For many 70s and 80s, Esprit used to be a fashionable brand that needed some economic ability to bear. It firmly occupied the position of youth memory about fashion, and was the first fashion name in China with the meaning of “middle class”. However, the rivers and rivers are no longer the scene, and today Esprit has long been ruined by the forgotten doom.

Not long ago, Hong Kong fashion and leisure brand Esprit announced the data for this fiscal year. According to the data, Esprit Holdings Ltd. (0330.HK) Esprit Global Holdings Co., Ltd., after a long period of transformation efforts, finally realized a turnaround: Net profit was 21 million Hong Kong dollars, while the net loss in the previous fiscal year was as high as 3.7 billion Hong Kong dollars.

However, from the latest financial report, we found that Esprit's turnaround is mainly based on the company's “slimming”: through the sale of the Hong Kong office, continuous closing of the store and layoffs, etc., to achieve profitability on the corporate books. The company's main business is still in a state of sustained losses.

Esprit chose to use "selling body" to sustain life as the door of a house was closed. As a "leader" of domestic fashion brands, why is Esprit stuck in the mud?

No longer in the peak period

Esprit, formerly a clothing company in San Francisco, USA, used Hong Kong Far East Co., Ltd. as the purchasing agent. The owner of the company, Xing Liyuan, was once relished because she was the husband of actress Lin Qingxia.

In the 1980s, Esprit was one of the favorite clothing brands for American teenagers. The visionary Xing Liyuan started to start the Esprit clothing wholesale business in Asia and opened retail stores in many Asian cities.

In 1993, Esprit Asia, a subsidiary of Hong Kong Far East Co., Ltd., was listed in Hong Kong. Four years later, it acquired Esprit's European business and changed its name to Esprit Global Holdings Limited. Esprit's fashion empire has gradually expanded its global layout.

In 1997, Esprit and China Resources Group jointly established Huarun Esprit to launch Esprit branded apparel retail business in mainland China. In the first year, it achieved 58% growth. At the peak, there were hundreds of cities in nearly 100 cities nationwide. Direct stores and franchisees.

In mainland China, Esprit was the original enlightener of the Western-style aesthetic taste of the middle class. At that time, ESPRIT's appeal was great, and various shopping malls gave various preferential policies in order to attract it. At the peak of Esprit, the guests of the major stores were in constant stream, and even stars such as Ren Xianqi and Fan Bingbing were seen shopping at Esprit.

In the first decade of entering China, Esprit, which lacks competitors, was fortunate enough to earn a lot of money in the Chinese market and gained a very high status, but the crisis is also increasing.

Since 2006, Xing Liyuan has resigned as the chairman and CEO of the Esprit parent company Esprit Global Group, and has continuously reduced its shareholdings until 2010. What followed was that Esprit's global situation has gone from bad to worse.

In fiscal 2009, Esprit's turnover fell by 7.4%. In contrast, net profit plummeted 27.4%, and net profit margin fell to 13.8%, a drop of 20.2%. In the same year, Esprit ended 15 years. Double-digit high-speed growth has entered the recession cycle.

After entering the recession cycle, Esprit is still expanding, regardless of its retail or wholesale sales area continues to grow. However, this expansion only brought negative effects to Esprit in terms of sales or profit acquisition. Not only did it not save Esprit's decline, but it accelerated the decline of Esprit.

In fiscal 2011, Esprit had to cut the wrist of North America, the most competitive market with a relatively small share (3-4%), retaining the largest European and Asian markets with sales and earnings growth, while closing 80 unprofitable Storefront.

In the end, the “slimming” initiative did not slow down the fall of Esprit. Esprit’s net profit for the year was only HK$79 million, plummeting 81%.

Performance volatility ultimately led to high-level personnel turmoil.

From February to March 2009, Esprit Global Executive Director and Esprit Brand North America President Griffith resigned with Executive Director and Esprit Brand President Thomas Johannes Grote.

At this point, including the "extraction" of Xing Li and Gao Hansi, the three founders of Esprit Global all withdrew. This wave of blood transfusion operations officially ended in May 2009. High-frequency change coaching, Esprit's brand development is even more stormy.

In the "up-and-coming" China region, Esprit's fatigue has gradually emerged.

In fiscal year 2010 and 2011, Esprit's sales growth in China was as high as 227%, but it was hit by brands such as fast fashion Zara, Uniqlo, H&M, and has been shrinking since that year. In 2012, at the beginning of fiscal 2013, when Esprit was about to fall below HK$30 billion in turnover, it came to Zara's parent company, Inditex SA (ITX.MC), which previously served as the director of distribution and operations for the Spanish company. Ma Haosi. At this time, when Esprit was completely surpassed by Zara and H&M, not only did the North American market have no place, but even its German base camp and the company's location in Greater China also fell.

After Ma Haosi joined, he introduced three other Indigo executives, Juan Chaparro, Elena Lazcanotegui and José Antonio Ramos. The long four-year transformation plan of Esprit has officially opened.

Uniqlo and Zara entered the Chinese market six or ten years later than Esprit, but they and the Swedish brand H&M are now a fast fashion choice for young Chinese. Esprit lost its brand vitality and was gradually abandoned by young people.

The fashion circle's "ice and fire two days"

The precarious fashion veteran is not just the Esprit family. Also relying on "slimming" to reverse the situation is the denim giant Levi's. According to the recent financial report, Levi Strauss & Co. Levi's second-quarter revenue still failed to achieve growth, but after the restructuring, the profitability of the company's spending reduction continued to improve significantly.

Coincidentally, Recently, Fort Lion International (00592.HK) issued a profit warning for the first half of 2016. It is expected that the profit attributable to shareholders of the Group will be reduced by 75%-85% compared with the same period of last year, although the report appears to be as of the end of June. The annual net profit of Lions was 292 million yuan, up 1.53 times year-on-year. However, if the sale of Macao properties was excluded, the profit was 25 million yuan, down 78%.

Giordano, Benny Road, and Fort Lions once called the Big Three of fashion clothing. Today, there is no one brand that is better.

Established in 1981, the Hong Kong-owned brand Giordano, listed in Hong Kong in 1993, Giordano International (00709.HK), and officially entered the mainland market the following year, creating a precedent for China's casual wear retail chain stores. In 2013, when the performance reached its peak, Giordano’s operating income reached 5.848 billion Hong Kong dollars, and 2,642 stores were opened worldwide.

However, the good times are not long, Giordano's sales in the past three years have experienced varying degrees of decline, the inventory problem is worrying. In 2015, the number of Giordano stores decreased by 81, and its subsidiary brand EULA also announced that it would cease operations. Today, Giordano has almost disappeared from the mainstream business districts of first- and second-tier cities.

What is even more tragic is that under the all-out blow of fast fashion, some fashion veterans have been badly sold.

Taking Benny Road as an example, "brand goods" Benny Road used to be a common fashion memory after 70s and 80s. Founded in the early 1980s, Benny Road was acquired by Hong Kong-listed company Deyongjia (0321.HK) in 1996 and became a subsidiary company, and subsequently entered the mainland market.

With the help of a number of big-name stars such as Andy Lau, Faye Wong and Maggie Cheung, the number of stores in Benny Road during the peak period exceeded 4,000. But in recent years, the shadow of continuous losses and transformational losses has always shrouded Benny Road. In the four years from 2011 to 2015, 617 stores were closed, with an average of 12 closed per month. As of September 30, 2015, the total number of Benny Road stores has decreased to 2,849.

At the beginning of this year, Benny Road was sold by the parent company Hong Kong Deyongjia Group, and the transaction price as low as 250 million yuan was very eye-popping.

The fashion industry is experiencing a brutal reshuffle. Today's market pattern can be described as "two days of ice and fire": on the one hand, fashion veterans are facing "closed shop tide", and on the other hand, fast fashion has seized half of the fashion industry.

According to Zara, its parent company Inditex SA (ITX.MC) Group's sales increased by 11% in the first half of the year, defeating all competitors. This achievement will once be the founder of Amancio Ortega. Pushing the status of the richest man in the world.

Among them, the group's core brand Zara achieved 13% sales growth, accounting for two-thirds of the group's total sales. Compared to the veteran fashion of closing stores, Zara added 79 new stores last year, bringing the total number of stores worldwide to 2002. Inditex's entire group has increased its stores worldwide from 2,692 to 7,013.

Other fast fashion brands such as H&M and Uniqlo have also expanded rapidly in recent years to jointly engulf the fashion market occupied by established brands. For the apparel industry, this is the best era, and this is the worst era.

How far is it from fast fashion?

The times have created heroes. The era of fashion veterans has been over. Today, these former heroes have to face up to the problems they face.

The principle of not breaking fast is not only applicable to Internet companies, but also to the fashion industry. If you look at the hot and fast fashion brand ZARA, you will know.

As a fast fashion brand, the mature, fast and consumer demand-oriented vertical integrated supply chain is the key to ZARA's success. On the contrary, Esprit still stays in the wholesale and retail thinking of brand building, focusing on the closed-door manufacturing of consumers, and wishing to lead the trend.

Fortunately, Esprit realized this problem early. In 2014, Esprit found Zara's former high-level Ma Haosi and started a long “Zara-style” reform.

They claim to have introduced Zara's model - reducing delivery time from the previous 9 to 11 months to 3 to 4 months. As written in the earnings report, “the design, quality and price/performance ratio of the products have been improved, and same-store sales have increased by 8% year-on-year (in the local currency of each store).”

But a closer comparison, Esprit still has a huge gap with Zara in pattern construction and product design. What ZARA adopts is actually the business model of SPA (SpecialtyRetailer ofPrivateLabelApparel), which means that the company controls everything from production to retail to improve the circulation speed and reduce the operating cost.

The SPA model has undergone three stages of improvement, from the prototype proposed by the American clothing giant GAP in 1986 to the Japanese-made SPA model represented by UNIQLO, which is characterized by low-cost popular basic and warehouse supermarkets. Finally, the SPA model adopted by Zara emphasizes the integration of the supply chain, based on efficient production capacity, guarantees the rapid update of products, and creates a new miracle in the clothing industry with “parity” and “fast fashion”.

Specifically, Zara does not have a new fashion from the designer's creative, design, to the pattern, production of ready-to-wear, shop shelves, can be completed in as little as 2 weeks. This unprecedented speed of innovation is inseparable from Zara's self-built factory. Unlike other clothing companies, Zara puts most of its procurement and production in Europe, maximizing the distance between the Spanish headquarters and enhancing the business. The ability to control all production processes. Once the ready-to-wear garments at the various Zara plants in Europe are completed, they are sent to the distribution center immediately after inspection labels. Through the highly efficient distribution center, the newly produced clothing products are quickly distributed to Zara stores around the world.

It is reported that the European region only needs 24 hours to reach the store, while the rest of the world only takes 36 to 72 hours. After the goods arrive at the store, they are directly put on the shelves, so that the Zara store always gives consumers a refreshing feeling.

In contrast, Esprit, which relied on retail wholesalers, has always been the traditional “light asset” route of the apparel industry. The only job of the clothing brand company is to design new products and hold order meetings. Specifically, after each season's new product design is completed, the company often needs to go through two or three months of fabric procurement period before handing it over to each factory for production. During this period, an order meeting will be held, according to the order of each branch and agent. Orders are adjusted for production, and finally to the delivery and replenishment phases. A batch of new products takes months to complete from design completion to shelf-up.

Zara's time from design to the sale of ready-to-wear counters is as short as 7 days, usually 12 days, and about 12,000 fashions are launched each year. In contrast, although Esprit's order will be changed from twice a year to once a month, and about 7,000 models will be launched each year, the wholesale business will be dominated by orders, and the proportion of orders that are destined for a long period of time will remain high. .

The short supply chain makes Esprit unable to respond quickly to market changes, and is unable to launch products that are responsive to consumer trends in a timely manner.

In addition, because Esprit does not participate in the production and retail of clothing, the ability to control the cost of clothing production is very weak. According to the reminiscences of Esprit's business in China, Esprit's supply chain cost is about 30% more expensive than Korean clothing brand “attachment”, not to mention the same competition with H&M, Zara and Uniqlo.

Although Esprit began to shift to “vertical mode”, it strengthened cooperation with vertical retailers and increased channel sales such as “direct sales” and “monopoly” to improve product design, shipment and pricing. But over the years, Esprit has formed a very close relationship with many distributors. The genes for wholesale and retail are hard to eradicate. Esprit, which is followed by department stores, has become weak in building and maintaining the brand itself.

From the situation of Zara and Esprit stores, we can find the importance of this "control ability" to the brand.

ZARA has opened more than 2020 stores in more than 60 countries around the world, 90% of which are self-operated stores, and the rest are joint ventures and franchise stores. In addition, Zara's location is often in the bustling business district of big cities, and it is opened in large-scale stores, with a huge experience space of 2,000 square meters plus constantly updated product display, bringing consumers a pleasant shopping experience, but also Meet the consumer demand for one-stop shopping.

It is reported that Zara customers have an average of 17 visits per year, while other general brands are 3 to 4 times, showing that the offline store experience is attractive to consumers.

In contrast, due to the decline in performance, Esprit has almost disappeared in all levels of business districts, retreating in the second and third-tier business districts, but wherever Esprit's store area in the mall continues to shrink, from the crowded position Corner position. In addition, the Esprit store's merchandise display has been confusing and has been criticized for a long time.

In terms of product inventory, because Zara's fashion is generally small, even the best-selling models are controlled in quantity. A dress often stays in the store for less than a month. Esprit's ordering model has brought high inventory and is caught in the slump of "the price of the product is high and the style is unchanged for many years." In addition, because of the large inventory, Esprit retailers often “crazy discounts” as they please, greatly damaging the brand's image.

In addition, the core of the clothing brand is always inseparable from the product.

First of all, in the development of clothing products, fast fashion and traditional clothing brands have a natural difference.

Unlike traditional clothing brand “design-oriented” closed-door product development, Zara's product design and development is completely consumer-oriented. Every day, the Zara store manager will summarize the consumer's purchase behavior, product feedback, etc. to the headquarters in time to convey customer needs. At the same time, they will also observe the sales situation on the day and re-display the hot items for sale. maximize.

In addition, Zara has a large number of young designers and buyers, who have been immersed in the activities of major fashion centers all the year round, drawing inspiration from top brand designers, capturing the most popular fashion elements and giving timely feedback to Zara designers. We.

In June 2001, Madonna held a concert in Barcelona, ​​Spain. The three-day performance was still underway. There were already "the same paragraph" worn by Madonna at the concert, and then on the Spanish street. Quickly set off a Madonna fashion hot, and these clothes are from the local Zara. This shows that Zara's new product design and supply chain speed is unprecedented.

Secondly, in the Esprit, where the product is not new, the positioning is still chaotic.

In 2002, Czech-German Gao Hansi was promoted to CEO, positioning the consumer group as 20 to 40 years old. Esprit was split into three sub-brands Esprit, EspritCollection and edc. Esprit took the classic route, retaining the original style, and EspritCollection took the professional route. , edc walks the youth fashion route.

Apparently subdivided clothing brands can help consumers make more appropriate choices. However, although the design departments of the three sub-brands of Esprit are separated from each other, they are still affiliated with the design center of Düsseldorf, Germany, and are influenced by similar cultures. The design style is relatively similar. The result presented in the market is that the brand positioning is erratic. Take a basic T-shirt as an example. The difference between different sub-brands is three to four hundred yuan, and the lowest price is 99 yuan, and the highest is 500 yuan.

Finally, the high price and frequent discount promotions, Esprit's image has plummeted in recent years, has long been a basic brand that consumers will only buy during the discount period. A group of customers who had the most consumer power and desire for consumption have gradually moved away from the brand.

Thinking about how to get back to life is a top priority for Esprit. In the image reform, Esprit invited the Korean star Song Hye Kyo, who was in the first half of the year, to serve as the spokesperson for the new season in 2016. The "Descent of the Sun" starring Song Hye Kyo in the past has set a variety of viewing records in China and Asia, and has a high reputation and status in the minds of young people.

At the beginning of this month, Esprit launched a joint venture with fashion brand and opening store Opening Ceremony. However, the tide of the tide brand will radiate to the entire Esprit product line, I am afraid it will take a long time.

Esprit’s CFO, Deng Yongzheng, suggested that Esprit’s response to the Asia-Pacific challenge includes developing franchises and focusing on e-commerce. In addition, Esprit will save HK$1 billion in expenses this year and next. The specific measures include continuing to reduce shops that are not operating well, reducing the size of wholesale and reducing structural overlap.

However, if consumers completely lose interest in Esprit, then turning the sales channel from offline to online does not save it. Maybe in the future we will see Esprit continue to “sell”, but if Esprit can't completely complete the short supply chain and make the product become fashionable again, doing more is just a matter of delaying death.