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In the context of declining consumption growth, transformation anxiety has almost filled the entire apparel industry. Almost all major domestic apparel brands are actively trying to transform, from offline to online, from domestic to foreign, from brand creation to acquisition . Judging from the situation in recent years, most of the transformations have not been very successful. The confusion of the transformation of the domestic apparel industry also reflects the survival of the apparel industry. However, there are also a few brand players with outstanding performance.
Recently, the listed company Peacebird (code: 603877) released its 2018 annual report. In 2018, operating income increased by 7.78% and net profit increased by 27.51%, creating the best performance of Peacebird since its establishment. Since 1996, Peacebird has traveled for 23 years. From street shops and single women's clothing brands to nearly 4,600 offline stores and 7 brands, the annual turnover exceeds 7.7 billion yuan. Peacebird achieved rapid growth in a short period of time. From the development of Peacebird, we can see the development trend of the domestic apparel industry and the path of digital transformation.
Industry dilemma: the traditional bottleneck of the apparel industry and the bottleneck of extensive management
With the strong entry and expansion of international fast fashion brands, domestic traditional fashion and leisure brands are facing multiple tests such as loss of consumer groups, inventory backlog, capital turnover, and strategic transformation. Large domestic apparel companies once fell into the tide of closing stores. Nowadays, the apparel industry is generally faced with a series of problems such as overcapacity and excessive inventory in the industrial chain. At the same time, sales in physical stores have plummeted, store rents have risen, labor costs have risen all the way, and profit margins have been constantly compressed. Not adapted.
(1) Overcapacity leads to inventory backlog: Apparel companies do not have enough knowledge of users' fashion needs, and market demand information and forecasts are inconsistent. When market consumption slows down, overcapacity is likely to form at the production end. At the same time, Uniqlo, ZARA, H & M and other international Fast fashion brands have created a huge diversion pressure on domestic apparel brands, resulting in a large decline in sales and a backlog of inventories.
(2) Terminal store shopping guide management is not precise: terminal store management of domestic apparel companies is generally more traditional, lacking the ability to collect and analyze store data, store merchandise display and experience are poor, shopping guide sales conversion rate, joint rate is low, store customers The unit price is low, and the average joint sales ratio of traditional store shopping guides has been hovering below 1.5 for a long time, while international fashion fast-selling brands generally reach above 2.3. The low shopping guide conversion rate and the associated rate have caused store sales to decline.
(3) Homogenization of brand design and positioning: Brand designers generally rely on experience to predict fashion trends, failing to grasp changes in consumer preferences and market changes. In the era of brand homogeneity, young consumers pay more attention to personalized design and full-process shopping experience, but the apparel company's brand positioning is not clear, the design concept cannot meet consumer and market needs, and the product is not attractive, making the initial design The link generates inventory.
(4) Extensive traditional ordering business model: Apparel companies generally adopt the traditional ordering model, that is, the futures production model of “apparel brand dealers → orderers at all levels → retailers → consumers”. (Summer, autumn and winter) The orderer / franchisee pre-orders goods from the apparel company in advance, and the number of orders depends on the orderer's experience in the market to determine. The extensive single order model has become unsuitable in the Internet era, resulting in sales block and inventory backlog.
(5) Low level of front-end and back-end supply chain management: R & D, design, manufacturing, and terminal retail of traditional apparel companies are relatively closed, and they rely on processes to connect them. Due to insufficient coordination of supply chain management, data circulation between various sections is caused. Slow and difficult to communicate. The efficiency of product scheduling and logistics distribution between regions is low, resulting in a low inventory turnover rate. According to statistics, international fashion fast-selling brands only have 30 to 50 days, while the average inventory turnover days of domestic apparel brands are up to more than 180 days, which cannot meet the changes in market demand in a timely manner.
Innovative breakthrough: Take the user as the center, join hands with Alibaba, optimize the supply chain with data, and operate online and offline in all channels
Peacebird opened its store in Taobao Mall in 2008. At the beginning, it wanted to open up new channels to digest the inventory backlog caused by the traditional ordering model. However, the growth and changes in online sales surprised Peacebird ’s chairman Zhang Jiangping, so he continued to adjust in the later period. Online positioning and products, and began to focus on resources and pay attention to online development. By the end of 2018, the online business revenue of the Taiping bird brand reached 1.997 billion yuan, accounting for 26.29% of the company's total revenue.
Taobao / Tmall online stores bring peacebirds more than just new channels and income, more hidden benefits come from user analysis and insights and data-driven business logic. In the past, apparel brands understood the needs of users for products more through interviews, surveys, and sampling, relying on industry experience to capture changes in fashion. Now, users can be profiled based on the geographic distribution of Internet users and the preferences of young users, and based on these Consumer information optimizes product design and production. Today's Internet consumer users have begun to shift to the post-90s and post-00s. The average annual growth rate of these young consumers is as high as 14%. For the apparel industry, seizing young people is seizing the future. And young consumers are precisely the heavy crowds of online space on the Internet, so online is an important neural network for Pacific Bird to reach consumers, which can more accurately understand users' needs for products and fashion. For example, after cooperating with Coca-Cola, Sesame Street and other joint product brands, it was after exploring online and becoming popular that Peacebird began to expand cooperation with various brands and attracted a large number of young consumer fans.
For the relationship between online Tmall stores and offline physical stores, Peacebird has also gone through the process of "addition" to "combination" in the past 10 years. Based on Peacebird's keen market sense and innovative culture, Peacebird started a comprehensive cooperation with Alibaba in 2017 on new retail, realizing the integration of online and offline omni-channel operations and the global operation of members. At present, Peacebird has intelligently transformed more than 200 stores to automatically perceive users to realize global marketing, and has achieved online and offline communication, including commodity communication, payment communication, and logistics communication. It supports store code scanning, online shopping. Online and offline self-explanation.
Peacebird's strategy in 2019 is to "focus on fashion, data-driven, and retail across the entire network." Among them, the data drive mainly includes the digital transformation of stores, the data collection of stores, the location of big data stores, intelligent algorithm-driven business decisions, and the digital transformation of supply chain TOC.
Among them, TOC (Theory Of Constraints) refers to the enterprise management method that enhances the weakest link in the traditional industry system to bring overall enhancement. When it is implemented in the apparel enterprise, the push supply chain evolves into a pull supply chain, which is to sell Fixed production. Because the traditional predictive production method of the apparel industry is the root cause of high out-of-stock and high inventory in store sales, the traditional order-predictive production method is mainly based on experience, which leads to serious out-of-stock and bad products sold in terminal stores. The backlog of products sold into large inventory results. In order to change this situation, it is necessary to completely change the operation mode of the supply chain.
The key point for Peacebird to achieve a rapid response in the supply chain is data-driven.
The first is the dataization of stores. The company needs to obtain a large amount of information data in sales stores. Understand which stores sell products of various sizes and styles. For the products with good sales volume, Peacebird currently organizes the information feedback through the weekly production and sales coordination meeting to determine the replenishment order, and distributes the replenishment goods to different stores according to the data analysis results and different quantities. In this way, the 40-day cycle required for the previous replenishment was successfully reduced to 10 to 14 days.
The second is to connect the supply chain data information, not only the real-time sales dynamic data of each digital store will be directly supplied to suppliers and franchisees, but also the Peacebird ERP has achieved data communication with outsourced production plants. In this way, the data is smooth in all links in the industry chain, and finally achieves the rapid tracking of market changes and the result of ordering production by sales.
In 2018, the sold-out rate of Peacebird summer goods increased by 6%, and the company's commodity inventory growth momentum was effectively controlled when the annual operating income increased by 7.8%. . As of the end of 2018, with the exception of Beitian and Taiping Bird's Nest, all brand-operated stores and 45% of franchise stores covered orders, and the proportion of orders pursued throughout the year reached 18%. Pacific Bird Men's (Summer) Purchasing orders in 2018 increased retail sales by 34% in the quarter.
Industry evolution: The development trend of the apparel industry is data-driven omni-channel integration operation
The new retail era has come, and online and offline integration is the future trend. There will be no pure e-commerce companies or pure offline physical companies in the future. Online and offline users are the center, coupled with rapid response logistics and supply chain combinations In order to truly create new retail.
The criteria for evaluating any one model are cost efficiency and shopping experience. The emergence, development and growth of new retail formats are based on these two points. A good model is to meet low cost, low inventory, and high product operation. Efficiency, high revenue efficiency and good user experience. For Peacebird, the new retail is to take users as the core and data as the link, to open up the entire link of the supply chain, and realize the digital transformation of online and offline integrated omni-channel and global operation.
The cooperation model between Peacebird and Ali is to empower the apparel industry. This empowerment will profoundly affect upstream fashion design, midstream manufacturing, downstream brand communication, product distribution, logistics distribution, store operations, and precision marketing. Such cooperation can be used as an analysis of the "new retail" of the Chinese apparel industry. A typical sample of the future transformation path. The core carrier of "new retail" is a highly digitalized business infrastructure that can lead to intelligence. Driven by data capabilities, Peacebird has opened up the entire network marketing of the supply chain, using the platform to manage the data of various business sections and achieving precise marketing and smart operations in the future. It is a key layout to promote Peacebird's strategy in the future. All-round transformation of deep integration of new technologies.
Author: Xiao Jian (Ali cloud Research Center senior strategist)
Editor: Zhang Jingjing
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