What are the problems that need to be solved by shoe and bag companies this year? Nine out of ten people will tell you that it is high inventory!

Yes, all along, high stocks are considered to be the driving force behind the rising prices of shoes, bags and bags. Industry insiders laughed and said that even if all China's shoes, bags, and bags companies are out of production, the warehouse stocks can only be used at home for shoes and bags sales companies for at least three years. This is evident in the seriousness of the inventory of shoes and bags.

But why high inventory will become the most difficult problem for shoes and bags companies in 2012? The following examples may give you some inspiration.

Huge inventories have become the sword of Damocles hanging on the heads of footwear and bags companies – who can clear inventory and have the opportunity to survive. According to the normal operation of the industry, 10% to 20% of the range is regarded as safety stock, which means that the production of 10,000 clothes, of which 1,000 to 2,000 are inventories is commonplace, which is also in the shoes, bags and bags Within the controllable range. However, with the economic environment changing, exports are blocked on the one hand, and foreign buyers are destroying orders more and more. On the other hand, domestic distributors began to be cautious and their purchase intentions on the purchase fairs have weakened, resulting in direct delivery. The amount has decreased.

Case 1 Li Ning: After "changing", "lost"

In the past, Li Ning Company “everything was possible”. Not only did they increase net profit year after year, but they also surpassed Adidas as the second largest sports brand in China; now Li Ning confirmed their latest slogan “Let Change Take Place”. However, today's changes make Li Ning bitter to speak.

According to the semi-annual report, in the first half of last year, Li Ning had an inventory of up to 992 million yuan, an increase of 186 million yuan over the beginning of the year. It also announced that it will spend about $300 million to buy back "unsold products" from distributors. It is expected that the group will need to repurchase an additional inventory of about 1.448 billion yuan in the next two years.

On June 30, 2010, Li Ning, a well-known domestic sportswear brand, held a press conference to announce that the Li Ning brand will be fully updated from brand identity to brand slogan. According to relevant domestic media reports: Li Ning's bid change is intended to seek international development. Li Ning's new brand slogan is "Make The Change," which means "make changes happen," and proposes the concept of "post-90s Li Ning," hoping to have an impact on young consumers. The Li Ning brand hopes to firmly grasp the inherent qualities of young consumers and gain a sense of cultural identity.

However, one year has passed and it seems that it has not developed in the direction originally expected. This year is Li Ning's initiative to propose the third year of brand remodeling. Proactive change is a good thing. However, just after the Spring Festival, the news of layoffs came. Although the specific number has not yet been announced, according to the latest report published by Li Ning, the 2011 Li Ning Group's revenue is expected to decline by 6% from 2010. 7%, the days are obviously not very good. Just after the Spring Festival, it was reported that Li Ning announced large layoffs, adjusted its organizational structure, and reduced personnel costs.

On February 8, Li Wei, a spokesman for Li Ning, further explained the layoffs. “We did not say that it was downsizing. It may be that the outside world does not understand the accuracy. The restructuring of the organization is part of the Group’s strategic transformation. It aims to focus on the core business, optimize the organizational structure, improve operational efficiency, and improve the net profit margin.”

Case 2 Smith Barney: Moderation Hedging Expansion Delayed According to the 2011 mid-year report published by Smithsdale, during the reporting period, the company's operating income increased by 49% over the same period of 2010, gross profit margin increased by 4% to 47% year-on-year, and net profit increased year-on-year. 833% to 376 million yuan.

However, in addition to the perfect performance of the explosion, the stocks of the Meibang garments increased. As of June 30, 2011, the inventory of Smith Barney's apparel increased by 220% year-on-year to 2.89 billion yuan, compared to only 903 million yuan for the same period of 2010. Net assets for the reporting period were only 3.2 billion yuan, and inventory accounted for the same period 90% of assets. In the same period, the proportion of inventories of the same type of garment enterprises in the net assets was about 20%.

In fact, the high growth of Mebon's apparel inventory has been evident since 2010. The company's inventory in 2010 amounted to 2.548 billion yuan, an increase of 183% year-on-year, accounting for 77% of net assets. At the same time, the net cash flow from operating activities was negative 1.054 billion yuan, a decrease of 223.03% year-on-year. According to the first quarter report of 2011, the inventory quantity has increased from 706 million yuan at the end of the first quarter of 2010 to 3.162 billion yuan in the first quarter of this year. In just one year, the inventory volume has increased by 347.88%.

Meibang clothing: The main reasons for the high inventory are threefold: First, the sales scale is expanding; the style design is rich; the second is the late winter of 2010, and the sales cycle of winter clothes is delayed; the third is to deal with the supply shortage caused by the labor shortage at the beginning of the year. Shocked and arranged the storage of goods in 2011.

Tang Shuang, analyst of Huachuang Securities Textiles and Garment Industry: The weather causes a serious impact on the company's apparel industry. It also shows that Meibang Apparel did not accurately judge the demand in the year and the supply chain's rapid response capability needs to be strengthened. In order to eliminate stocks and make a substantial discount sale to May Bang, it may cause the company's 2012 gross profit margin to fall by 2-3%. Although the Me&City brand of Meibang Apparel turned losses in 2011, due to repeated adjustments in the company's strategy, the supply of fast fashion supply chains is still lacking. With the intensification of competition in the popular casual apparel industry, the future of Mebon clothing is not optimistic.

Shenyin Wanguo: The company has increased its sales efforts in the fourth quarter of last year and the Spring Festival this year. The new and old integrated sales strategy has begun to show results. At the same time, the company has handled inventory in different channels such as discount stores and online sales, and the total inventory has begun to appear. Inflection point, the inventory structure has improved. It is estimated that the current total inventory size will be about 2.5 billion yuan, of which about 12% in spring and summer 2012 is estimated to account for 250 million yuan, and 28% in autumn and winter 2011 will be 700 million yuan. In spring and summer 2011, the product volume will be 30% larger. About 800 million to 900 million yuan, 2010 winter accounted for 20% of about 500 million to 600 million yuan, the remaining few for the 2010 spring and summer or earlier products. The inventory clearance process will continue for some time, and it is expected that inventory will fall back to a lower level by the middle or second half of 2012. The short-term may have a certain impact on the gross profit margin, but in the long run, it will enable the company to move forward lightly and get rid of inventory burdens, which will benefit the future development.

They say senior commentators: The core of the profits of a clothing company is the control of inventory, if the stock is reasonable to obtain excess profits. At the same time as the pursuit of scale effect, Smith Barn increased a large amount of pre-orders. Once the sales are expected to have problems, inventory will increase significantly. The brand ME&CITY, which started out as a metropolis series, is the mode in which Metham hopes to be in direct contact with the terminal. China has long relied on the model of agents to make fashion brands never touch the popular trend in the market. Mebon's launch of ME&CITY is a subversion of traditional franchisees and agents. However, Smith Barney ignored or said that it was impossible to control the difficulty of the new ME&CITY brand's operating cycle and the huge backlog of inventory problems. This self-supporting model that completely subverts the original franchise operation mode of Meibang, makes ME&CITY and Meters Bonwe both in a hedged position in many aspects.

Consumer: When I study, I especially like MTS Bonwe. Because of its colorful and innovative style, it is also distinctly different from the casual style. It is more personal and affordable. It is very suitable for students' spending power. The newly launched brand ME&CITY is mainly aimed at urban white-collar workers aged 18 to 35 years, which complements and extends the MTS Bonwe brand that emphasizes on campus. The price is high, but there are discounts from time to time.

In spite of this, there are still some opinions on the adjustment of Li Ning's strategy.

“Not that I like to be different, don’t always compare me with others. The way you arrange for me always makes me get lost. Change is power, and after 90, Li Ning.” Li Ning’s advertisement for the 90s was criticized too deliberately. Is the use of "70 after the tone of the word after 90," their products also have the same problem, only consider the appearance of Hyun is not Hyun, but ignored the 90 after the brand connotation requirements, Nike, Adidas and other foreign brands are still subject to 90 After love, and Li Ning's prices are getting more and more expensive, so Li Ning's transformation not only failed to get 90 after the recognition, but lost a large number of 70 after 80 consumer groups.

In addition, Li Ning began to reform the sales channels last year, allowing major distributors to acquire small distributors with low single-month monthly sales. This led to the dealer's lack of confidence to greatly reduce the number of orders, and some even change the door to sell other brands. Consolidating sales channels and increasing product prices are all signs of Li Ning's preparation to abandon the low-end market, but this step has gone very poorly.

They said the company: let the change happen, after doing Li Ning. First of all, you need to understand the psychological characteristics of the post-90s, otherwise success is just empty talk. The post-90s consumer psychology is undergoing entirely new changes. Humans have desires and conditions (environmental and cultural changes) to obtain emotional and spiritual products. For the post-90 generation consumers, gender, age, education level, or income level are no longer the dominant factors that consumers need to change. Instead, consumers change themselves for personal and spiritual satisfaction (psychological self). Whether you admit or not, this disruptive change has indeed occurred and is changing the direction of future social and brand marketing.

In addition, there is a one-size-fits-all approach to the channel strategy. Even Adity said that he wants to open the store to China's six-line market, and Addi has also launched a sub-brand of low-to-medium price. Why should Li Ning give up the low-end market? Do not forget, before and after 2000, it was precisely because Li Ning gave up the shoes below 180 yuan, only to give other brands the opportunity to catch up with it.

70 after 80 consumers: has always been very supportive of local brands, but the new slogan proposed by Li Ning, from the age of these "hardcore fans" refused, did not dare to step into the Li Ning store, for fear that others think we Loading tender.

Consumers after 90: Compared with the traditional media, I prefer the marketing mode that combines network and entertainment. We have inherent “immunity” with traditional advertising forms. It seems that it is not easy to impress us through traditional forms of advertising. Now that we are not interested in traditional media, we basically do not watch TV and newspapers. Instead, interesting, experiential, and interactive online marketing activities Can better impress us and stimulate our desire to purchase. Internet marketing may be the most suitable for us. The main way we obtain product information is the Internet and mobile phones. Li Ning brand communication has some on the Internet, but it is far from enough. Branding must learn to use various network tools, games, microblogs, etc. to strengthen communication with us or create hot topics. How much do brand managers know about this?

Case 3 Special Steps: Risk of impairment between huge inventory and prepayments According to the semi-annual report, special-step inventory amounted to RMB 887 million, an increase of approximately 92% year-on-year; coincidentally, Peake also rose alarmingly by 41%. It has increased by 20.3% year-on-year.

High inventory not only affects Xtep's turnover rate, but also creates internal conflicts with its own business model, injuring the company's product innovation and inventory control, and thus affecting its core competitiveness. In addition, the risk of impairment between huge inventories and prepayments is likely to become a sword that hangs above the growth of the company's performance.

Recently, Hefei Bo, the Chief Financial Officer of Xtep, stated that by reducing the order target and slowing down the opening of stores, it is possible to control the inventory issue. In the future, there is no need to buy back inventory, nor will it close the store significantly. He Ruibo said that the current retail sales ratio is about 5 times, which is more than 4 times higher than the previous year. However, the situation is controllable. "Inventory pressure is lower than other brands." In order to cope with this situation, the company has reduced its 2012 sales growth target from 15% to single digits; in terms of opening stores, it has opened from 800 to 1,000 new ones each year and has lowered it to 400. As for retail sales, due to the weather, same-store sales only grew by single digits in the fourth quarter of last year, and retail discounts were 70%. He Ruibo believes that after the inventory is digested, the business can be restored in the second half of this year. "We don't make 'one brother' not stop!"

They said that Tan Ke, an analyst of Dongxing Securities' apparel industry, has added nearly 20,000 new stores to local sports brand companies that were listed on the market from 2007 to 2009. By the end of 2009, the number of terminals increased by nearly 2 times compared with the end of 2006. However, behind the frenzied expansion, various problems such as the deceleration of scale growth, high market concentration and high inventory are exposed. This explains to a certain extent why a number of listed companies have lowered 2012 sales expectations, even Reduce costs through layoffs. It is expected that the domestic sports brands will continue to increase their prices in the future. On the one hand, they are inevitable cost factors. On the other hand, the simple extension of the company's original expansion channels is gradually being replaced by “opening shop + price increase”. The profit driving model will also be replaced by The "increasing volume and price" has changed to "price increase".

Li Guangdou: In 2011, the competitive situation of local sports brands changed, and Anta surpassed Li Ning in operating income. “The current domestic brands face the dilemma of “previous enemies, followed by pursuers”. In the case of severe homogenization of products, local brands did not grow well after the Beijing Olympic Games.” With cultural connotations, if local brands want to break through, they will need to combine elements such as fashion and art to create cultural symbols that are consistent with consumers in the era.

Li Kailuo: The decline in single-store profits is becoming the biggest risk after the expansion of the brand. “The era of Wandian” reflects not only the expansion of market capacity and the enhancement of brand strength, but also the acceleration of market integration and the amplification of business risks. This also caused today's inventory and channel integration problems. As most of the expansion of branded retail terminals now takes the form of agency franchise stores, agency franchisees do not entirely agree with the "expansion of impulses" of brands. The competition is too fierce, and the “crazy” shop opening by brand owners has caused agents to fall into the trap of “no profit”.

Senior commentator: After the crazy expansion of the local sports brand face a new cycle. 2012 was a very difficult year for domestic sports brands. Starting in 2008, the “buzzwords” embedded in the crazy expansion of sports brands will start one by one. The high premium foreign brands Nike and Adidas firmly control the high-end market of domestic sports brands. How local brands deal with the tendency of sports brands to “consumption in foreign countries” is a proposition that companies should consider in the white-hot competition. In addition, sports brand enterprises not only face the pressure of homogenization competition in the same industry, but also are squeezed by the market of the leisure industry. On the one hand, a large number of low-cost and fast-changing local leisure brands with fast repair and transfer capabilities are on the rise. On the other hand, the innovation of foreign brands such as ZARA and Uniqlo has exerted pressure on the local sporting goods industry.

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