Giordano Push Free Alliance Mode Aggressive Expansion Risk

Compared with competitors,

Much behind.

17, reporters learned that Giordano plans to increase 100-200 mainland stores in the second half.

Compared with Giordano in the mainland

900 stores, the plan is quite radical.

It is worth noting that in order to win over investors, Giordano launched a free affiliate mode, that is, franchisees joining Giordano will not be charged.

The industry generally believes that looking at Giordano's earnings in recent years, it is easy to see that the company's performance has been declining continuously, and the mainland is the worst hit area.

Giordano has formulated such a radical expansion strategy, which aims to quickly digest its inventory with franchised stores.

But under this mode, Giordano has little control over franchisees. Once there is a problem, it is right.

The damage will be difficult to control.

Half a year expansion of 100 stores in mainland China

Giordano group disclosed in its latest earnings report that it will open 100-200 stores in the mainland in the second half of 2016.

In this regard, Giordano said that the new franchise is mainly to enhance the group's profitability, reduce group backlog stocks and increase the liquidity of group capital chain.

The reporter interviewed Giordano company Beijing branch and Hongkong head office on this phone, but the two companies did not make any reply before the deadline.

It is reported that Giordano has about 900 stores in the mainland market, and this is expected to add 100-200 new stores, accounting for nearly 1/4 of the total number of shops.

However, unlike this rapid expansion, in 2012, there was a rapid closure of Giordano. At that time, 163 stores were closed in the mainland, 26 of which were self operated stores, while the number of franchised stores was 137.

At that time, the reason for Giordano, a large area shop, was that in order to relocate the brand business in a big way, it wanted to focus on the first line quality of the store, and to make strategies for the market's profitability, financial ability and brand status.

Kang Lanxin, general manager of the school of clothing and accessories, thinks that the expansion of Giordano's choice of franchised stores in the mainland is mainly about avoiding market risks. Compared with self owned stores, franchisees have relatively limited management and control, but the investment is relatively small.

In fact, behind the massive opening of Giordano is the unsatisfactory performance of the company.

Giordano's latest report shows that in the first half of fiscal year 2016, the company's operating income was HK $2 billion 532 million, a decrease of 7% compared to the same period in 2015, and the profit margin of shareholders reached HK $204 million, a decrease of 2% over the same period last year.

Giordano's performance began to decline as early as a few years ago. In 2014, Giordano's sales volume was HK $5 billion 545 million, down 5% from 2013, and net profit of HK $408 million, down 38% from the same period last year.

The mainland market declined more obviously, with a total sales volume of HK $1 billion 580 million, down 9% from the same period last year.

In 2015, Giordano's sales volume was HK $5 billion 381 million, a decrease of 3% compared with the same period last year. At the same time, there were 80 loss shops in the mainland, accounting for 21% of the total number of self operated stores, with a total loss of 18.

As the performance continues to decline, the company also closes its stores on a large scale. By the end of 2015, the total number of Giordano stores was 2452, representing a decrease of 190 in 2014.

The number of Giordano's mainland stores is 891, compared with the end of 2014, a net reduction of 70.

It is worth noting that Giordano has been closing down its outlets.

In this regard, industry experts believe that Giordano, as an old fashion brand, entered the mainland market earlier, and enjoyed an advantage in market visibility and retention rate.

But with the entry of fast fashion brands, Giordano failed to do homework in product design and consumer segmentation, resulting in the brand being gradually eliminated by the market.

The reporter made a telephone interview to Giordano North China as a franchisee. The staff said that at present, there are only direct stores in Beijing market, but other cities can provide franchise services in the market.

According to the staff, joining Giordano does not charge a franchise fee, it only needs to join businesses to meet the first purchase quantity, shop decoration fees and shelf deposit requirements.

Take the 100 square meter shop as an example, the first purchase volume is about 150 thousand yuan, the discount is 45% off, after that, the spring and summer section can be 4.2-4.3 folded, and the purchase discount between autumn and winter is between 4.5-4.6 discount.

It is worth mentioning that Giordano's replacement for franchisees is rather harsh. In addition to the first batch of goods that can be exchanged, the two purchase goods need to be handled by the franchisees themselves.

In this regard, Ma Gang, an independent critic of the footwear industry, believes that although Giordano does not receive a margin, it can quickly attract franchisees. This has a positive effect on dealing with stocks and occupying the market, especially the three or four line market. But from another perspective, the right to control and control the franchisee is negligible if no margin is received. If the franchisee fails to achieve the expected psychological profit, it will be difficult to estimate the damage to the brand if it chooses a low price promotion or even closes itself.