Can Li Ning Save Britain'S Dreary Brands?

People are keen to compare the two top domestic sports brands, Li Ning and Anta.

Before this year, the two groups were on a different path: Anta relied on buying and buying, including FILA and Amer sports, the parent company of Archaeopteryx, and other international brands; while Li Ning always relied on one brand to create the "China Li Ning" series by making trendy brands and increasing national identity.

Although Li Ning mentioned in the semi annual report recently released that it is necessary to "adhere to the strategic direction of" single brand, multi category and multi-channel ". But judging from its actions, the division of business models between the two companies seems less obvious.

Li Ning also began to buy brands. In May this year, it bought Hong Kong's "Qianchao brand" fort Shilong with a 30% discount. In fact, as early as August last year, Li Ning disclosed that it had established a private equity fund with Lane capital in Hong Kong, China, hoping to invest in foreign consumption and sports brands through the fund. And the chairman of lane capital is Li Ning himself.

Now, Li Ning plans to pay again. They are targeting Clarks, a British shoe brand.

This shoe enterprise with a history of nearly 200 years, after 2014, the profit continued to decline, and went to a loss in 2018. Last year, after losing 82.9 million pounds, it experienced shop closures and layoffs in the UK. After the outbreak, the United States will also close 25% of its local stores.

"E-commerce online" interviewed several former Clarks consumers and several post-95 young people. They said, "I bought them a few years ago, but I haven't bought them for a long time." "it's only for middle-aged men to wear shoes." "the shape of shoes is a bit dull.".

A loss, closed shop, brand image to dull brand, will be a good investment target?

Although the acquisition of Clarks has not yet been settled, we can analyze the current cards of Li Ning and the development of Clarks: why does Li Ning want to buy Clarks and what changes will it bring to Clarks in crisis?

Not cool Clarks?

Clarks' story originated from the transformation of a sheepskin carpet company. In the 1920s, the founder made the first pair of wool slippers with carpet scraps, which sold well and started the shoe business.

After 1950, Clarks has become the leather shoes brand of the United Kingdom. The first flagship store, opened in London's most fashionable Regent Street. There is also a Clarks on the streets of every city. The rock band beatles and oasis are its fans.

A few years ago, Chinese tourists to the UK might have put a pair of Clarks in their suitcases when they returned home. In an era when high-heeled shoes and leather shoes still occupy the pages of fashion magazines, such a British brand is undoubtedly the representative of high-end and texture. At that time, sports and leisure style did not occupy the market, and the formal wear with sneakers was still quite different.

And its decline is precisely related to the trend of fashion and the change of social trend - "sports and leisure" has been popular in the market for several years; the status of Internet companies has risen, and they are not fastidious about dressing, which also makes other companies relax the dress restrictions. All these factors have greatly reduced the sales of the main dress shoes brands.

In 2018, Clarks began to lose money, which is exactly the most popular year for sports and leisure in the world.

Looking at the popular shoes on social networks in recent years, or the once brilliant but now declining shoe brands, their fates are different because they are retrograde or smooth in the trend. The former are all in the field of sports and leisure, such as adidas' little white shoes, Paris family's father's shoes, and the popular yeezy boost and AJ in the shoe market; the latter is like the silent shoe king Baili.

In recent years, in order to meet the trend, brands are releasing more casual styles. Clarks also sells casual shoes and co branded shoes with fashion brands such as stussy, palm angels and Todd Snyder.

But perhaps because of the narrow domestic audience of these brands, Clarks' external image has not changed. What it sells in tmall flagship store is a pair of formal leather shoes, Derby shoes. 799 yuan a pair, nearly 500 pairs a month. People give it a high evaluation: comfort, quality, good service.

In the eyes of many Chinese, Clarks is like a conservative British, reliable but boring. The most classic desert boots and kangaroo shoes, in today's eyes only for the young people of Nike and yeezy, are not attractive.

Why does Li Ning want to buy it?

Li Ning's anxiety and opportunity

The answer to the question first: Li Ning's growth needs a new engine.

As the first sports brand to grow up with personal IP in the history of Chinese sports, in the past few years, Li Ning has been following the "single brand" line, especially China's Li Ning, which makes it return to the vision of young people, turns the brand story, and indeed brings considerable growth to Li Ning.

Even in the first half of the year affected by the epidemic, the retail flow of running, training, basketball and other categories declined, while the flow of sports fashion category in which Li Ning belongs increased by 12%. This category accounts for 37% of the total retail flow, and it is a category with a proportion of * *.

However, compared with Anta next door, Li Ning, which used to be the number one sports brand in China, has been left behind.

In the first half of the year, Li Ning's revenue dropped 1% to 6.161 billion yuan. Anta's revenue also decreased by 1% in the first half of the year, but its volume was almost twice that of Li Ning, with 14.7 billion yuan.

Li Ning reached its heyday in the two years after the Beijing Olympic Games, and then suffered a serious inventory problem in 2012, when it lost nearly 2 billion yuan. Anta Group made a profit of 1.359 billion yuan. When Li Ning struggled to get out of the shadow of the decline in brand positioning, Anta went up all the way, with a market value of over 200 billion in 2019, catching up with Adidas.

Now the market value of Li Ning is less than half of Anta. I don't know if it will lament the impermanence of fate.

Now may be an opportunity for it to grow. The epidemic has brought about a wave of bankruptcies, and many famous brands and shopping malls have declared bankruptcy, turning into "tears of the times". But the crisis of some brands also brings opportunities for others.

The company with sufficient cash flow in hand is the player with the most chips in the field at the moment. Li Ning's 2020 half yearly report shows that it has 5.56 billion yuan of cash flow in its hands. Li Ning also invested about $61 million when he set up a private equity fund. Having enough money and a suitable investment target means new possibilities.

What can Clarks bring to Li Ning?

A company generally gains growth from several dimensions: raising prices, or expanding the market.

Therefore, Li Ning's previous acquisition of Bao Shilong has not been favored by the market: since 2014, the profit of baoshilong has been declining year by year, and has turned from profit to loss in 2018, with a net loss of HK $29 million, and in 2019, it has expanded to HK $139 million. Among its flagship stores, the best-selling products are T-shirts with a price of 89 yuan, and coats in autumn and winter are even less than 100 yuan.

As a "low price, past" brand, Castle Shilong is very difficult to go up.

Anta's strategy of buying mature international brands before is to help itself obtain higher revenue and profit margin by using diversified product lines and price bands.

Anta's main footwear products are priced between 160 yuan and 400 yuan. 400 yuan, in the high-end outdoor sports brand "archaeopteryx", only enough to buy a cap.

The price of FILA, which contributes more than half of Anta Group's revenue, is between 300 yuan and 800 yuan. The price is twice as expensive as Anta, which brings amazing gross profit to the whole group. In the first half of this year, Anta's gross profit margin was 41.6%, and FILA's gross profit margin was more than 70%.

It can be imagined that if he can successfully hold Clarks, Li Ning's price range will also be raised: a pair of Clarks will be priced between 700 yuan and 2199 yuan. Li Ning's T-shirt is only 50 yuan to more than 100 yuan, and the price of shoes is similar to Anta, between 160 yuan and 400 yuan.

In fact, the price and positioning of Li Ning have been greatly raised by China's Li Ning. Li Ning's T-shirts sell for 139 yuan, and a catwalk sweater can sell at a high price of 2500 yuan. Among tmall's flagship stores, Li Ning's best-selling shoes for men and women are 178 yuan and 299 yuan respectively, while those of China's Li Ning fall between 699 yuan and 999 yuan.

In addition, when Anta acquired Amer sports in 2018, it mentioned the reasons for the acquisition in the announcement: the influence of Amer sports in the international market and segments can bring growth to Anta.

Li Ning's acquisition of Clarks is the same. Clarks has accumulated brand value and market accumulation in the past 200 years. This is very important for Li Ning, whose influence is still limited to the Chinese market.

But Clarks needs to be a little more popular to be reborn.

Can Li Ning save Britain's dreary brands?

Despite the successful launch of the "China Li Ning" series, Li Ning did not have the experience to make other brands younger. But perhaps we can refer to Anta, its old rival, once again: how does it turn a silent Italian brand into a brand loved by young people?

In 2007, Belle International, which holds the management right of FILA in China, is deeply in the aging crisis, and hopes to make FILA a a brand for people over 40 years old. Naturally, it turned out to be a failure.

But after Anta took over FILA, it positioned consumers between 18 and 26 years old. It gradually took back the management rights that had been left in the hands of dealers, and opened many direct stores in the core business circle or high-end shopping malls by using the channel resources in their hands. This not only makes the brand respond quickly to the market trend, but also makes FILA more tonal in the form of big stores or flagship stores.

Brand image change is also going on at the same time. Li Ning did not invite foreign aid when building China's Li Ning. Instead, Li Ning's original design team did it. Anta paid for South Korean designers and created a new fashion brand, FILA fusion, under the FILA brand. FILA has also used the basic actions of sponsoring hip-hop variety shows, releasing joint brands, etc.

In the fashion market, winning young people means taking everything. Soon, FILA became Anta's most powerful growth engine.

Anta (including Anta children's independent stores) has more than 10000 stores worldwide. The number of outlets of FILA in mainland China, Hong Kong, Macao and Singapore (including FILA kids and FILA fusion) is only 1 / 10 of Anta's, but it has generated more revenue than Anta.

In the first half of this year, Anta Group's revenue was 14.669 billion yuan, of which FILA accounted for more than half, 7.152 billion yuan. Even after the outbreak, the revenue of FILA maintained a growth rate of 9.4%. Over the same period, Anta's revenue fell by 10.7%.

Li Ning, who has entered his first year, also has various kinds of rich channel resources. Li Ning often mentioned his multi-channel advantages in financial reports: core business circle, traditional department stores, and outlets and other inventory channels. According to the current way of brand rejuvenation or high-end, it is almost a must to open a big store in high-end shopping malls. China's Li Ning occupies a place in the core business circles of Shanghai Xingye Taiguhui, Raffles Plaza, Lujiazui Center store.

This advantage is particularly valuable when Clarks faces the saturation of stores in European and American markets and a large number of shop closures: Although Clarks has entered shopping centers such as Yintai department store or joy city in a new first tier city like Hangzhou. But in Shanghai, Clarks stores are mostly opened in old department stores such as Paris spring and Bailian, or discount stores such as yioulai and Florence. Li Ning's channel resources can help Clarks expand its younger stores or flagship stores to display its brand image.

Li Ning and Clarks have quite mature operation experience in e-commerce respectively, which may give both sides room for mutual promotion. In the first half of this year, Li Ning's revenue accounted for 27% more than offline retail sales (21.6%). Clarks's digital foundation is also good: it not only opened a flagship store on tmall, with more than 1.3 million fans, but also used live broadcast and other games in the store. Wechat public account can directly jump to the brand Jingdong Mall.

As for Clarks' style, will it change in line with the trend? Our answer is: No.

Dr. Martens, a native of Clarks, is also winning the world with several classic shoes. It's just that Dr. Martens seems more rebellious and seems to be bound up with underground subcultures such as rock music. When rock music and hip-hop, once buried in the ground, were brought to the ground by several variety shows, their corresponding consumption patterns and brands naturally became popular.

Desert boots and kangaroo boots can also be cool again. Clarks' positioning of "formal leisure" in the eyes of Chinese people can bring more possibilities for Li Ning, who focuses on sports. This allows a group to always hold a ticket in the market of transient fashion trends.

Who can guarantee that the next "age of refinement" will not come?