Our reporter Li Wei
Recently, it was reported that Esprit's parent company Esprit's parent company's sales in the second half of 2016 fell 10.6% year-on-year to 8.323 billion yuan. Although the operating conditions have improved, it still suffered losses compared with the same period. And the income as of the end of March this year is still falling.
"From the relevant data, the short-term turnaround is mainly based on Esprit's continued large-scale closure of loss-making retail stores, abandonment of low-performance wholesale sales points, reduction of promotional activities and price cuts," said International Brand Strategy Analyst Chen. In an interview with the Science and Technology Daily reporter, Qing said that "the deep-seated contradictions have not been resolved, the transformation has not been successful, and the prospect of Esprit's resurgence is not optimistic."
At that time, at least part of the youth fashion memories of the 70s and 80s were "sufficient enough to buy an Esprit." Esprit, which used to bloom everywhere, is more than today's ZARA. Wearing "Esprit" is equivalent to labeling fashion, Europe, America, fashion, and middle class.
The fashion brand, which was founded in the United States in 1968, launched in Hong Kong in the 1970s, entered the mainland market in the 1990s, and has been popular for more than a decade, quickly fading in just three or five years after welcoming the "peak of the peak" in 2008. “The peak revenue was as high as HK$37.227 billion and the net profit was HK$6.45 billion,†Chen Qing said. “In 2013, the net profit loss was as high as HK$4.388 billion, which was the first financial Esprit after listing in Hong Kong in 1993. Annual loss."
In Chen Qing's view, on the surface, Esprit did not accurately grasp the changes in consumers' psychology and consumption patterns, and missed the best opportunity to transform before the advent of the Internet era. On the deeper level, it was based on joining and wholesale and retail. The flat and loose business model of the feature cannot be transformed into a “vertical†and “efficient†integrated business model in the short term, which eventually leads to the collapse of the entire fashion empire.
When it comes to internationally renowned fast-moving brands, you can't help but mention ZARA. ZARA's business model is exactly the opposite of Esprit, focusing on heavy assets and “vertical managementâ€, which means that all aspects of the entire apparel industry – from design proofing to processing and production, sales channels, logistics and distribution, are firmly in their hands. Here, “simply said that it is not to join, produce, and distribute air, so it can shorten the design, decision-making, and transportation links, and greatly improve the circulation speed and operational efficiency.†Chen Qing said.
The data show that the traditional process of the garment industry from design to raw material procurement to production and processing, the entire process cycle is as long as 4-9 months, the design phase takes 1-3 months. Esprit's products usually last more than nine months from design to shelf sales. Even after a drastic reform, the entire process takes about three months. ZARA only takes two weeks. In an era characterized by connectivity and fast-moving, this alone will push the brand to the forefront of the industry.
All thanks to ZARA's powerful vertically integrated supply chain system. The ZARA brand has its own factory. More than 50% of its products are produced in its own factories, and only a very small number of products are manufactured by Chinese manufacturers. This production mode allows ZARA to respond quickly to market sales and continuously modify and improve design and manufacturing to achieve more effective control.
In the field of logistics, ZARA is also the ultimate, called "Shunfeng in the clothing industry": there are numerous trucks at the door of the warehouse, the products are transported to other European regions or airports twice a day, and long-distance transportation outside Europe is always airlifted. Even with the high transportation costs, we must pursue the unprecedented high speed of the entire fashion industry.
In contrast, the traditional wholesale and retail franchise model of Esprit is much more low-end. The company's only job is to design new products and hold an order meeting: after each season's New product design is completed, it will take two or three months of fabric procurement period, and then handed over to each factory for production; during this period, an order meeting will be held, according to each branch and The agent's order adjusts production and finally enters the distribution and replenishment phase.
In the opinion of analysts, Esprit and ZARA represent, to some extent, the survival and development characteristics of the apparel industry in different periods. The traditional wholesale model represented by Esprit tends to be “light assets.†In the past when the capital economy was still underdeveloped, it was indeed a business model that could quickly replicate and scale up, and it could explode in a short period of time. "But the shortcoming is that the product cycle is too long, the lack of control over the intermediate links and production efficiency, the inability to keep up with the current fast-fashioned industry characteristics, and the impact of external factors, and the transition is too long, and the transition is difficult to achieve overnight." Say. From the founder Xing Liyuan's continuous reduction of shares, the final cash out and the general retreat may be able to see that Esprit's transformation is at least a controversial and uncertain future.
After the founder left, professional managers said that how to keep short-term profits has become the number one task in business management. The most effective way is of course the "closed shop" and "discount promotion". So after 2008, many Esprit apparel products began to go to the hypermarket, with a 30% discount and a 50% discount, regardless of the season's annual discount. This also became the direct killer of the Esprit brand value, and formed a negative relationship with the store and clearance. The closure of the loop.
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