, for example, Youngor’s real estate business achieved a revenue of 5.196 billion yuan, with a net profit of 1.191 billion yuan, while the net profit of the apparel sector was only 445 million yuan.
In the capital market, Youngor also performed well. As early as 1999, Youngor became one of the main promoters of CITIC Securities (17.600, 0.12, 0.69%), and the stock price has soared since then. The data shows that from 2006, Youngor has cashed in 6 billion yuan by reducing the company's stock. A more fresh data is that in the third quarter of 2016, the Group's investment business realized revenue of nearly 3 billion yuan, an increase of 40.21% over the same period last year.
Even Li Rucheng himself said that "investment can earn 30 years of manufacturing money."
Transformation blocked
The rapid development of the real estate and investment business sectors can bring huge revenues to the Group. Ideally, these resources can be used to feed back the clothing business. But it is more likely that the apparel business is increasingly marginalized.
“Group profits mainly come from investment. From the reality, clothing is no longer the main business of Youngor.†Tang Xiaotang, founder of No Agency, an industry research and consulting investment institution, told the “Financial Weekly†reporter.
This is indeed the case. As early as 2009 in the property market, the above situation has been very obvious. At that time, the equity investment business of Youngor Group surged by 404.61% compared with 2008. In the same year, the real estate and equity investment sectors contributed nearly 80% of the Group's profits, leaving the core apparel business far behind.
Li Rucheng did not agree with the outside world’s question about Youngor’s “doing no businessâ€. After all, as a listed company, it is understandable to give back to shareholders with high profits. But this is when the market environment is good.
After the market turmoil and the “tangible hand†began to regulate, the profit of Youngor Group also fell.
Since 2011, a series of real estate control policies have been implemented. Hangzhou, Ningbo, Shanghai and other places have also introduced a purchase restriction policy to cool the hot property market. Youngor also "shows the original shape": the group's real estate business revenue fell nearly half of the year, and the net profit fell by 15.86%. Throughout 2011, Youngor Real Estate did not even take a piece of land.
At this time, Youngor remembered the clothing business. In 2012, Youngor announced that he would return to the main business of clothing, and strictly control real estate investment, adjust the scale of investment, and concentrate resources on brand clothing.
However, this idea has not been implemented in a thorough manner, or has had little effect. Youngor Group focus on the apparel business, more reflected in the transformation and upgrading, trying to shift business from the production and operation to brand operation. Specifically, it is stripped of some low-profit business to create brand image, such as reducing the stake of textile enterprises, reduce OEM export business.
In addition, Youngor’s performance is not satisfactory in creating new brands. MAYOR is a high-end menswear brand under Youngor's brand positioning “Manager's New Clothesâ€, creating high-end customized dresses for civil servants and executive leaders. But the brand hasn't caused much attention since its creation, and customization itself is more of a way to enhance the user experience than a profit growth point.
Market vortex
The MAYOR brand was recently unveiled at the 20th Ningbo International Fashion Festival this year. Li Rucheng announced at a high-profile meeting that in the future, he will cooperate with five European fabric suppliers to create a customized high-end men's wear in the MAYOR series. Suppliers including ALBINI and LORO PIAN have come to the forefront. They have served the first-line brands such as LV.
In the context of the downturn in the domestic apparel industry and the serious homogenization of products, it seems inevitable to choose a relatively high-end men's wear market with a relatively relaxed runway. However, “The market of Youngor is mainly concentrated in the second and third tier cities.†Tang Xiaotang said, “Traditional consumers still recognize the brand of Youngor.†But Youngor, who now promotes high-end custom suits, seems to be drifting away from mainstream consumers.
Another unavoidable fact is that domestic high-end menswear brands are almost all European and American brands, and Youngor wants to get a piece of it from here. Moreover, influenced by the change of consumer interest, experiential consumption has gradually hollowed out the wallet of consumers, while the traditional high-end clothing consumption with flamboyant nature is in trouble. The fact that many international brands are in cold in China is an example.
In addition to entering the high-end market, Youngor also did not forget to attract young consumers, but in front of it, there is a high wall that almost all traditional brands must break through: brand aging. In order to solve this dilemma, many brands are expanding their younger and more casual product lines. Youngor is no exception. The Hart Schaffner Marx and GY brands are the main leisure category, hoping to provide casual menswear for younger elites.
Tang Xiaotang is not optimistic about this. "Youngor's expansion of casual wear does not necessarily have innate genes. If it is not done well, it will cause damage to the formalwear brand." And the domestic casual wear market is also in the dark, European brands ZARA, JACK Brands such as & JONES have already embraced a large number of young fans, and Zhejiang Taiping Bird and Senma also have a place in the domestic market. Youngor not only entered the game late, but the casual wear market was already slightly crowded. There is probably not much room left for the former to play freely.
Based on the business extension of traditional suits and the rushing in the non-apparel field, the “changing†genes seem to have been engraved in Youngor’s bones. So the question is coming, can Youngor deal with the new changes in the battlefield?
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