Text | Planet Planet, by | European Gold
The business of women's underwear is not the same as many people imagine.
For laymen, it seems like a combination of two shoulder straps and two pieces of brackets, but in fact, it takes about 40 tedious steps to produce a bra. For comparison, it only takes 10 steps to produce a common printed T-shirt, while a pair of jeans only takes 6-8 steps.
In 2020, the market size of women's underwear in mainland China will be about 155.9 billion yuan. In this 100 billion track, there have been listed companies such as Urban Beauty, Huijie Shares, and Aimer Shares, as well as innovative enterprises with a valuation of more than 1 billion yuan such as Ubras, Banana Nei, and Nei.
Under the pattern of highly dispersed market, traditional underwear, underwear without underwire, underwear without size, sports underwear and other sub-categories have ushered in greater growth. However, in the increasingly homogeneous competition, the performance of some old brands is becoming weaker and weaker.
Increase in income but do not increase profits, but a large amount of losses, why did the former national underwear brands fall into such a strange circle?
Why is the former national brand here?
After 2003, the company began to maintain an annual growth of more than 30%, and the number of stores increased from nearly 50 in 2003 to 6272 stores in 2014. The first annual report handed over after the listing in 2014 showed that the company's revenue and profit achieved rapid growth of 37.4% and 54.8%, respectively, and the gross profit margin also climbed from 36.7% in 2013 to 39.1%.
According to The Furnost & Sullivan report, according to the total sales volume of China's domestic clothing industry in 2013, Urban Beauty occupies the first place in this market with a market share of 2.9%, which is three times that of the industry's second place Arifen.
But the phrase "debut is the peak, peak is the fall" also happens to describe the embarrassment of urban beauty.
After landing on the Hong Kong Stock Exchange in 2014, the profitability of urban beauty did not rise but declined. In 2015, the company's net profit was about 540 million yuan, followed by a decline in fluctuations, and in 2019, it turned from profit to loss, with a net loss of 1.298 billion yuan, a net loss of 118 million yuan in 2020, and a loss of 494 million yuan last year.
Analysts in related industries said that freezing three feet is not a cold day, and the decline in the performance of urban beauties has a lot to do with its crazy expansion ideas.
The strategic core of the company in the early stage is to expand the store, and it is also the absolute core of the KPI assessment of each department. In the five years from 2011 to 2015, the number of Urban Beauty stores increased by 5115, and 3 new stores were opened almost every day.
As of April 2016, the company has 6657 franchise stores and 2669 franchisees, with an average of less than 3 stores per franchisee. Among them, 1354 franchisees have only 1 store, and another 594 franchisees have opened 2 stores, so most of the franchisees are weak and weak, and there are basically no strong franchisees.
On the other hand, due to insufficient information communication, after the sales side realized the changes in market popularity, the production department lacked sufficient intelligence, and the wrong market judgment caused the company's own inventory accumulation. Before 2016, domestic women's underwear was mainly based on steel rim products, and in 2016, no steel rings began to break out, and the market share jumped rapidly from about 10% to 30%-40%. The sales side of Urban Beauty believes that the trend is a short-term impact, thus missing the best reaction time.
Aware of the above problems, Urban Beauty has been carrying out targeted reforms since 2016, but the reforms take a long time and do not see results overnight.
In order to alleviate the pressure brought by inventory, Urban Beauty Company has successively adopted various forms such as expanding the Southeast Asian market, domestic third- and fourth-tier discount stores and e-commerce shopping festival promotions to "destock".
Gone are the days when channels were king
Over the past few years, urban beauties have relied on huge offline stores as tentacles to complete transactions. However, with the "human goods yard" change brought about by the Internet, this "channel is king" game has not worked as well as before.
As the post-90s generation, known as the "internet natives", gradually become the mainstream consumer group, their purchasing habits have also changed. According to iiMedia Research, 43.2% of Consumers in China choose online channels.
Image source: Ai Media Consulting
On the other hand, with the concept of "no underwire" and "no size", women are more inclined to be comfortable and pleasing to themselves when choosing underwear, rather than pursuing pleasing sexiness. By 2018, the top ten underwear products sold on Tmall Double Eleven have all been underwear without underwire.
According to CBNData's statistics, sales of underwear without underwire have increased by 50% per year in the past five years. According to media reports, Tmall has revealed that in the first half of 2020, the sales of underwear without steel underwear accounted for 70%, pressing against traditional underwire underwear.
In addition to consumers and categories changing, the consumption scene is also changing.
From the perspective of brand market share, Aimer and Nippon Fast Retailing (Uniqlo) occupy an important position in the mainland women's underwear market. According to the market share data released by Euromonitor, aimer and Fast Retailing Japan accounted for 2% of the market share of women's underwear in 2020, and the market share of urban beauty ranked third with 1.5%.
The highly fragmented competitive landscape makes brands attach great importance to the reachability of offline channels (stores) in the early stage of development. In addition to the above-mentioned urban beauty has opened more than 8,000 stores, the data shows that as of June 2021, the number of offline stores of Aimer shares totaled 2,103; as of December 14, 2021, Uniqlo had 873 stores in 30 provinces (including municipalities directly under the central government) in China.
Under the channel layout based on offline stores, a product goes through about five steps from production to consumption (manufacturer - brand - distributor - franchisee - consumer). This consumption chain has the disadvantages of information asymmetry, long chain, many links, low industrial efficiency, low degree of informatization, slow response, and high operating costs, and it is difficult to control the consumption information and data at the end.
The network channels (manufacturers- brand owners- consumers) mainly based on the Internet e-commerce platform shorten the intermediate links, and to a certain extent, the gross profit margin of the enterprise is guaranteed, so that more enterprises are willing to sell through the network.
After realizing these changes, Urban Beauty opened a "second venture" in the second half of 2020, proposing that brand positioning return from sexy fashion to practicality.
On the customer side, Urban Beauty attaches great importance to the values and emotional interaction between the brand and consumers, and has created many marketing activities such as the most intimate you, the young Chinese college students' underwear creative design competition, the 2021 autumn and winter show, and the 2022 spring and summer new product show. According to the data, within two weeks of the Spring Festival in 2021, the "To the Closest You" marketing campaign brought nearly 20 million write-offs to the brand and converted 43,500 new members.
On the product side, it deepens the mining of consumers' personalized consumption needs, emphasizes the product value as the core to create explosive models, and changes the extensive production mode in the past. Through the enhancement of product texture through scientific and technological fabrics, in the case of considering more personalized practical scenes, Urban Beauty vigorously develops classic evergreen products to achieve the purpose of reducing the total number of SKUs and improving inventory.
On the channel side, the company began to promote a more refined differentiated management strategy from point to point, and the channel management style changed synchronously with the market pattern, emphasizing the decentralization, trust and solidarity of provincial companies and franchisees.
Judging from the existing reform clues, the early reform of urban beauty has indeed shown certain results, but the epidemic has made more consumers "tighten their money bags". As a more durable product, underwear itself does not have a high repurchase rate, and there are still many challenges in the second half of the transformation of urban beauty.
"No size" lingerie melee
In recent years, the more comfortable underwire-free category and the shorter purchase decision chain of the cup size, no size category have become the new darling of the underwear market.
According to the sales data of the Vipshop platform, since January 2022, the search volume of "underwear without underwire" has increased by 38% year-on-year, and the search volume of "underwear without size" has increased by 64% year-on-year; keywords such as "no feeling", "no trace", "basic model" and "vest style" have replaced "gathering" and "promotion" to become hot words for underwear category demand.
The complex cup size system that used to dazzle consumers has gradually been replaced by universal sizes such as no size or S/M/L; new categories such as graphene, self-heating, and muscle bottom clothes have also appeared in more and more consumer shopping carts.
This vigorous women's underwear "wear experience revolution" has further subverted the original market pattern.
Through this wave, cutting-edge brands born on the Internet such as Ubras, Inside and Outside, Banana, and Youshu trees have quickly seized market share through accurate consumer insights. Taking Ubras as an example, from January to March this year, the brand's overall sales at Vipshop increased by about 2 times year-on-year.
However, the so-called "no size" is actually a commercial "routine" carefully designed by the merchant, and the industry calls it "technical arbitrage".
The basic size of daily common underwear is divided into ABCDE five cups, 70/75/80/85 four bottom circumferences, even if you do not make large D and E cups, a bra also needs to be stocked with 12 sizes. In addition, a underwear usually needs to be made of dark, light and complexion to meet the needs of consumers in different wearing scenes, then only one bra needs as many as 36 SKUs. A mature brand has at least 20 underwear products on sale, which may be close to 1,000 SKUs at a rough calculation, which is not only a huge production cost for enterprises, but also a huge inventory and capital cost.
And sizeless underwear almost no longer faces the pain points of the traditional underwear industry. Taking Ubras as an example, most of their products are only one size (suitable for A-C cups / 90-130 pounds), and the simplification of sizes is conducive to consumers' online purchases and reduces decision-making costs. At the same time, the product SKU has been greatly reduced, and the production and preparation cycle has been compressed, further releasing the financial pressure of the enterprise.
On the other hand, traditional underwear is composed of 20-40 parts, and it takes 30-50 processes to make, and in the case that the machine cannot cover the whole chain, if one person is responsible for one of the processes, an assembly line needs dozens of workers. Moreover, the error of the manual process is less than 2mm, and the production process requires a lot of manpower and material resources. The sizeless underwear adopts integrated stitching technology, the production process is within 10 processes, and the main steps are completed by computers and machines, which is less difficult to manufacture.
Therefore, sizeless underwear has unique advantages in manufacturing, stockpiling, sales and other links, in the case of the same price, the cost of sizeless underwear is lower and the profit is greater.
Despite the advantages of sizeless underwear, urban beauties seem to be hindsighted to this wave. It wasn't until spring 2021 that Urban Beauty launched its own Vbra sizeless underwear and ONE SIZE sizeless underwear. In the 2020 Tmall Double Eleven sales list, Ubras has pushed all underwear brands to win the underwear category sales champion.
After missing the "outlet", Urban Beauty used the supply chain advantages accumulated by herself for more than 20 years to catch up.
Subsequently, Urban Beauty and JD.com launched digital cooperation to explore new product and service functions around the digitization of "user and member operation", "channel and operation", "supply chain" and "product and production".
Finally, in the R & D department, Urban Beauty requires raw materials, production, data and sales to do research and development on a platform, when the new wind in the market is reflected for the first time, it can be quickly digitized back to the raw material end and the R & D end through market feedback, and even form a sample.
In this "sizeless" melee, although the urban beauty is late, Vbra no size underwear, no size high elastic pants have become a million explosive products in 2021.
summary
The lingerie industry has been called "the last piece of cake in the apparel industry".
iResearch pointed out that China's women's underwear industry is relatively fragmented, and the brands are not differentiated enough in the minds of consumers. In the future, the head brand will continue to export value, refine the long-term value operation of users, and the concentration of the industry is expected to be further improved.
And it is foreseeable that in the future, Chinese women's underwear brands will be more subdivided, matrixed, technological and standardized. Although the heat of no-size underwear is high, it is limited to low barriers, and it is still necessary to deepen the fabric, design and appearance in the future. With the entry of traditional underwear brands, the market competition will become more and more intense, and the speed of technical iteration of sizeless underwear will also accelerate.
The ups and downs in the commercial sea have always been the norm, from the first share of underwear in the past to a huge loss of 494 million, Zheng Yaonan, who has regained the helm, and the urban beauty, are trying to return to the C position.
Resources:
[1] "2020 China's domestic clothing industry development status and consumer habits analysis report", Ai Media Consulting
[2] "China's Women's Underwear Industry in 2021: Will No Size Underwear Become the King of the Lingerie Track?" " head leopard
[3] "Urban Beauty: An In-depth Understanding of the Business Transformation Process of Urban Beauty", Everbright Securities