Shrink, expand? The sporting goods market is hot and cold

A few years ago, the author found in the pedestrian streets of several third- and fourth-tier cities that some local sportswear brands opened their stores very boldly. Often, there were several specialty stores in one city or even one street. However, in the past two years, the sporting goods market has encountered a cold snap, and major manufacturers have entered a difficult stage of strategic contraction.

Local companies continue to close stores and shrink

After well-known sports brands such as Li Ning, Peak, Anta, 361 Degrees, and China Dongxiang announced the closure of some stores, Xtep, the only company that did not publicly disclose information about store closures, also joined the group. row by row. According to statistics, major sports brands closed more than 3,000 stores last year, and industry insiders expect the tide of store closures to continue.

At present, the number of stores of the six major sports brands is still huge: 7807 for Anta, 7303 for Li Ning , 8050 361 degrees, 7603 Xtep, 7059 Peak, and 2550 in China. An industry insider said, "At present, the adjustment of major brands has not been in place, and the efforts to close stores are still not enough."

Adidas expanded against the trend and eroded the market in low-tier cities

In stark contrast to the large-scale closure of local brands However, the international giant Adidas recently announced with a high profile that it opened about 800 new stores in China last year. Moreover, sales in 2012 exceeded $14.5 billion, a record high.

According to the "Towards 2015" plan announced by Adidas at the end of 2010, the number of its stores in China will increase from 5,500 at the time to 8,000, and from 550 cities to 1,400 cities. It is worth noting that the expansion of low-tier cities (third- and fourth-tier cities and even fifth- and sixth-tier cities) is a core part of the strategy, and cities with a population of 50,000 to 500,000 are included in the target, "sinking to low-tier cities, It is an important growth point for Adidas in the future." Adidas CEO Herbert Hainer said.

Low-tier cities have always been the dominant sites for local sporting goods brands. Why are the dominant players losing ground, and Adidas, the "aristocrat", has put down its stature, sinking channels, and cannibalizing the market?

straighten out the channels and lay a solid foundation for expansion

Perhaps Adidas has already experienced the haze of poor channels, excessive inventory and marketing failures in advance. In 2008, due to being too optimistic about the Olympic market, Adidas was once caught in a huge inventory dilemma. In order to clear the inventory in a timely manner, dealers did not hesitate to discount the products, which led to losses in many stores. This is similar to the excessive inventory dilemma experienced by Li Ning and others in the past two years.

These difficulties made Adidas realize the importance of channel diversification. While eliminating non-standard and low-loyalty dealers, it stabilized and strengthened its relationship with loyal dealers, and gradually increased the proportion of self-operated stores. Water internet channel. To this end, the company has set up a dedicated team to help dealers truly realize the final purchase of consumers. Industry insiders believe that only by improving the ability of dealers and ensuring the joint efforts of both parties can ensure the normal operation of new product sales and inventory digestion. The dealers' business is integrated into the enterprise's own business system, and the two parties work together to create more value.

The re-engineering of local brands still needs profound changes in many aspects

This is precisely what Li Ning and others have not done. According to the comments of investment bankers, sports brands have not hesitated to open a store at all costs in order to impact the listing and achieve a higher issuance price-earnings ratio. After the listing, due to the pressure of performance, the extensive growth model of opening more stores can best create a bright financial report in the short term and meet the expectations of investors.

This logic can continue when market demand is strong, but the seeds of the bubble are also planted at this time. Since 2011, with the slowdown of economic growth, stimulus policies have been gradually withdrawn, and the growth rate of domestic demand has gradually declined. The tide receded, and overextended businesses had to begin the painful process of squeezing the bubble.

Many of these brand expansions are inefficient grounds. For example, the situation of several stores in one street mentioned by the author above will inevitably lead to vicious competition and excess supply. Once the industry is in a downturn, dealers downstream of the channel are prone to encounter high inventory problems, followed by cash flow crisis, price cuts, losses... into a vicious circle.

In addition to the after-effects of over-expansion, the inadequacy of local companies in branding has also weakened their resilience. Taking Li Ning as an example, in 2010, Li Ning Company began to rebrand its brand, choosing to fully embrace the young consumer group born in the 90s as a key brand line, and launched a new brand promotion offensive of "post-90s Li Ning". But this not only did not impress the post-90s, but lost Li Ning's original customer base. The endorsement stars such as Lin Dan and Lin Zhiling invited, and the international superstars of international giants such as Adidas, are not small, and they have not grasped the consumer psychology of the post-90s generation.

On the other hand, Adidas, in addition to maintaining a high-end image, also focuses on creating a low-cost "sports fashion" brand in response to the low participation rate of national sports and high fashion participation in the Chinese market. At the same time, the gradual convergence of sales prices with local brands has also greatly improved consumers' acceptance of international brands.

Of course, the trough experienced by local sports brands is also one of the manifestations of the global economic downturn. Another international giant, Nike, is also selling sub-brands to tide over the difficulties. Perhaps most companies are too optimistic when the industry is on the rise. But it is undeniable that the extensive management of local brands and the gap in brand building are all real problems.