Seven Wolves Wandering In The Men's Wear Industry

"Man, more than one side" star Zhang Hanyu endorsed the advertisement, which made the seven wolves (002029) the men's wear brand became the leading brand of domestic business men's clothing. In 2012, seven wolves men's clothing revenue of 3 billion 480 million yuan, reached the peak of historical performance.

However, since 2013, with the overall decline in the overall performance of the domestic garment industry, the first performance of the seven wolves has dropped in an all-round way. This is the first time that the performance of the seven wolves has declined for the first time in more than a decade. In order to reverse the situation, the seven wolves began to inventory for several years, and began to explore the retail mode and take the road of diversified investment. However, the main business of men's wear has been in a state of stagnation.

In recent years, the seven wolves began to transform the fashion group. In 2017, they bought the European luxury brand "Karl Lagerfeld", and launched the multi brand strategy to push the wolf totem "Wolf Totem", "16N" and other brands to the market. These measures made the main business of the seven wolf wolf men's clothing rebounded. However, compared with the best performance in 2012, there is only a small increase in men's clothing industry.

This year's business case has rearranged seven years' transformation actions of the seven wolves, summed up some experience of success or failure, and tried to help the strategic transformation of enterprises.

brand

Create the first brand of men's clothing

The seven wolves born in Jinjiang, the hometown of Chinese clothing, were also products of "three to one supplement".

In February 1985, the founder Zhou Shaoxiong and Zhou Shaoming brothers invested and founded the Jinjiang Jin Jing labor overseas Chinese hometown garment craft factory, this is the predecessor of the seven wolf group. Although Zhou Shaoxiong is famous for his job as a foundry, Jinjiang has long had a brand awareness. In the late 80s of last century, Chyi Chin, a singer in Taiwan, sang "I am a wolf from the north". In 1990, Zhou Shaoxiong took advantage of this upsurge to launch the brand of "seven wolves" and hired Chyi Chin, who was just right then, to become a brand spokesperson.

Jacket is a popular single product in the 90s of last century. It is also the pivot of seven wolves to move men's clothing market. In 1991, the seven wolves launched the color change jacket, which spread all over the north and south of the river. In 1995, the double-sided jacket was introduced. A classic slogan of "men is more than one side and character is consistent" makes the brand of seven wolves look on the horizon. In 2000, the classic lattice jacket was launched to lead the market of Chinese jacket Market. In the next 18 years, the market share of the seven wolves has always been the first in the jacket Market.

The golden age of the development of the seven wolves was before 2013. At that time, the clothing industry product consciousness was not strong, the channel was king. "Opening more stores and opening stores" is a market terminal strategy that the seven wolves have persisted for many years. In 2006 alone, the number of seven wolf dealers increased by nearly 1000.

On the brand building, the seven wolves have played the role of a popular star in China. From Zhang Hanyu, Chang Chen, Li Chen to Aarif Lee and Jing Bairan, almost become "male god harvester".

Xiao Yang, a professor at Fuzhou University, who studies the marketing and brand of domestic enterprises, said: "the seven wolves lock in the business and leisure men's wear market, focus on the elite men in the struggle, and the brand culture carries a distinct personality. The core values of their courage, wisdom and courage are the most popular men's clothing brands in those years."

Fei Hongping, an associate professor at the Business School of East China University of Science and Technology, evaluated the seven wolves. "From the marketing point of view, the reason why the seven wolves were able to succeed at that time was mainly because they found a good location and dig deep into the story behind them. In fact, the positioning and culture of the brand were not accidental. The choice from logo, spokesperson to media channel is consistent with the behavior characteristics of the public or target group at that time.

In 2004, the seven wolves successfully landed at the Shenzhen Stock Exchange and became the first listed men's clothing company in China. After 8 years, their performance has been climbing steadily. In 2012, seven wolves reached the peak of history, with a total revenue of 3 billion 480 million yuan and a net profit of 550 million yuan. They were 13 times and 18 times higher than those listed just 8 years ago.

　 change

Changes after the summit

However, by 2013, the market suddenly changed, and the garment industry in China was in the doldrums. Enterprises were plunged into stockpiles and cut down channels. The seven wolves were not able to escape. In 2013, their revenues and net profits declined sharply. This is the first performance decline since the establishment of the company.

In Xiao Yang's view, after years of rapid expansion, the domestic clothing brand began to face the problem of supply side and demand side mismatch after 2010. On the one hand, the growth of overall market demand is decreasing and the cost of industry is rising rigidly. On the other hand, fast fashion brand growth and fast penetration of online shopping have led the whole industry to enter a new stage of transformation and upgrading.

2013 is a watershed for many domestic garment enterprises, and the seven wolves are no exception. This shows that the transformation and upgrading of enterprises is a long cycle process. Domestic business men's wear market is more conservative and stable. The seven wolves have always been the leading brand of this market segment, but it may be the pressure of market segmentation boss, which makes enterprises face the problem of slow decision making and slow updating of product form.

In addition, great changes have taken place in the channels. Over the past ten years, China's men's clothing enterprises have basically adopted the mode of "wholesale + brand". In the view of the fashion marketing expert and the founder of the intelligent marketing institution, the "wholesale + brand" mode can take advantage of the characteristics of the national sales outlets and the wide radiation coverage, and quickly spread the products in the market, and quickly realize the withdrawal of funds. But it is not easy to control brand promotion and goods management, which is unfavorable to the long-term development of the company.

Obviously, the seven wolves also saw the drawbacks of wholesale mode, and began to shift from "wholesale + brand" mode to retail mode. For the seven wolves, it is also an opportunity to reorganize channels, and it is also a process of channel optimization and survival of the fittest.

In the previous "wholesale + brand" mode, the headquarters usually gave the plan to the distributor, and the rest was left behind. Even so, retail outlets at that time were still very easy to make money.

In the retail mode, the seven wolves pay more attention to the retail terminal's experience ability, and make more meticulous links for retail management, sales management, display management, VIP management, quality management and so on, and eliminate the stores that can not keep pace with the development of headquarters.

In the retail mode, the seven wolves, which once sold wholesale, shut down a large number of unprofitable stores, increased the number of outlets, and collaborate with agents to strengthen training for franchisees and enhance control over terminals. On storefront construction, in order to alleviate the pressure of inventory, the seven wolves developed a number of factory shops. Its online sales are mainly based on off season inventory, while a small number of networks are dedicated to products.

In the 2018 annual report of the seven wolves, it was mentioned that in the retail reform in recent years, the seven wolves terminal gradually moved to the "direct battalion" mode, that is, whether direct or franchised, the company was involved in personnel training, display and market strategy of terminal stores, and managed to "join" in the form of "direct battalion".

For this reason, the seven wolves changed the wholesale mode of agents in the past, and worked with some excellent retailers to carry out channel management. At the same time, in order to adapt to the trend of mobile Internet, the seven wolves also began to expand online sales. The proportion of online sales increased year by year, forming a channel model matching online and offline.

However, this channel change seems to have failed to reverse the effect. The number of terminals of the seven wolves has decreased from 4007 in 2012 to 2821 in 2014. In 2016, the profits of the seven wolves were 134 million yuan, which was about 20000000 yuan less than that of 2008. At the same time, the seven wolves also face greater inventory pressure. At the end of 2018, the total inventory was close to 1 billion yuan, compared with less than 600 million yuan in 2012.

　　 Transformation pain is hard to get back to its peak

After 2012-2016 years of adjustment, the domestic garment industry generally realized the importance of meticulous management and gradually shifted from extensive wholesale business to fine retail industry.

For the domestic clothing enterprises as a whole, one of the most representative ones is the clothing enterprises that take a low price and parity route. Such enterprises often expand their product categories, dig deep product lines, such as Hai Lan's home (600398), and the other is the clothing enterprises that take the medium and light luxury route, call their followers through the values, and will develop towards the "multi brand" direction. The seven wolves belong to the latter.

Although we saw the opportunity of fast fashion, the seven wolves did not have efficient organization optimization and regulation capabilities, like ZARA, UNIQLO and H&M. The general process of the product cycle of the global garment industry is: market feedback, concept, demonstration, development, testing, batch production, promotion, listing, life cycle assessment, fast 4 months, slow one year, and fast fashion brand ZARA can reach 2 weeks.

In 2014, the seven wolves began to strategically transform and establish the pattern of multi brand industry development. Apart from the main brand of "seven wolves", they also cultivated the wolf totem "Wolf Totem" and bought the brand of young brands such as Chao brand "16N". In 2017, seven wolves bought the European luxury brand Karl Lagerfeld, hoping to transform the fashion group. In 2018, seven wolf new spokesmen chose this for the first time. Han Yu, the first season champion of hip-hop, is trying to attract more young people by increasing brand fashion tonal.

In order to reverse the brand image, the seven wolves will expand the online channel, store digitalization, new media marketing and internal brand incubation. The acquisition of Karl Lagerfeld will make the brand image internationalization more important. This is not the first time that the seven wolves have been close to internationalization. In 2011, seven wolves bought Hangzhou Kenna Garments Co., Ltd., which was responsible for Italy luxury brand Versace, Connally and Danish famous jewellery brand Jason George in mainland China. But in 2016, Kenna sold to Zhejiang Yi Tang Industrial Co., Ltd. because of its losses after the acquisition.

Although KarlLagerfeld is the same name brand created by Lord Buddha, the magic of Buddha is obviously not played in the same brand. After its entry into China in 2013, the brand has been in a state of loss, consumer recognition is not high, and it lost about 40 million 140 thousand yuan in 2018.

"To deal with the demand of light luxury and fast fashion under the background of consumption upgrading, it is not a seven wolves enterprise to adopt the acquisition or self creation way to cultivate light luxury brands and thus embark on a multi brand road. It is the same confusion for many famous clothing enterprises in Jinjiang, Quanzhou, to operate multiple brands under the group structure." Xiao Yang said.

Compared with the traditional brand of clothing industry in Jinjiang, light luxury brands have different brand genes. The fashion elements of light luxury brands must surpass the real material level. Perhaps refined, elegant, small, or perhaps some unique charm of the circle, their brand emotional elements and fashion symbols are more or more rooted in the most explosive part of the consumer group.

In Fei Hongping's view, this may also be a way of development. But from the perspective of brand development, it is not consistent with the original value line of the seven wolves. The original brand image and culture of the seven wolves, the most important thing is the accumulation and experience of their business management and market development, which are different from the light luxury brands.

Since 2013, many domestic clothing groups have chosen the two wheel drive and interdependent business structure of "industry + investment", which is reasonable from the perspective of the domestic economic environment. Seven wolves also gradually began to develop investments other main industries. In 2015, seven wolves invested in the establishment of a wholly owned subsidiary, Xiamen seven equity investment limited, as the main body of foreign investment, and participated in the fashion industry and retail consumption industry through direct investment or the formation of special funds.

"As a transitional choice in difficult times, this is not a good solution. But in the long run, it depends on the strategic choice of the head of the enterprise. Now the industry thinks that doing business is better than making investment. This is also a unique phenomenon in China at the present special stage. In the long run, China's enterprises must be based on industry to develop. " Fei Hongping appraise.

The result of a relatively diversified investment has also increased the revenues of the seven wolves in 2018. The profitability is much less than that of the previous year, and it has a long way to go for the seven wolves.

　　 Diversification failed to revive seven wolves.

In 2012, the number of seven wolves in the country reached 4000, with sales revenue of 3 billion 500 million yuan and net profit of 379 million yuan. However, in 2014, there were only 2821 stores of seven wolves in the country, with a net profit of only 267 million yuan.

Although the seven wolves have also been transformed from wholesale to retail, the effect is not obvious, and sales performance is still declining.

For this reason, the seven wolves have made a diversified attempt. In 2014, the seven wolves recalled the original external authorized trademark of knitting textiles, and began to make men's underwear, underwear, socks and knitted products. The second is cross domain horizontal expansion, which has opened the operation mode of "industry + investment", and one of the important means is real estate management.

In addition, the seven wolves also entered the venture capital industry. They also made the best of their efforts. According to public data, seven wolves set up 6 investment companies, such as Xiamen seven wolves equity investment company.

In the first two years, the diversification of the seven wolves also played a good role. When men's underwear, underwear, socks and other products were the most, they contributed more than 1 billion 100 million yuan of revenue to the seven wolves, accounting for 36.34%; the real estate sector accounted for 58% of the main business income of the seven wolves, and even exceeded the men's clothing income of the main industry.

However, in the past few years, the Chinese men's wear market has undergone profound changes.

In 2008, the international fast fashion began to take root in the Chinese market. From 2012 to 2016, it was the most crazy expansion of 5 years. With ZARA, H&M and UNIQLO as its representative, it expanded rapidly from China's first tier cities to two or three line cities. They quickly attracted young people in cities with low prices, rapid product upgrading and over SKU. At the same time, with the rising of shopping centers, international fast fashion brands quickly succeed through the strategy of opening big stores.

On the contrary, the seven wolves at this stage still use street shops as the main channel, while the street shops' iteration is faster, leading to the atrophy of brand channels such as the United States. Shopping centers have already become the traffic entrance of urban shopping. They have gathered three entries, including shopping entrance, happy entrance, and life entrance, but the seven wolves did not seize the opportunity to upgrade channels.

The continued flagging of the main industry also made Zhou Shaoxiong, founder of the seven wolves, begin to reflect. In 2018, the chairman of the seven wolves said that after nearly 30 years of development, the seven wolves have realized that only by doing their old business is the most correct choice after they have gone through many detours.

The seven wolves, who once again returned to their main business, began their efforts to internationalize and high-end transformation. They embarked on the international line. They went out to Milan fashion week for 4 years. They also bought the Karl Lagerfeld, signed an internationally renowned designer, and tried to build a clothing based industry group.

On the product construction, the seven wolves continue to polish "artistic ability" and "technical ability", and strive to shape product confidence. The product design department persisted in developing products with both cultural attitude and product style and attitude. On the basis of digging deep into the core of the brand, it continued to excavate the spiritual connotation of wolf culture and develop products containing wolves DNA to combine wolf elements, ethnic elements and popular elements.

However, it is obviously not easy for the seven wolves to re establish their main business to return to the peak of the year. The market environment has changed, the consumption groups have changed, and the consumption has been upgraded. These are the realities that seven wolves need to consider and face. Creating fashion industry groups also needs more time accumulation and capital assistance.