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Lining Two Years Of Change Channels Ahead

2013/3/15 16:04:00 47

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Lining Outdoor Sportswear Outdoor Industry Brand Domestic Sportswear

Less than two years ago, the first change in the market has been Lining's (P). Is it possible for the company to make a comeback?

Lining sporting goods Co., Ltd. (hereinafter referred to as Li Ning Co) is always the learning object of all sports in China, namely a target= "_blank" href= "http://www.91se91.com/" and "clothing /a".

By the end of March, Li Ning Co will announce its 2012 earnings report. According to its early warning announcement issued in December 17th last year, it will be the first loss for Li Ning Co in eight years. According to the earnings report, Li Ning Co income in the first half of 2012 was RMB 3 billion 880 million yuan, and net profit fell 85% to 60 million yuan over the same period last year, which is only 1/4 of PEAK's (net) net profit, which is far from Anta's 770 million yuan ratio.

many people in the industry believe that the root of the Lining problem is that when the industry growth rate slipped and showed signs of saturation, the business model of establishing a marketing network and gaining market share at the core of the wholesale market was outdated. In the early warning of Lining's performance, the board admits that excessive expansion leads to an increase in dealer inventories, which negatively affects the retail store's performance and profitability and leads to continuous deterioration of their cash flow and financial situation.

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What is more serious is that many dealers have been unable to solve the inventory problem by improving their internal operation, which is a fatal blow to Li Ning Co's channel. P

In the past two years, Li Ning Co has been trying to get out of the trough, find effective ways to get along with channels and consumers, and even replaced President Zhang Zhiyong, who has been a leader for 11 years, in July, July. TPG partner Jin Zhenjun served as executive director and executive vice chairman of the company. Under the leadership of Kim, the company completed a major structural adjustment and invested huge sums of money to carry out a channel revival plan, including supporting dealers to clean up inventory, inventory repurchase, rationalizing sales network, and reorganizing the receivable structure of individual participants and a series of initiatives.

recently, the Li Ning Co Board approved the proposal to sell convertible securities in public, raising funds from HK $1 billion 850 million to HK $1 billion 870 million to implement the overall change plan.

but what the industry is more concerned about is whether Lining is still in the midst of crisis at present. In addition, following Anta, Anta, PEAK, and 360 degrees, which rely on the same growth mode, have also seen a dangerous signal of higher inventory and lower profits since 2012. Under such circumstances, whether Li Ning Co can find out a new way to effectively manage channels and enhance brand added value is of great significance to the whole sportswear industry.

Lining P told reporters that he realized that the market was leaving less time for the company. The company plans to complete the channel revival plan by the end of 2013, when the inventory will be controlled within a reasonable range.

"Lining mode" trap /p >

Li Ning Co, become a channel, lose the channel.

Star gymnast Lining founded Li Ning Co in 1990, when the sportswear brands could only be sold in state department stores. Lining took the lead in introducing franchisees and took the franchise mode. The store quickly launched all the first tier cities in Li Ning Co.2004. After that, Lining rarely participated in the specific management of the company. In June, June, after doing lumbar surgery, Lining gave the company full authority to professional managers, and I only showed up on the board of directors four times a year.

the mode created by Lining is well inherited and carried forward by Zhang Zhiyong. Zhang Bingliang, general manager of Fujian HEIA Clothing Co., Ltd., in an interview with reporters, said that the mode of "wholesale + franchising" was also used by Anta, XTEP and other companies. After the dealer ordered the goods, the brand manufacturers finished the wholesale account, and no longer participated in the terminal sales.

this mode is low cost and low risk to brand players, making it possible for enterprises to expand rapidly. However, the shortcoming is that the brand operators have few control over the terminal and price of the products, and are far away from the real needs of consumers.

2009 is the most brilliant time for Li Ning Co. It benefited from the Olympic Games and other factors. In those days, Lining surpassed Adidas in the Chinese market and increased by 25.4%. In the same year, the average growth rate of the industry was 12%.. But the problem is that the goods are not in the hands of consumers but in the warehouses of dealers.

a dealer in Shandong told reporters that at that time Li Ning Co even asked for "opening stores in different directions of people". The average order in each quarter required an increase of 15%. If dealers objected, then a new Lining shop would soon open up in the same block to rush the business.2009 years, and the Lining store reached 7249, but 15% of the dealers actually controlled only one store, and the meaning of wholesale did not exist.

This is the key to Lining's success at that time. However, the pressure of the channel has also been deposited. Lining himself has also reflected that the way of growth in the past was relatively low, and brought about vicious competition and oversupply of P.

Lining's market share has gone beyond the wrong signals released by Adidas. This has led the company management to think that the consumption psychology of the people has become mature and no longer blindly pursue the international brand.2010. In order to enable the new logo to be the symbol, the management layer throws out the brand remolding strategy and introduces the concept of "post-90s Lining". When deciding whether to change the new standard, the company convenes the board of directors to set up four alternative LOGO on the table, so that Lining can come up with an idea. Looking at the alternative logo on the desk, the founder, who has not been in the company for a long time, says, "can I take it today?"

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brand remolding strategy has further intensified the pressure of channel inventory. Replacing the standard, on the one hand, increased the new stock, on the other hand, the old stock has no way out. At the same time, the new product positioning and new shops are not popular. For a while, the whole distribution system of Li Ning Co is uneasy.

Lining's competitors took advantage of.2010 for the first time in.2010. Lining's profits were first overtaken by Anta. But Ma Gang, a clothing retailing expert, told reporters that Anta was not worth learning. Anta, who was more stringent in its early control over channels, extended the old mode of Lining during the expansion period, that is, blindly opening stores and pressing goods.2010 years. The number of Anta stores increased by 958, much higher than that of Lining, and a more radical "Wan shop plan" was put forward in 2011.

to 2012, it is not a problem of Lining company. It is a bad phenomenon that the domestic sportswear industry has been lingering and sluggish. Insiders believe that the demand for domestic sports a target= "_blank" href= "http://www.91se91.com/" > dress less than /a is one reason, but for domestic brands, the "Lining mode" is the root cause of the difficulties, because most of the sports brands that decline in performance are caused by the vicious expansion of channels.

2012, the performance of Anta, 31st degree, PEAK and other companies all fell. Anta's operating income in 2012 decreased by 14.4% compared with the same period in 2011, while inventories increased by 11.17% compared with 2011. The profit of 360% in 2012 dropped by 38% over the same period last year, and PEAK closed more than 1000 stores last year.

in the face of inventory, most sportswear companies resort to discounting, closing stores and opening factory stores, but they soon find that the old inventory has been cleaned up and the new stocks have come again. How should we eradication? Li Ning Co, the founder of the domestic sports brand business model, has made two years of reform.

two years of change

the beginning of Li Ning Co's pformation was from the last CEO Zhang Zhiyong. He put forward the correct concept and direction, but failed to beat the old system, and finally failed to save the declining trend.

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After P, Lining gradually returned to the Li Ning Co annual meeting of.2011. Lining spent a long time pointing out the problems of the company: stop swaying between professional sports and sports fashion and concentrate on sports. He also raised the expectation that Lining should first be a Brand Company instead of a profitable company.

but a year has passed, and the situation of the company has not improved significantly. "The company has experienced simple, temporary solutions, and it has continued to follow the old habits and frameworks. It can only be slowly improved." a former executive of Lining told reporters that the company introduced a lot of "airborne troops" from the outside during the period of over expansion. This kind of "airborne culture" keeps the internal strife in the enterprise constantly and wobble, but it can not promote the pformation very well.

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the fate of the "PPT project group", which has been in the Li Ning Co for a while, is an example: Zhang Zhiyong once set up a PPT project group in the company, that is, using IT system, through the cooperation between the retail enterprises and the production enterprises, the unified planning and management of production plan, inventory plan, distribution plan and sales plan can avoid the inventory problem, make the supply chain develop synergy and shorten the supply chain to 14 days. However, the implementation of PPT mode means that the pformation of product design, supply chain, retailer's pformation and factory assembly line will be changed. The interests of all parties will be affected. Finally, the project will become a target of public criticism until it is frozen.

another example is that Zhang Zhiyong tried to carry out the channel reform and promoted the merger and consolidation of distributors many times, hoping to improve the drawbacks of dealers not being self operated and too decentralized, but always slowing down because of the overreaction of dealers.

above executives said Zhang Zhiyong hoped that through a sound system to complete the company's pformation, he would never tear up his face and accuse others of his mistakes. Zhang Zhiyong, who was more successful than the pioneer, was no longer suited to be a reformer.

from early 2011 to December, Li Ning Co's share price dropped by 61.5%, while a large number of executives left. The situation forced Lining to find an iron hand role to restructure the company in February.2012. Lining introduced private equity investor TPG as a strategic investor. In July of the same year, TPG partner and now executive vice president Jin Zhenjun became Lining's real manipulator.

to solve inventory problems and rebuild relations with distributors is the first hurdle for Li Ning Co to regain vitality. A dealer told reporters that Lining had 52 large dealers and controlled 7300 stores. As of June 2012, the company's inventory reached 1 billion 138 million yuan, while accounts receivable at distributors were as high as 2 billion 500 million yuan.

Jin Zhenjun said, for small dealers, the biggest support given by Li Ning Co is no longer pressing goods. For some large dealers, the original debt will be partially offset by discounted price. After the trial, Lining launched a 1 billion 400 million -18 billion channel rehabilitation plan for repurchase stock, and the proportion of new products less than 60%-75% can make room for new goods by repurchasing stock.

the dealer said that the simple repurchase stock will only make the existing dealers 1/3 get the money and run away, and 1/3 will stay, and 1/3 will be ready to change at any time. "Brand dealers, franchisees and franchisees themselves are triangular game relations, and interest orientation is inconsistent.

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Zhang Bingliang said that due to the strong rise in land rent, plus franchise fees, ordering fees and labor costs, the average efficiency of an ordinary franchisee (end store efficiency) is 10 thousand yuan per square metre per year, while UNIQLO is 72 thousand yuan.

this means that as long as the company's distribution system exceeds three levels, the franchisee can hardly make money. "Buy back is just to ensure that dealers do not die, so that dealers do not lose confidence in Lining and leave time for change."

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if you want to really retain dealers, the best way is to optimize the channel operation capability so that they can have money to make money.

In 2012, Lining integrated 256 low efficiency single store distributors and launched new dealer strategies and policies, that is, from scale growth to upgrading retail efficiency. At the same time, dealers were encouraged to develop self owned stores and separate checks on proprietary businesses and wholesale businesses. According to Li Ning Co, Lining's distributor system is highly efficient at present, and has achieved flattening without intermediate links.

Sports 100 Chen Yin, director of marketing, told reporters that Jin Zhenjun had successfully helped Daphne pform. The pformation of Lining's channel is nothing more than learning from Daphne: improving the proportion of direct sales, improving the right to speak in distribution channels, and making management flat. In fact, this is the future trend of the whole sports apparel industry.

a senior Li Ning Co insider commented that the loss in the 2012 fiscal year can not be regarded as the failure of the reform. On the contrary, it is the price that must be paid after the reform is deepened. It indicates that Lining has bottomed out and has done nothing. From the financial point of view, putting more burden on the old fiscal year can also make the company's new year's reform light up.

farewell to oneself /p >

January 25th, Li Ning Co announced the financing plan to raise HK $1 billion 870 million for the development of companies including the implementation of the overall change plan. Lining himself stressed at the press conference that the era of sales growth of sporting goods suppliers relying on the scale of stores has been tied up. Li Ning Co has shifted from wholesale oriented to sports marketing oriented strategic model, that is, "retail + brand" mode.

Deng Hongbing, vice president of supply chain, who joined Li Ning Co in August 2012 P, told reporters that this mode needs efficient channel control and support for the supply chain system that can react quickly to the terminal. The next step of Li Ning Co will focus on supply chain optimization, which is also one of the purposes of financing HK $1 billion 870 million. "No matter what type of products consumers buy in terminal stores, we can understand this at the first time, so as to quickly collect market information, analyze the best-selling products, consumer buying behavior and buying habits, and truly achieve consumer orientation.

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clothing retail expert Ma Gang said, compared with the industry leader Nike and Adidas, Li Ning Co's problems are mainly in two aspects: inefficient channel and supply chain reaction and weak brand premium capability, which is also a problem facing the whole sports apparel industry in China.

Adidas also caused high inventory because of overestimating orders. But because of the good brand, the dealer system will not collapse. As long as prudent orders can suppress stock, and for the local brand players with weak brand premium, a big problem, dealers will immediately change stores. At this point, Li Ning Co even needs to learn from its "juniors", such as PEAK, which insists on the development of basketball equipment and sponsorship of basketball events.

many people in the industry believe that a professional sports equipment manufacturer who is closely related to a sport will be the development direction of the future sports brand.

> a href= "http://www.91se91.com/news/index_f.asp" > Lining < /a > in the past, swinging back and forth between basketball, badminton and table tennis, it is impossible to determine that the core.2012 of Lining has been announced as CBA equipment sponsor, covering 2012/2013 to 2016/2017 season. Despite the fact that Li Ning Co's five yuan 2 billion yuan sponsorship fee is actually sky high, Lining has made clear the strategic focus of returning to sports.

Lining P himself said that China's sports industry will usher in the next golden ten years, that is, in the process of urbanization in China, sports consumption and sports culture will become the most important consumption growth space.

P > data from the National Sports Bureau shows that the added value of China's sports industry is less than 1% of GDP, and the per capita sports consumption of the Chinese people is 10% in Europe and America. If it can reach 50%, it will form a huge market of over 2 trillion yuan per year.

"the whole industry will have a big shuffle. It will see which brand reform is more resolute." Ma Gang said. Anta, PEAK, including brands, have begun to control orders and adjust channels, and 360 degrees, XTEP and so on are still quietly opening stores until 2012, hoping to occupy the market when their competitors contract. Compared with that, Lining, who has already made two years of change, is undoubtedly more resolute.

in addition, under the great change policy, Lining also began to actively expand the industry market beyond sportswear,.2 27, and Lining explored the Ninth Asian sporting goods and fashion show as an outdoor brand. The brand opened its first direct store in Beijing last year, and plans to open 60 -80 stores this year.

In the past two years, compared with the domestic sportswear industry, the sharp increase in the year-on-year growth rate of the outdoor apparel market has been maintained at around two digits. The first domestic outdoor brand listed company Pathfinder, operating income in 2012 was 1 billion 100 million yuan, an increase of 47% over the same period last year. The profit was 170 million yuan, an increase of 59% over the same period last year.

the outdoor brand market is diverting the consumption demand of the sportswear market, and has attracted the development of sports brands including Adidas. It is understood that Adidas opened four outdoor stores in China last year. Lining explored the timely launch and was naturally worth looking forward to.

but what needs to be noticed is that the Pathfinder is still in the stage of extension driven by large scale shops. As of the end of the three quarter of 2012, the company's stock balance increased significantly compared with the same period last year. Will 113.5%. outdoor brand repeat the movement brand's mistakes?

therefore, for Lining himself and TPG, the key to all the changes lies in the real promotion of channel and supply chain efficiency. Execution is particularly important, otherwise it will repeat the "Zhang Zhiyong era" scene.

but it is worth worrying that private investors will quit. After passing through the pition period, Lining still needs to find a professional manager who is well versed in sporting goods brand spirit and strong executive power.