"The quality and price of our products are very good. You should go to the store and have a look. There must be something you want to buy." It is not marketers who are trying to promote new products, but CEO Chen Lang of China Resources Vanguard.
Not long ago, a mixed casual fashion brand "V ictor & V ictoria" was put on the shelf of China Resources Vanguard. Although the range was only in 2 or 3 stores in Shenzhen, it was the first place in which Huarun had been involved in its own clothing brand so far. Try it once.
"Our product line is quite complete, including a variety of styles of suits, fashion, shirts, casual wear, shoes, etc., the main price between 60 to 150 yuan, are designed by the Hong Kong headquarters hired Hong Kong professional designers, the current team has Eight individuals have already selected several manufacturers in Shenzhen for OEM production, Chen Lang told reporters.
In fact, Wal-Mart, the world’s largest retail group, has just launched a clothing brand called “Metro7†in the United States. Zeng Qiang, public relations manager of Wal-Mart China, revealed that this series has not yet been promoted in China. However, on the shelves of the Wal-Mart Shenzhen store, three children's wear, cowboys, and casual wear brands named “K id connection,†“725,†and “SE†have already entered the room. “There is an Asian Resource Development Department under Walmart and is responsible for its own brand development team.â€
At the Carrefour Supermarket in Yongjin, a clothing brand called “Euro†is often the “champion†of sales growth in the supermarket textile office. It is said that "European Yun" was hired by the French headquarters to design a special person, and then commissioned by relevant manufacturers in Fujian, Shandong and other places, the average price is lower than similar products 30%. “In 2003, Feng Xiaozu, the president of Carrefour South China, was appointed as the president of China in Hong Kong Parkway, and the most significant change Feng Jue Zu brought to PARKnSHOP was the addition of textiles such as clothing and footwear. It is said that PARKnSHOP is now planning to expand its own brand of clothing. An insider of PARKnSHOP revealed to reporters.
Almost at the same time, multinational retail giants have turned their sights on clothing brands.
Gross profit and rent
“After the retail industry was fully opened, the scope of power of retail companies has doubled in just one year. It has become a common practice for several supermarkets to be close to each other in the same city, and price competition is inevitable in order to snatch customers. The most intense promotions were made, and the gross profit of commodities dropped again and again.†The manager of a supermarket told reporters with resignation.
The financial report of Aeon (Hong Kong) Department Store Co., Ltd. (0984.HK) recently released shows that the company's turnover increased by 16.2% to HKD 2.605 billion in the first half of the year, but the company's gross profit margin decreased from 25.6% to 24.8%, mainly due to the period Food prices fell, while food accounted for 35% of the company’s overall sales.
On the other hand, due to the fluctuation of real estate prices, the rental level of the retail industry has increased significantly, and as the number of competitors increases, the cost of the network has doubled. Macquarie Securities recently lowered the profit forecast of Lianhua Supermarket (0980.HK) for the next two years by 3.0% and 9.0%, and lowered the target price to HK$7.0. The poor operating performance shows that the operating environment of Shanghai supermarkets is difficult, especially with the increase in rents, which led Lianhua Supermarket to increase its share of sales in the first half of the year from 4.1% last year to 4.4%. According to a survey by the reporter, Beijing Wumei (8277.HK)'s rental expenses in the first three quarters of 2005 accounted for the Group's turnover, which also rose from 2.3% in 2004 to 2.4%.
On the one hand, the decrease in gross profit, and on the other hand, the continuous rise in rental costs. In the double attack, retailers need to find new and effective ways to improve the overall gross profit structure and to level out gross profit.
Average gross profit
“The gross profit of apparel brands is as high as 40% to 50%. Previously, China Resources and its suppliers adopted an affiliate model. Even if half of the deductions are deducted, suppliers can still make profits.†Chen Lang admits that they are quite interested in this part of gross profit.
“The profits of manufacturers in the textile and apparel industry are generally very low, generally not exceeding 10%. There are also several clothing listed companies in Hong Kong whose profits are only 3% to 4%. Most profits in this industry are taken away by middlemen and terminal sellers. In an interview with the "First Financial Daily", Lin Xuanwu, deputy chairman of the Hong Kong Textile Industry Federation, said.
"If the ex-factory price of a piece of clothing is 35 yuan, it may become 100 yuan when it reaches the hands of domestic consumers. If it is exported to foreign countries, the terminal sales price may even turn 10 times, and the profits of the textile and clothing distribution sector are indeed not low." However, the CEO of a clothing company in Xintang, Guangdong, said that few garment companies are currently interested in free clothing brands in domestic supermarkets. The reason is that these supermarkets have pushed prices too low and the manufacturers have almost no profit.
At present, domestic supermarkets are not the main places for people to buy clothes. Most of the clothes sold are low-end products, and prices generally range from a dozen to several tens of yuan. For some manufacturers who want to use the supermarket brand effect to enhance their influence in the country. It does not make sense at all.
Those who supply the supermarkets are usually some unknown small factories, which have limited capabilities in batch processing and production.
It is understood that most of the self-owned branded apparels such as Wal-Mart and Aeon are not produced in China. “After being affected by tariff problems, the amount of this part of the product is not large. In addition, clothing is related to the daily consumption of customers, and at the same time, it is influenced by the trend. It is not something you want to do.†AEON (China) Co., Ltd. Procurement supervisor revealed to reporters.
If you want to find large manufacturers OEM, you need to reach a certain scale of sales capacity. According to Yan Haijun, Purchasing Director of the Department of Textiles, Consumer Goods, and Fresh Foods of Auchan Int'l (Shanghai) International Trading Co., Ltd., China's labor force is cheap, the textile industry is complete, and the facilities are complete. This gives Chinese textile and apparel prices, quality and delivery dates. It has a very big advantage. At present, there are more than 1,000 Chinese factories that have been rigorously assessed and incorporated into the Auchan procurement system. Auchan purchases hundreds of millions of euros of goods from China every year. Auchan sells at supermarkets and shopping malls in Europe. Among them, 50% of the European and European brands that purchase textiles and garments are attached to Auchan free brands, and there is a tendency to continue to increase the proportion. However, Auchan free brand clothing. No sales in China, all exports.
“China's retail enterprises’ own-brand apparel is still in its infancy, and consumers’ consumption habits have yet to be cultivated. At present, sales are also not regarded as a scale advantage. Therefore, in the short term, the expansion of apparel self-owned brands is still very risky.†According to the CEO of the retail industry, the positioning and design of self-owned brand clothing are also very important. Do not enter the market easily unless there is greater strength.