Can The Multi Brand Strategy Of XTEP Running Shoes Produce Synergy?

According to the world clothing shoes and hats net, in March 4th,

Wolverine, a well-known footwear manufacturer in the United States, announced that each side invested 155 million yuan to establish a joint venture to develop its business in China.

XTEP's wholly owned Affiliated Companies Xtep Holdco has signed a number of joint venture agreements with its joint venture partners (Wolverine wholly-owned Affiliated Companies). The newly established joint venture will be responsible for launching Saucony (St. John's) and Merrell (MAI LE) brand in mainland China, Hongkong and Macao.

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And accessories development, marketing and distribution.

Industry experts believe that on the one hand, XTEP's joint venture may find new growth points, but if you want to get good results, you will need time and time.

Multi brand strategy of XTEP running shoes Market

Public information shows that Saucony was founded in 1898, is one of the world's top four running shoes brand, and Newbalance, Brooks and Asics are equally famous, and even has the "Rolls-Royce" in running shoes.

The launch of GRID in 1981 has been considered as a midsole technology system that provides both slow and stable functions.

The brand was bought into WolverineWorldWide in 2012.

Merrell is a major brand of high performance mountaineering shoes, founded in 1981. Since 1997, the company has been a wholly owned subsidiary of Wolverine World Wide.

XTEP said that with the strong momentum and booming market demand of China's running and outdoor sporting goods sector, the joint venture will use XTEP's retail network and its close relationship with shopping center operators to launch Merrell and Saucony brands, outdoor and running shoes, clothing and accessories in mainland China, Hongkong SAR and Macao SAR.

Most of the new stores will be opened in shopping centres in the mainland of China, and will expand their business bases in the Hongkong Special Administrative Region and the Macao special economic zone.

It is worth mentioning that in 2015, XTEP made a brand remolding, positioning from the fashion sports brand into a sports fashion brand, with "becoming the runner's preferred brand" as the goal, and formed the two major products of the professional sports and sports life centered on running. The products cover four sports fields: running, comprehensive training, basketball and football.

Among them, XTEP sports resources are concentrated in the field of running and are tilted to marathon events. According to statistics, in 2017, 40 running events were sponsored, and more than 670 thousand participants participated.

XTEP brand management related staff told reporters that XTEP mainly from the running shoes market, joint Saucony aims to layout high-end foreign shoes market, and XTEP optimistic about the future development prospects of the outdoor market, will expand outward with Merrell as the starting point, increase more categories, maintain product diversification, meet market demand.

Can multi brand produce synergy effect?

Ding Shuibo, chairman and chief executive officer of XTEP International Holdings Limited, told the media that XTEP has been committed to providing professional and fashionable sports products for consumers. The goal is to expand into a multi brand portfolio group that can meet different customer needs.

Benefiting from the rich resources and advantages of XTEP and Wolverine, the joint venture company will help XTEP to reach more mature consumers, and at the same time bring two brands of Merrell and Saucony to consumers interested in sports and outdoor activities in related areas.

XTEP firmly believes that cooperation can bring strong synergy and create a win-win situation.

WolverineWorld Wide chairman, chief executive officer and CEO Blake W. Krueger told the media that Wolverine is very pleased to work with XTEP to accelerate the expansion of the two main brands Merrell and Saucony in the Chinese market.

With XTEP's leading position and expertise in the industry, plus Wolverine's technological strength and brand awareness, it will provide a solid foundation for joint ventures and promote the sustainable development of Merrell and Saucony in the booming running and outdoor sports market.

An analyst who did not want to be named by CITIC told reporters that the performance of XTEP itself has been relatively stable from the perspective of the company itself. XTEP, the main fashion line, is moving towards product +, sports +, Internet + "3+ strategy". The aim is to push the company's products, sales and after-sales services to a higher level.

In addition, XTEP spent 150 million yuan to buy back the old products in 2015, which promoted the efficiency of retail stores and boosted the confidence of dealers.

It is reported that in January this year, XTEP International announced that the general net profit of the company's common stock holders should be increased by about 50% to 60% over the 2017 year as of December 31, 2018. The main reason is that the company's operating revenue in the 2018 fiscal year is about 25% higher than that of the same period last year.

"In the long run, China's sports market still has much room for growth. XTEP's performance has also given more investors and investors confidence.

The layout of high-end running shoes market and outdoor market is also a successful chapter. After all, enterprises need new breakthroughs and growth points.

The analysts said.

But on the other hand, the reporter understands that at present, China's running shoes market is still dominated by the two major brands of Adidas and Nike. Although Saucony and Merrell have a high reputation in the international market, they face no market scale and share in the face of the Chinese market.

Take Saucony as an example, it landed on the Chinese market in 2004, but in the past 15 years, there were only about 20 stores. Its flagship stores such as Tmall and Jingdong also announced their stop operation last year.

"The sports market in China does have a lot of space, but it is not easy to cultivate this market.

XTEP has done well in the short term, but faced with many competitors, it also needs to strengthen its operational capability.

In addition, the domestic outdoor market development has not been satisfactory in recent years, and the outdoor brand performance is basically in a downward trend. Cutting through the outdoor market is not necessarily a good choice.

China stationery, sports and sporting goods association outdoor products branch experts admitted to reporters.

"XTEP wants to seize the young market, but young people may not be able to consume high-end brands. Imagine Anta acquiring FILA as a good performance. It takes time and time."

The above experts say.

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