GXG Wu Lei: Why Do Other People'S Retail Businesses Thrive And You Are Still Performing Art?

Speech: Wu Lei, vice president of GXG group.

In 2007, the GXG brand was founded.

In 2010, GXG, who hit the net for 3 months, became famous in the war of 11 to 10 million.

In 2014, GXG took the lead in testing water O2O, which resulted in sales of over 300 million yuan, accounting for 20% of the total sales, but they finally found that O2O only carried the cargo pass problem and could not complete the digitalization and efficiency improvement of the system.

In 2018, GXG and Alibaba, Tencent respectively launched offline retail store new retail cooperation, and Tmall's new retail system cooperation, so that offline shop sales increased by 5%~10%.

In the same year, GXG group parent company submitted a listing application document to the HKEx to be listed in Hong Kong.

As the leading brand of men's clothing category in clothing industry, GXG has gone through the strategic pformation from electricity supplier to new retail business. Its 9 year development history has enlightening significance for the brand of clothing and fast moving field.

In April 22, 2019, Huan 2019 new retail influence summit and the business review strategic conference were held in Shanghai.

Wu Lei, vice president of GXG group, shared the thought of GXG pformation in the past 9 years.

Today, I would like to share with you some thoughts on our new retail business in recent years.

The following contents may be slightly different from the mainstream thinking in the current market. If there are any offense, please ask for it.

One

Is retail really new and old?

In my opinion, the basic definition of people's freight yard has not changed for hundreds of years in retail history, and it will not become a new retail business because of the electricity supplier.

Last year I talked with many brands and platforms, such as good brands, traditional brands, live broadcast, net red, etc.

For example, some social networking platforms, they think, "are not what we describe to the outside world, but your outsiders don't understand us."

I personally expect that in the next 3 years or so, the new electricity supplier headed by the social electricity supplier will account for half of the online market share.

The former retail stores are people's freight yards, and now there is a new pattern. From the supply chain to the people, the so-called commodities, channels, content marketing, and net live broadcasting are all operational problems. In fact, this is not the most important.

My conclusion is that the original business mode was that 4 people played mahjong and lost the village. Today's business mode is that you are still playing mahjong, but the people next to it are not waiting for the Zhuang village as they used to be, but several people have started another table to fight the landlord. Unfortunately, you can't play yet.

Consumers are more willing to see more personalized content, so I think the whole retail system has entered a rapid adjustment and differentiation, close to the bottom of the adjustment and start again, will enter the next round of outbreak, maybe China will have a hundred years of brand, a hundred years of business, and a variety of personalized enterprises.

Achieving growth is a very simple matter, guiding traffic and doing low price.

But it is difficult to see the future from all kinds of changes.

I chat with many new platforms and new brands and find that they are superior to many people in the underlying architecture, which is something I am afraid of.

Although retail is not new and old, many people have begun to consider the underlying strategy, and then use the Internet tools to drive efficiency and iterate.

This is a problem that many brands need to worry about today, not just worrying about the surface of new retail.

Two

Are we going to toss it up?

GXG was founded for 12 years, and began to do business in 2010. Today, the proportion of electricity supplier income has reached 36%, and today, our organizational structure has been gradually to the electricity supplier.

In addition to the independent operation of specific channels, the whole group's organizational structure has no longer been differentiated from the supply chain, design, administration, HR, information systems and other background departments behind the operation. We have completed the de organization of the organizational structure.

At present, there are 2250 stores under the line, and the total number of direct battalions is more than 60%.

We think that the pformation of retail needs three points.

First, the proportion of direct business must be high and the proportion is not high.

The pformation of new retail must be controlled by the headquarters of the store resources, because the online digital backstage should be introduced to every single line store, bringing all consumption demand continuously.

Second, the proportion of electricity supplier income is high. We believe that the low proportion of electricity supplier income means that the ability of digital operation is not enough.

The electricity supplier accounts for 36% of all sales of GXG, and it is estimated that the market will reach 50% in about two years. Other brands are now below 20%.

But when we reach 50%, we will not go up. We will do price convergence, especially on line.

Today, the easiest way to expand the growth of electricity providers is to make special contributions. Many brands make special contributions for KPI, or the quality is a little bit different, or do not change a number, because it can hit 50 percent off, and there will be sales, but this is not what we want to do.

While increasing the proportion of electricity supplier income, we are still in the same quality, increasing the price and line convergence year by year.

Third, the organization must first be new retail, and the online team must be pinched up with the offline team.

We can not let the two opposing parties manage two different channels. The two will definitely fight. After that, the chairman will have to make a decision about which one to choose.

So if you want to do a new retail business, let's think about whether the underlying architecture solves this problem. If there is no solution, don't talk about it. Why do I compromise with the other side for KPI?

After 2014, we did 4 things: first, inventory sharing; second, commodity life cycle judgement; third, flexible supply chain; fourth, intelligent warehouse logistics.

By 2017, when the platform found us to talk about strategic cooperation, I said yes, but there was a request that multiple platforms should be tried, and I could not restrict me. In advance, I did not want to work with the platform for PR and PR, otherwise it would not work well.

Why do we have to work with us?

Because most of the clothing brands in China, the electricity supplier accounted for only 10%~20%, the organizational structure has never been able to integrate, dealers also seized the brand.

Before they can complete the bottom pformation, they can only act as the art of new retail, and we are capable and willing to explore it.

In early 2018, we started to cooperate with the platform for 30 stores. We gradually digitized the passenger flow around the store and digitized consumers' touches, moving lines and thermal maps. We evaluated the matter only by looking at two points.

First, did the same store grow at the same time last year? Second, did the gross profit margin of this store increase?

If these two points do not arrive, the new retail business is nonsense.

Finally, after all the data came out, we shared all the stocks through 4 background capabilities, and judged the life cycle of commodities through artificial intelligence, and then made quick supply through flexible supply chains and intelligent warehouses.

Now GXG can supply 7 days ~30 days, including down garments, through flexible supply chain. Our speed is even faster than that of some fast fashion brands.

Three

Is it a continuation of behavior art, or an iteration of the underlying structure?

Now, let's talk about what changes have taken place in China's consumers today.

Why did he not play with you after playing with landlords? Why did he only buy one or two pieces of clothes before, and now he bought dozens of pieces, and each garment was not washed; his younger age is not consistent with your younger age; can you grasp the needs of the front-end consumers, can you drive the ability of the background supply chain to supply him?

These two things are not clear. You are not advanced in getting to the middle.

I think it's very important to understand the underlying logic.

Dynamic black note

Finally, three sentences are summed up:

First, from the top level, the highest efficiency to meet the individual needs of God is to centralize.

Today, most of the channel businesses live on your shoulders. Don't take them too seriously.

A lot of channels call for brand names to reduce prices, increase rates and increase activities every day. Just ask, where is the Commission of the channel, where is the commission?

So we need to think about this problem from the top level structure, how to go to the middle level, and meet the needs of the former consumers from the supply side with the highest efficiency.

Second, in the middle level logic, it is driven from channel to selectively driven data.

In the past, we were all channel driven, shopping malls have a good location, the platform has a "sea view room", this job can be done.

Now, can we meet the needs of consumers through data integration and judgement?

If one day you can do this, you can become a net red. At that time, you bring your own traffic without any restrictions. You can live very well without advertising.

But this is a choice, not all brands are all data driven, otherwise China's brands will be made into a mold.

Today, many brands in China are driven by designers. It should not be driven entirely by digitalization. It is very important to choose digitally.

Third, the underlying structure, from linear digitization to artificial intelligence.

Today, China's ERP is basically a cargo flow. Many enterprises have made ERP a middle station. Today's ERP system is more automation of Excel, which requires iteration, and the linearization process becomes a system.

You need to have the ability to learn to judge which data is true and what is fake and then meet the needs of consumers, which is what all garment retailers should do in the future.

Therefore, the informatization of enterprises in the future is bound to integrate. It will inevitably turn from the linear structure to the direction of artificial intelligence. In the past, BI will only tell you the structure. In the future, it will tell you the decision reference, and the staff should upgrade their judgement and drive.

For GXG, we will take 5 years to become a voice in the industry. We want to be an ideal company driven by the new retail mode.

What is ideal type?

Low inventory, high profits and feelings are the core goals pursued by all.