Jiangnan Cloth 100% Returns "Save Oneself", What Medicine Is Sold In The Gourd?

The overloading of stocks in winter and the recent push in the spring brought the crisis of clothing industry under the outbreak.

Recently, an open letter written by Jiangnan cloth to the dealer partners of the group became popular in the circle. In view of the epidemic situation, its return rate of 2020 spring products, including JNBY, CROQUIS (sketch), less, JNBY by JNBY and POMME DE TERRE (Peng MA) brand, was adjusted to 100% (2020 spring special return policy).

In the letter, Jiangnan cloth clothing explicitly asked all dealers to return some of the products in advance, and said they were considering the policy for other products.

Why do you dare to drink this soup? This is another hot topic in the retail winter. On the face of it, this will prevent dealers from selling their stocks in a bid to maintain the brand premium of Jiangnan cloth.

Of course, the recycled goods can be returned to VIP customers at a low price. It can also be sold through other channels such as the third party online platform, WeChat interactive marketing service platform and so on.

As an integral part of the retail circle, the clothing industry in Jiangnan cloth clothing also has natural fragility. "Instant eternity" is common here because competitors are ready to copy, surpass or even replace.

Therefore, the past 23 years' journey, "not to be trapped by sudden crises, to seek certainty in uncertainty" has become the consistent rule of Jiangnan cloth.

One Products are excellent, ROE ranks the forefront of A/ H-share listed clothing companies.

Brand and channel are the backbone of the commercial kingdom in the south of the Yangtze River.

Among the listed clothing companies in the A/H screened by wind, Jiangnan cloth clothing is one of the highest ROE (net asset yield) companies, while ROE reflects the efficiency of capital investment.

Data source: Wind drawing: commercial real estate headlines

We can see that the gross profit margin of Jiangnan cloth is higher than that of ROE, which reflects the high pricing power brought about by product design, that is, strong brand power has brought a brand loyalty consumer group willing to pay for the premium of products, so its profitability is strong.

According to brand types, the clothing industry mainly includes designer brand, luxury brand, fast fashion brand and commercial brand. Compared with the other three categories, designer brand has three core elements: high recognition, design driven, high customer stickiness.

Take Jiangnan cloth as an example, the clothing is basically white, black gray, brown and other pure colors. The material is mainly cotton, linen and wool, and the identification is high.

Source: Jiangnan Buyi official website

In 2015, Jiangnan cloth clothing commissioned the Hongkong consulting company CIC to conduct a survey on the brand awareness of domestic women's designers. Of the 300 designer brands in China, 35.5% of respondents thought that JNBY was the most distinctive and easy to identify.

High design fan is another weapon that Jiangnan cloth can stand out from its competitors. From a designer gradually evolved a stable team of designers, so that it can maintain stability while having the ability to expand different segments of the market, and further open up the growth of the group space.

The product is in place, entertain guests. In order to improve customer stickiness, Jiangnan cloth has built up a member system which is called "nuclear weapon" by the outside world. Though imitators are numerous, there may be less duplication.

The reason is that membership is an extension of products. Excellent products are the foundation of all things. Without endless creativity, customer stickiness is impossible.

Although the designer brand of clothing industry has a certain market capacity in recent years, and has potential for development, the designer brand that really applauded and attracted is still few.

According to the CIC consultation report, the designer brand segmentation market volume increased from 1 billion 800 million yuan to 4 billion 490 million yuan in 2013-2017 years, and the compound annual growth rate was 25.7%. It is estimated that the market capacity will increase from 5 billion 680 million yuan to 13 billion 460 million yuan in the 2018-2022 year, and the compound annual growth rate is 24.5%, far exceeding the overall growth level of the clothing industry.

Finding a delicate balance between design and commercial landing is also a door technology.

On the one hand, designers generally lack the experience of brand and channel management. At the same time, because of the high cost of operation, most independent designers rely mainly on word of mouth or show activities to publicize, so it is very difficult to seamlessly connect with the market.

On the other hand, the differentiated positioning of distinctive styles often corresponds to the small consumer groups, which are relatively limited in scale and unable to form a system that can be inherited.

To this end, Jiangnan cloth is no longer confined to the "small part of the business", through multi brand strategy to extend the concept of style to more people, which is also able to stand out in the domestic designer brand, and gradually establish the scale of the leading edge of the key.

Two Multi brand and full channel force, members contribute 7 to sales

Jiangnan Buyi went to Hong Kong in 2016, and its revenue in the next three years (fiscal year 2017-2019) was 2 billion 330 million yuan, 2 billion 860 million yuan and 3 billion 360 million yuan respectively, corresponding net profit of 330 million yuan, 410 million yuan and 480 million yuan.

Stable and upward transcripts, so that Jiangnan cloth has been favored by the capital market. In 2018, it was selected as Hang Seng Composite Index, Hang Seng Consumer goods manufacturing and services index, Hang Seng Hong Kong stock pass index and some other index constituent stocks.

And behind this, we can not do without its unique mode and operation.

Sharing system to open channel inventory, store turnover rate increased

In March 2014, Jiangnan cloth clothing formally launched the inventory sharing and distribution system, through inventory monitoring, sharing, distribution, effectively reduce the probability of discontinued stores, improve the success rate of customer purchase.
The allocation of headquarters replenishment, online and offline (including direct stores and distributors' shops) has been realized.
Real time monitoring of the stock of each store, timely detection of high demand products, prompt timely replenishment (monitoring); online and offline (including self run and distributors) sharing of inventory allocation; after receiving orders, quick positioning, ordering and setting the best route, the product will be delivered to customers in time.
Inventory sharing and distribution system in southern China

Source: CITIC Securities

The landing of inventory sharing and distribution system has brought about a rapid increase in retail sales.

In the 2016 fiscal year, the sharing system promoted the net retail sales of Jiangnan cloth retail sales by 236 million yuan, accounting for 7.3% of the total retail sales; the 2017 corresponding figures were 228 million yuan and 11% respectively in the first half of fiscal year.

Data source: company announcement Cartography: commercial real estate headlines

Multi brand strategy, mining different market segments

In terms of designer brand, there is an inherent paradox between the persistence of revenue growth and brand positioning, that is, once a single brand appears scale generalization, it will weaken customer loyalty to the brand and further restrict the scale of revenue.
To solve this paradox, Jiangnan cloth chose to expand the brand mix and product category.
From 2014 to 2017 fiscal year, group business revenue increased from 1 billion 380 million yuan to 2 billion 330 million yuan, 3 annual compound annual growth rate was 19%, operating income growth rate increased year by year, mainly due to the accelerated growth of non JNBY brand.

According to brand incubation time, Jiangnan Buyi brand can be divided into three categories: mature brand (JNBY); growth brand (sketch, JNBY by JNBY, less); primary brand (Peng Ma, JNBYHOME, REVERB, SAMO, LASO MIN SOLO, and so on).

In fiscal year 2018, the proportion of mature brands, growth brands and primary brands accounted for 58.6%, 40% and 1.4% respectively. In fiscal year 2019, they were 56%, 41.9% and 2.1% respectively.

Take the "fans effect" as the leading factor and operate through the whole channel.

As a designer brand, Jiangnan Buyi and fans have the same business logic of "seeing the big with the small". High customer stickiness and high premium rate are two commonalities.
The channel platform of Jiangnan Buyi (offline retail stores, online platforms, WeChat interactive marketing service platform) all revolves around the "design + user demand interaction" and the effective transformation of fans.
Offline retail stores provide clothing experience, and at the same time, in order to achieve brand consistency, all shop designs and appearance designs of self catering stores and distribution stores in Jiangnan have unified guidelines.

Data source: corporate earnings mapping: commercial real estate headlines

The profitability of the offline stores has increased steadily. In fiscal year 2019, self operated stores and distributors' stores achieved operating income of 1 billion 489 million yuan and 1 billion 470 million yuan, up 6.3% and 22.8% respectively. Corresponding Gross margin has also maintained a high level of 70.9% and 52.2% respectively.

Data source: corporate earnings mapping: commercial real estate headlines

The online platform mainly focuses on third party online shopping platforms (such as Tmall, Jingdong, vip.com). At the very beginning, the third party platform of Jiangnan cloth and clothing was mainly based on "discount sale over season products". At present, the products have been synchronized online and offline, and sales promotion activities have been increased.

　　 Data source: corporate earnings mapping: commercial real estate headlines

WeChat interactive marketing service platform. Jiangnan Buyi is an example of the early use of WeChat system for private area traffic operation and membership management.
In this channel, it has set up an information system integrating "membership management", "new product push" and "user data analysis". Compared with the third party online platform, it provides two-way interaction between fans and designers, providing a benign reference for brand positioning.
As of June 30, 2019, the total number of cloth members in the south of the Yangtze River exceeded 3 million 600 thousand. Among them, WeChat membership exceeds 3 million 100 thousand, and membership sales account for about 70%. The establishment of membership system is the foundation of the new retail business in the south of the Yangtze River.

Data source: corporate earnings mapping: commercial real estate headlines

In the 2016-2019 fiscal year, the number of fans who spent more than 5000 yuan in the year of Jiangnan cloth clothing climbed by 90 thousand, 110 thousand, 160 thousand and 200 thousand respectively. These 200 thousand fans with strong consumption power are their core consumers.

Three The confusion of clothing industry, from "channel is king" to "efficiency competition"

Even without the impact of the epidemic, structural differentiation will dominate the situation of China's garment industry in the weak market in 2020.
At this stage, clothing companies have gradually shifted from "channel king" to "efficiency competition". The extensive growth mode of traditional clothing brand extension is difficult to sustain.
The same as "big brother" of the southern cloth, under the outbreak of the crisis, based on refined member management, the whole brand of all channels of flexible attack, it can be regarded as a unique landscape in the industry.

Design team + brand matrix helps growth, embrace capital, strengthen internal strength, open channels and members. Three sentences concentrate on 23 years' marketing wisdom of "confrontation uncertainty".

Source: Jiangnan Buyi WeChat public address

The importance of core designers is self-evident. The designer team that constantly replenish fresh blood is an important factor in brand renewal.
Brand matrix widens the upper and lower limits of brand. On the one hand, the expansion of the brand matrix enriches the connotation of its own design, and on the other hand, it helps the brand expand the current market and improve the market share.
And the intervention of capital strength is enough to enable clothing brands to achieve more effective synergy and faster expansion in supply chain, marketing and channels.
Although the technology and management capacity is relatively weak under the epidemic, clothing enterprises are facing the risk of delisting, but it is also an opportunity for them to reexamine "who I am, where to go and how to go".