At its peak, Heilan Home had more than 7,200 stores, a market value of nearly 90 billion, and annual revenue of 3.4 billion. It was the largest clothing company in the A-share category. Today, the market value of Heilan House is only 20.5 billion. Compared with its peak, the market value has evaporated by nearly 70 billion.
As the overlord of men’s clothing, Heilan House’s user group positioning can be said to be precise and clear. But why has it reached the point where its market value has evaporated by 70 billion? What is the "difficulty" in continuing to make a good man's wardrobe today?
1. Although the market value is evaporating, the current performance of Heilan House is still fine
We all know that the epidemic began in 2020. Looking at the financial report of Heilan House for that year, the net profit in the first half of the year was only 947 million. Yuan, a year-on-year plunge of 55.42%. At that time, in order to reverse this decline, Heilan House spent 1.042 billion yuan on advertising and marketing expenses, and even hired Jay Chou as its image spokesperson.
The impact on the consumer market during the epidemic has already existed, but Heilan House’s huge marketing investment can be considered to have restored performance to a certain extent. Let’s take a look:
- 1. Performance is stable: Lanzhijia’s single brand sales in Q1 2022 were 4.263 billion, down 7.28% year-on-year. This little bit of decline during the pandemic is pretty good.
- 2. The stores are not closed: The number of single-brand stores of Heilan House is 5,692, an increase of 20 stores compared with Q1 last year. In other words, even if the store is not closed, it is still very good.
- 3. The stores are all OK: Currently, 5,692 stores have achieved sales of 4.263 billion, and the average store revenue is about 250,000 yuan/month. After deducting 11% of online sales, the store still has 220,000 yuan/month for orders. With an average area of 180 square meters, this performance is really not bad.
However, the clothing industry has obvious seasonal attributes, which means that if your summer clothes are not sold out, they can only be piled up in the warehouse. According to the financial report, Heilan Home’s inventory has hovered around 9 billion from 2015 to 2020, accounting for 67% of the entire revenue. High inventory is still unavoidable.
The current high inventory amount of Heilan House is mainly due to the long turnover days. The average turnover days of Heilan House is around 283.32 days, and in the past six years, the average annual inventory turnover days of Heilan House has been around 282.06 days each year.
Due to the high inventory and the impact of the epidemic, it is understandable that Heilan House will be in crisis.
2. So, is there a crisis of "middle-aged men" in Heilan House?
There is no doubt that the current evaporation of Heilan House’s market value has aroused heated discussions, and the views that have been criticized for being tacky and low resonate with many people. In other words, the decline of Heilan House is due to a very typical brand aging.
Heilan House targets men directly, and men inevitably have a "mid-life crisis", and Heilan House is no exception. In my opinion, there are two main aspects of the aging of Heilan Home: one is the aging of products; the other is the aging of channels.
Let’s first talk about the aging of products. In fact, this is a big issue, but I will only make an analysis from some subdivided clothing categories:
Through my observation, Hailan House is one of the few companies that has the best performance in clothing categories. POLO shirt is a clothing brand placed in such a high position. We only need to compare the tops category of Uniqlo , POLO is only higher than some special and high unit price suits/windbreakers and cooperation models.
Why do I have to argue about Polo shirts? As we all know, only 10% of men in the world can look good in Polo shirts. This shows that most of the male consumers of Heilan House do not consume for the purpose of "outfitting" or "looking good".
- However, this group of people is objectively becoming fewer and fewer among today’s young men. Therefore, the so-called men's wardrobe of Heilan House naturally prefers "the wardrobe of young and middle-aged people, especially middle-aged men, in the third and fourth tiers and rural areas.""
The characteristics of this kind of customer group are that they pursue cost-effectiveness and have relatively low aesthetic standards. Most of the clothing products they choose are "durable", "washable" and "non-fading" as important selling points, which means that they will Losing the high-quality male consumers in first-tier cities.
Of course, Heilan House has also tried. As shown in the picture above, their overalls are as thin as those of smart boys, while the Uniqlo overalls in the picture below are perfect. Pants are obviously more oversized, loose and comfortable.
In terms of brand R&D and design, the 2021 annual report of Heilan House shows that the total revenue for the year is 20.188 billion yuan, and the research and development expenses are 124 million yuan, accounting for only 0.62% of the revenue. ; The R&D investment of other clothing brands such as Metersbonwe and Semir is 1.79% and 1.91% respectively, far exceeding that of Heilan Home.
- . As a result, less money is spent on appearance design. Grasping the aesthetics of modern urban men, subsequent growth will naturally become sluggish. Of course, are all products of Heilan House like this? To be honest, some of their online products are worth mentioning. For example,
. The collaboration with Smilelyworld has a full sense of netting on the tie-dye and small logo Tee. However, a young finger of an old lady may be able to deceive the king through the door, but it cannot really make her look younger. Here are some things involved The second relative aging of Heilan House is the aging of channels
At present, Heilan House has always been a brand based on offline, and its online proportion was only just over 10% at its peak, and this high-quality online customer base. It is obviously not enough to support Heilan House to make younger and more radical products.
- In other words, if you want to be young, you have to give up your business, and your stock price will collapse; if you don’t want to be young, you have to stick to the rules; obviously capital will not allow you to cut off your wrist. Choose the former. Therefore, due to the impact of the epidemic, Heilan House has a high inventory backlog.
Speaking of men’s clothing, Jinba men’s clothing must not be bought much because it is more high-end business; while Heilan House. It is mid-range and casual, with a complete range of store styles. Compared with and , the price is not expensive. Heilan Home should be considered a popular brand among young and middle-aged people.
- However, if it goes down the line, it will inevitably compete with Heilan Home. Uniqlo competes. Among online brands, there are more and more small category brands taking the basic route of minimalist , which means that Heilan House has more and more competitors. It can only be said that when the times abandon you, you will not even say hello. The "middle-aged man" crisis of Hailan House still needs to be overcome.
3. Finally, what is the "difficulty" in a man's wardrobe?
We need to know that most men find it difficult to enjoy the process of shopping for clothes. They only find it a burden to repeatedly compare and choose clothes. And things like shoes and clothes, or in other words, men’s brand loyalty is not as strong as imagined.
- Furthermore, compared with the consumption habits of most women who buy a few pieces of clothing every month, men’s demand for clothing is negligible. Male consumers make consumption decisions very simply and directly in categories that they don’t care much about. And clothes are typical, many men don't spend too much time making decisions.
On the contrary are categories such as automobiles, electronics and watches. For example, there are a lot of online review contents for electronic products or cars, and many people will happily discuss these products with others under these contents even if they have no plans to purchase these products in the near future.
On the contrary, we can see that there are relatively few content and users who are very keen on talking about men’s clothing. It can be seen that when most male users decide which brand of clothes to buy, they only care about two points: one is that the style looks good; the other is cost-effectiveness.
There are not many men's clothes, especially those for working men. Do you see any big changes in suits, polo shirts, overalls, jeans, T-shirts and plaid shirts over the years? Therefore, when most male consumers buy clothes, they have a price scale in mind. How much does it cost for ordinary daily wear, and how much does something slightly better cost.
- That is to say, everyone uses this price to benchmark various brands, and then judge whether the clothes are worth the price through real experience. Once you identify these brands, you will identify them for a long time and form very strong consumption habits, which generally will not be changed easily.
At that time, brands such as Metersbonwe, Semir, and were able to rise with pure and Jeanswest . Sports brands such as Nike Adidas Anta Li Ning also sold well in casual clothes. Uniqlo was able to attract the favor of many people, all due to this factor. It has a lot to do with it.
When most men form a few fixed brands in their minds for buying clothes, when it comes time to buy clothes, they will just choose one at random. But when the concept of "this brand can no longer be purchased" is injected into their minds, they will naturally allocate the share of clothes purchased from this brand to other parallel brands.
- Therefore, when the sales of a men's clothing brand decline, there is often only one reason, and that is that consumers in the past feel that you are not worth buying. This is what Heilan House must think about and face.
Final words: Objectively speaking, the impact of the epidemic must be very large. In addition, the selection of the initial target group is actually destined to slow down the development of Hailan House.
In short, most men really don’t have that much need for clothing. Maybe buying it twice a year when the seasons change is considered a frequent change. There are many people who wear the same T-shirt for three or four years. Compared with the consumption habits of most women who buy a few pieces of clothing every month, men's demand for clothing is negligible. It can be seen that making men's clothing is not simple.
- Of course, Heilan House has indeed driven some consumption through good positioning and marketing, and has also achieved phased success. But fundamentally speaking, the consumption willingness of the target group has become difficult to be stimulated. How to continue to find their pain points may require continued efforts.
