By Bao Yuanyuan
With clearance sales, shop shutdowns, and order shrinking orders, sportswear brands, who once secured a solid position in the market, are now having difficulties maintaining their prosperity amidst the recession of the entire clothing industry. They are seeing undesirable market results. Since the beginning of this year, there has never been lack of news of discounts and sales of sportswear brands. Particularly in recent time, discount has been attracting more attention than the discount itself. With excessive inventory and dropping profit, Chinese sportswear brands are plummeting collectively.
High homogenization reduces consumption expectation
According to statistics, in the first half of the year, profit of homegrown brand LI-NING was 85 percent lower than that that in the same period of last year, operation revenue decreased by 10 percent to RMB 3.88 billion Yuan, and the stock price of the company dropped an aggregate of 35 percent compared with the same period of last year. In the meantime, LI-NING closed down hundreds of its shops. Earlier in 2011, annual sales revenue of LI-NING was RMB 8.93 billion Yuan, down 5.8 percent compared with the same period of the previous year. Its downward trend is showing signs of accelerating.
Industrial tycoon LI-NING is not alone. Other Chinese sportswear brands have also been seeing poor performance. According to the procurement meeting for the second quarter of 2013 of Chinese sportswear brands, orders of companies like Anta, Xtep, and Peak have all slipped to various extents. Xtep's orders decreased by 15 to 20 percent, Anta by 15 to 25 percent, and Peak by as much as 20 to 30 percent.
Procurement meeting is often a barometer of the market. From this, we can roughly see that Chinese sportswear brands are currently in trouble. Why all these are happening? "A weak economy, the settling of the operation strategies of foreign sports goods enterprises, and the depression of the Chinese clothing industry, all these are external causes", said a person who has many years of experience in sports brands management. For Chinese brands such as LI-NING and Anta, their substantially similar product structures and marketing models are the main culprits.
Sports brands have created production and sales miracles in the past few years, and consumers are deeply impressed by sports brands that mushroomed years ago. Around 2000, China's bidding for the hosting of the Olympiad created a sports phenomenon across the country, and after Beijing won the bidding, China's sports goods market erupted. Sports brands and traditional clothing brands enjoyed a "golden decade" of development together, during which time the industry had maintained two-digit growth every year. At the peak of the revelry of domestic brands, people suddenly found that China had more than 20 well-known sports brands, different from the market pattern of other country in which only three to four major brands dominate.
Today, after the weeding out by the market, LI-NING, Anta, Xtep, 361°, Peak, and China Dongxiang emerge as the 6 major brands in the domestic market. However, after careful analysis of the products and positioning of these brands, we found that there are shocking similarities among them. For example, in terms of products, all these brands have developed products for basketball, jogging, comprehensive training, and casual sports, let alone the similarity in their product design and LOGO; besides, almost all brands follow the same advertising and marketing path of celebrity endorsement and title sponsorship. Unquestioning and rapid expansion and attaching too little importance to R&D while too much to marketing have caused the gradual weakening of the overall competitiveness of sports brands.
Meanwhile, industrial insiders point out that the transition of consumer demand in recent years has also been a major cause of the depression of Chinese sports brands. "Ten years ago, you would feel good to go out in a sports outfit, and it was a fashionable thing to do to go shopping in sportswear shops". At that time, Chinese brands such as LI-NING and Anta managed to take some share from Adidas and Nike, gaining quite significant market share with bustling demand. Years later, however, the fashion trend created by foreign brands like ZARA and H&M quickly stole the thunder from sportswear. To this day, the ideas of rapid distribution and rapid consumption still prevail. A big chunk of the youth group that used to consist of the consumption force of sports brands are now taken away by trendy fashion. The shift of demand is another reason why sports brands stumble in the battlefield.
Focusing on main business to improve competitiveness
With shutdowns of shops and changes in the top management, LI-NING is undoubtedly at the very front of this tide of industrial adjustment. It is told that the goal of LI-NING in the next two years is to increase its share in the Chinese market by 40 percent. After reducing its endeavors to dominate the global sports footwear and sportswear market, LI-NING is now transforming, shifting its target from rural consumers to consumers in large cities. It is hoping to gain more share in the domestic market and gain the recognition of the popular market. Industrial insiders believe that LI-NING should stick to the path of constructing variety resources and make effort to operate these varieties.
According to the development experience of foreign brands, it's particularly important to seize variety resources, such as Mizuno's focus on volleyball, Adidas' once long-time domination in football, and Nike's monopoly in basketball. Basing on such consideration, LI-NING signed a 5-year cooperation contract with CBA and signed Miami Heat guard Wade to introduce the Dynasty products series in Wade's name, a LI-NING version of Nike's popular Jordon footwear. As Jin Zhenjun, LI-NING's current executive vice president, puts it, LI-NING is trying to understand the brand DNA that consumers design to obtain, despite that this used to be the short board of LI-NING.
Although facing competition from fashion brands in the market, LI-NING still believes that persistence in the sports field is the foundation to maintain growth of the company. "After all, sports consumption is not age specific. It basically covers all consumption levels. Consumers can go after fast fashion, and they will also choose sports products when necessary". In LI-NING's view, the company must have a solid base of sports spirits in order to expand and grow.
Besides LI-NING, the reporter sees that Anta, Xtep, 361°, and Peak are all making new reform and upgrading basing on the market. According to experts, sports brands suffer depression collectively this year, and prospects in the next year remain rather dismal. "Walking out of the plain and beginning to climb mountains", this is how Chen Dapeng, vice chairman of China National Garment Association, described the tough journey of sportswear enterprises in the future. Under such circumstances, Chinese sports brands need to base themselves on market demands, stick to innovations, and differentiate development so as to walk out of the recession.
