Kite Turned Over: What Is XTEP'S Resistance To Top3?

At the beginning of this year, Lin Congying, the eldest son of the chairman of the nine Mu Wang, was married. The famous Quanzhou brand owners such as Anta, XTEP, seven wolves, Jin Ba and Qipai were rarely on the same stage.

In the video, known as the "100 billion asset chorus", Anta founder Ding Shizhong is in the front row, and XTEP founder Ding Shuibo is behind him. This is just like the position of the enterprises led by them in the Chinese sports brand -- Anta firmly sits first, while XTEP has just got rid of the declining trend and is in the Top3.

"Three points are doomed, seven points depend on hard work, love to fight will win", this is Ding Shui Bo's favorite song, at this time singing must have a taste.

In three years, the kite turned over.

The history of XTEP can be traced back to the 80s of the last century. Before it founded its brand in 2002, it was an unknown foundry. In the past 10 years, its development has been similar to most sports brands. It has been developing rapidly after the 2008 Beijing Olympic Games, and has been in the stock crisis before and after 2012.

Since the beginning of 2012, XTEP's performance has declined, and the total number of stores has dropped from the peak more than 7500 to 6000 at the most dangerous time.

In 2015, Ding Shuibo was determined to make a bold and comprehensive transformation of XTEP.

Three years later, XTEP reversed its decline and its store size recovered. In 2018, XTEP's revenue was 6 billion 380 million yuan, an increase of 24.8% over the same period last year. According to its earnings report, retail sales in the first quarter of 2019 will increase by more than 20%.

XTEP is a microcosm. It reflects the manual operation of Chinese enterprises from "millet plus rifle" to the industrialized production of digitalized guidance, and even the wave of intellectualization is coming.

Camus warned the world that "the real generosity of the future is to put everything into the present."

In retrospect, in XTEP's counterattack story, the key to supporting its rapid transformation and resumption of growth is a "cloud".

Ding Shuibo approved 10 million on the spot.

One day in 2015, Tang Kunjun knocked on the door of Ding Shuibo's office. For this day, he made a lot of preparations, and even drew an old colleague who understands IT and understands business. He was Xiao Lihua, vice president and general manager of the electricity supplier of XTEP group.

Tang Kunjun, XTEP (China) Limited CIO, entered XTEP in 2000 and took part in the whole process of XTEP IT system from scratch. On this day, he is ready to propose to Ding Shuibo that the current distribution and retail related system based on wholesale mode be broken, reformed, reorganized, and established "business stage", and all of them are transferred to Ali cloud. This is almost equivalent to the collapse of reconstruction.

After half an hour's report, Ding asked 3 questions: how long? How big is the risk? How much is it?

Tang Kunjun said: to support Ali platform technology, support XTEP no problem, less than 10 million of the cost.

Ding Shuibo signed and approved on the spot.

A few years later, Tang Kunjun recalled the report: 10 million, it is very difficult to win the project, and we can only do our best. But Ali's support for XTEP has helped a lot.

In fact, when Ding Shui signed, XTEP was in the most difficult time. In 2013 and 2014, XTEP's revenue and net profit both dropped two digits, averting 200 stores a year.

The transformation under crisis is not to be missed at all.

However, Tang Kunjun said that for many years, Ding Shuibo had absolutely no funds in two things, one is talent cultivation, and the other two is information system construction.

In other words, Tang Kunjun was determined to take a huge risk and rebuild the IT system.

63 systems

2015 is crucial to XTEP. After a few years of recession, XTEP launched the "3 year strategic change" in the year. The brand, product and channel have been transformed comprehensively, focusing on "running" and from the wholesale mode to the retail mode.

The business ahead needs to be done quickly, but at this time, the backstage IT system is dragging its legs.

According to incomplete statistics, in 2015, there were at least 63 systems inside XTEP. These vertical systems were isolated from each other's chimneys, with many interfaces, difficult integration and slow response. Some of the system's product teams had been disbanded.

"The old system is like an old broken tractor. It has been unable to run. Every time a meeting is held, the IT department is always criticized." Tang Kunjun said that at that time, the IT department had to spend one month, one quarter, or even longer.

We must change, but how do we change? Tang Kunjun and his team have seen almost all the retail IT systems in the market, and found that they are still developed on the basis of traditional wholesale mode, which can not solve XTEP's problems at all.

Until he saw the "enterprise application platform" launched by Ali cloud, it suddenly became clear. Is this not the system XTEP has always wanted?

Unlike the IT system developed in the past for various business lines, "platform" is the "greatest common divisor" of the business in a business type, that is, the smallest and simplest business process in the business type, and the module is placed in a shared pool, where the front-end application needs anything from it, just like "building blocks".

Take the clothing industry as an example, whether men or women's wear or sports shoes purchase materials or products, seventy or eighty of the business processes are the same. Under the management mechanism of "strong middle stage and small front desk", enterprises can fix the same process of different types of clothing enterprises to form a model, and the IT department only needs to customize 30% differences.

China and Taiwan allow enterprises to "remain unchanged" and Tang Kunjun sees hope. Knowing the first time of Ali Yun's business, he took 18 people to the Alibaba and exchanged a whole day.

Before long, he decided that XTEP must be in the middle stage. Thus, there is a preceding scene.

In 2017, XTEP and Ali cloud cooperation to create the "XTEP all channel retail platform" formally launched. XTEP adopts "shock type" therapy to completely destroy the original system. Fortunately, everything went well, and it took only 8 months to spread to the whole country.

Tang Kunjun said that this speed is "unique" in the industry.

On line, due to the improvement of operation and maintenance efficiency, 2/3 employees of IT departments of XTEP's dozens of branches nationwide have nothing to do, and seventy or eighty people have transferred to other departments.

In 2018, XTEP decided to reorganize the poor children's clothing business. All the resources and data of R & D, procurement and production, sales channels, marketing and other sectors were integrated with the adult clothing business. This is not a small dish. XTEP children's clothing business has been independently operated since 2012. Before the reorganization, there were 1200 sales outlets and 18 branches in the whole country.

Before the establishment of China's central stage, such a reorganization needs to sort out the business lines one by one, which will cost a lot of time and energy. How long does it take to restructure after being in Central Taiwan?

Tang Kunjun said, "less than a week. "This is unthinkable in the past."

"We can't live without data."

Xiao Lihua, vice president of Alibaba group and general manager of the new retail business department of Ali Yun Yun, worked in XTEP for more than 9 years, and did all the aspects of commodity design, channel, marketing, retail and so on. He said that the biggest problem in the clothing industry is high inventories and high consumables, and there are always enough selling products, and there are many unsalable goods.

The problem is data.

Xiao Lihua said that in the absence of data access, the clothing industry is like gambling, to see who has a good eye.

The most important step in XTEP's reform is to shift from wholesale mode to retail mode.

Unlike Anta and Lining, XTEP did not rely on self-management, but relied on the exclusive distributor of about 40 stores, increasing the proportion of their direct management shops to reduce the level of distribution, so as to achieve the purpose of strong control terminals.

Among them, the terminal sales data is the most important, but at that time, XTEP's data push is basically manual, POS is offline mode, data uploading and downloading is difficult, and until data transmission is up, it has long been a "dead end". What control is it?

Based on the technical capability of Ali cloud, XTEP IT team set up the XTEP business platform, and opened up all the members, orders, inventory, logistics and settlement systems, forming Commodity Center, channel center, stock center and member center. Under the unified interface, the data generated under different scenarios can also be quickly returned to the cage.

By 2018, the entire retail network of XTEP has been covered by the enterprise resource planning system, and the terminal sales data and inventory level can be monitored in real time. The O2O system covers more than 40 agents, and the number of shops they directly run is 60%. All of them are shared with online inventory, and new products can be released, priced, and marketing.

Now, the sales data of XTEP's more than 6000 stores in the country are updated in 10 minutes.

Tang Kunjun said that all stores under the XTEP line can view data in real time, and the sale of a store, a product, and the purchase of a member can be seen at a glance. In this way, the store manager can know when to replenish the goods and when to adjust the structure of the goods, while the management can monitor the flow and inventory level of the store, and accordingly determine the rhythm and discount plan of the new product.

"We are now very dependent on data, and no data market people do not know how to live." He said with a smile.

　 Behind a "ugly" financial report

In the afternoon of March 15, 2018, XTEP released its 2017 results. Its annual revenue decreased by 5.2%, and net profit fell by 22.7%. Meanwhile, in 2017, XTEP closed a large number of stores, and the total number of stores dropped from 6800 at the end of last year to 6000.

After the release of the "ugly" earnings report, XTEP's stock price rose rapidly, closing at HK $3.84 / share that day, up 5.79% from the opening price.

Why did the performance decline and share prices rise?

It turned out that in 2017, XTEP spent 120 million 800 thousand yuan on a one-time repurchase stock and was charged with losses. If the money is not counted, the net profit of that year is 529 million yuan.

In addition, despite the decrease in the number of stores, the overall sales efficiency of XTEP exclusive agents has increased by more than 10%.

Another data is that in 2017, Tmall double 11, XTEP online and offline channel turnover exceeded 310 million, user orders almost all through the O2O intelligent algorithm to automatically deliver, city logistics costs more than half.

In 2017, XTEP and Ali cloud cooperation of the whole channel project won the group's highest award - XTEP president special award. XTEP chairman and CEO Ding Shui Bo described this year as the last stop of XTEP's "3+" strategy (product + sports + Internet +) transformation.

In 2018, XTEP's performance was "best in history" - annual revenue of 6 billion 380 million and net profit of 660 million, an increase of 24.8% and 60.9% compared with the same period last year, and the number of shops increased from 6000 to 6230.

What is the next goal of XTEP's "3 year strategic change"?

Can XTEP surpass Lining?

Chen Di Town, Jinjiang City, Fujian Province, a town with a population of only 73 thousand, was born with Anta, XTEP, and 360 degrees.

According to the 2018 revenue ranking, Anta ranked first in China's sports brand, Lining second, XTEP third, 331 degree fourth. Anta has more revenue than the latter three, XTEP's revenue is 4 billion less than that of Lining, but its net profit is comparable.

In March this year, XTEP announced the establishment of a joint venture with Wolverine, a 100 year old shoe manufacturer in the United States. It is fully responsible for the operation of the two major brands of the latter's Merrell (Mai Le) and Saucony (St. John's) in mainland China, Hongkong and Macao. Saucony is the leader of high-end jogging shoes, and Merrell is known as "the first outdoor brand in the United States".

Two months later, XTEP announced the acquisition of all the issue shares of the clothing and love group at a price of $260 million in cash, bringing the group's high-end tennis brand K-Swiss and its famous military boots brand Palladium into its pocket.

It is easy to see that XTEP's ambition is to acquire high-end brands and enter China's second tier cities.

This path is different from that of Anta. Since 2009, Anta has successively bought many international brands such as Fay, Desanto, Xiao Xiao cattle and so on. This year, it has swallowed down the parent company of the original bird.

But Anta has spent several years running with the first international brand, Phillip, before making big strides and buying and buying. Since its acquisition in 2009, Fei Le has turned into a profit in 2014 and began to expand in a second tier city. Anta spent five years in FIE and accumulated a lot of experience.

From acquisition to synergy, XTEP has a long way to go.

Today, the Chinese sports brand Top4, besides Lining, Anta Ding Shizhong, XTEP Ding Shuibo, and 360 degree Ding Wu are alumni of Chen Di national middle school in Chen Di, Jinjiang, Fujian. Ding Shizhong and Ding Shuibo, who were born in 1970, started their business at the age of sixteen and seven, starting from the shoemaking workshop in the village, opening up companies, creating brands and going public in Hong Kong.

Xiao Lihua revealed that Anta, XTEP and Lining have worked with ALI cloud to explore the full link "cloud" to support retail transformation. Over 80% of the top domestic garment enterprises are using Ali cloud. He said Ali cloud has become the biggest cloud in the new retail market.

Now, the competition of Chinese sports brands and even the entire retail industry has entered a completely new stage. Author: Wang Shiqi