In the first half of this year, domestic sportswear brands were obviously very good at "playing".
Recently, leading domestic sportswear companies such as Anta , Li Ning , 100 , 361 Degree and other released financial reports, with significant performance growth in the first half of the year, and revenue increased by more than 13% year-on-year. In contrast, international giants such as Nike and and Adidas have suffered a setback in China and their revenue has declined.
According to data from the National Bureau of Statistics, the total retail sales of consumer goods in the first half of this year was about 21 trillion yuan, a year-on-year decrease of 0.7%, among which the categories of clothing, shoes, hats, and needle textiles are areas with a relatively obvious decline. The retail sales of clothing, shoes, hats, and needles and textile products in units above the national limit fell by 6.5% year-on-year.
Under the trend of outdoor sports popularity and national trends, China's sportswear market is still booming. According to Magic Mirror Market Intelligence Data, compared with the men's and women's clothing industries, the sportswear industry performed better overall, with sales of Taobao platform of 14.082 billion yuan, a year-on-year increase of 6.8%, while both men's and women's clothing industries showed negative growth.
has experienced decades of development, and now Chinese sportswear brands have been able to challenge international brands such as Nike and Adi in the domestic market. However, due to the impact of the epidemic, domestic sportswear companies are facing a complex external environment, consumer wishes are changing, competition is becoming more and more intense, and inventory issues and growth issues are in front of us. The longer-term challenge lies in how to adhere to long-termism, return to the product itself, and meet the increasingly diverse consumer needs.
Anta and Li Ning competed for thirty years for
In 1989, Li Ning retired and established the Li Ning brand with the investment of Jianlibao Group of 15 million yuan. As a professional sports brand, Li Ning has been holding a golden spoon in his arms since his establishment and successively won sponsorships such as the 11th Asian Games torch delivery designated clothing, the Chinese national team Asian Games award-winning uniforms. In 1992, at the Barcelona Olympics, the Chinese delegation appeared on the sports field wearing Li Ning brand shoes and uniforms.
This means that Chinese brands have begun to enter the dressing world of Olympic delegations and end the monopoly of foreign brands. After becoming a sponsor of award-winning equipment for four consecutive Olympic Games, Li Ning became one of the representatives of national brands.
At the same time, Anta's logo was hung for the first time in front of a shoemaking workshop in Jinjiang, Fujian. At that time, Anta, led by its boss Ding Shizhong , began to produce sports shoes for multinational companies OEMs. These overseas orders completed the original accumulation for Anta, but Anta did not only accept overseas orders, but also began to open up the domestic market.
In 1999, Anta signed Chinese national table tennis team world champion Kong Linghui as spokesperson. In the same year, Li Ning invited supermodel Qu Ying as the spokesperson. In the past 30 years, Li Ning and Anta have fought many times, competing for the position of "No. 1". When
was first established, Li Ning, supported by the Olympic champion halo, had a first-mover advantage. Entering the 21st century, Li Ning established its brand positioning and ushered in a period of rapid development. In 2002, Li Ning's operating income was less than 1 billion yuan, and in 2008 it reached 6.69 billion yuan, with a growth rate basically remaining above 30% each year. At that time, even though international giants such as Nike and Adidas made large-scale attacks in China, Li Ning was still able to surpass Adidas in market share, second only to Nike, and ranked second in the country.
transformation occurred after 2008 Beijing Olympics . The sports shoes and clothing market changed, the overall market growth rate fell and fell into a sluggish. In 2010, Li Ning's turnover was close to 10 billion yuan, but in the second year, it entered a hovering period. According to a public report, the sportswear industry fell into an inventory crisis in 2011. Li Ning was also not spared, with revenue declined, inventory backlogs, and subsequent losses of billions.
independent shoe and clothing analyst Cheng Weixiong told China News Weekly that at that time, the core problem of Li Ning's performance recession was deviations in product positioning and other aspects. After gaining recognition from the post-70s and post-80s, how can young people born in the 1990s accept it?
The market decline in several years has given Anta the opportunity.In 2011, Anta's revenue basically tied with Li Ning. In 2012, Anta's revenue exceeded Li Ning for the first time, about 1 billion yuan higher. After seizing the opportunity, Anta took advantage of the situation to rise and continuously widen the market. By 2019, its annual revenue had exceeded Li Ning 20 billion.
In the first half of this year, Anta's revenue reached 25.965 billion yuan, while Li Ning's revenue was 12.4 billion yuan. The revenue gap between the two is actually widening. It is worth noting that in the first half of this year, Anta's revenue exceeded Nike and Adidas' revenue in Greater China, becoming the new "No. 1" in China's sportswear.
But Anta won, and Li Ning did not lose. In terms of profit, Li Ning's net profit reached 2.189 billion yuan, while Anta's was 3.588 billion yuan. Li Ning relies on the national trend to become the "top star" and his ability to make money seems to be better.
iMedia Consulting CEO Zhang Yi told China News Weekly that Li Ning's net profit margin reached about 20%, which is obviously higher than Anta. However, behind this is also the result of the different strategies of the two companies, one pursuing profits and the other pursuing scale.
It is too early to say who wins and loses, but what is pleasant is that the fierce competition between Anta and Li Ning for 30 years has directly promoted the rapid development of the entire domestic sports brand.
Walking on different paths
"Buy, buy, buy, buy" is Anta's tactics implemented to the end for many years. In 2009, in order to enhance its position in the market, Anta spent 332 million yuan to acquire the Italian brand FILA from Belle Group, which specializes in sports and casual clothing such as golf and tennis. After completing the acquisition, Anta directly competes with Nike and Adidas. In the year of the acquisition, FILA's revenue grew negatively. By the first half of 2022, FILA's revenue reached 10.777 billion yuan, becoming Anta's cash bull business, which contributed greatly to the overall revenue and gross profit margin.
Anta is targeting a series of mid-to-high-end sports brands in the acquisition: Anta acquired the British outdoor brand Desant in 2016, acquired the ski brand Koron in 2017, and in 2019, it will acquire the Amaphrod Group, which owns brands such as Archaeon Bird . Cheng Weixiong pointed out that Anta has actually built a business empire with Anta and Anta children as the cornerstone, targeting the sinking market layout, and gradually entering the mid-to-high-end market.
related research reports point out that Anta is currently positioned in the market with cost-effective mass products, and most of the products sold are basic products. Cheng Weixiong analyzed that in the face of such a basic base involving hundreds of millions of people in the sinking market, Anta is under great pressure after acquiring multiple sports brands. Therefore, while the scale is increased, gross profit will be affected.
According to the financial report, Anta's DTC business revenue accounted for as much as half of the first half of 2022, with e-commerce revenue accounting for 34.2%, and traditional wholesale and other business revenue at accounting for 16.1%. In the previous year, the figures were 35%, 34.1% and 30.95% respectively. Two years ago, Anta announced the promotion of DTC transformation, with the core lying on transforming dealer stores into direct stores. The financial report shows that as of the first half of 2022, Anta's main brand stores were 6,600, half of which were direct-operated brands.
"DTC requires enterprises to integrate from brand promotion, product research and development, channel development, store operation and reach users. Strictly speaking, this is an omni-channel retail company with many tentacles, so it will be relatively large in terms of investment. In addition, Anta implements a multi-brand strategy, and brands such as DiSant have not yet fully grown, so their revenue contribution is not large." Cheng Weixiong pointed out the reason why Anta's relatively low profit margin is.
In contrast, Li Ning has taken advantage of the dividends of the national trend and found the right feeling in the field of sportswear. It has been in full swing in the past two years. In 2018, Li Ning first landed in New York and Paris Fashion Week , attracting the attention of many young people in China in traditional Chinese elements inspired by Zen philosophy, Yin and Yang and Chinese landscape painting. In recent years, de-aging and pursuing fashion have become Li Ning's label.
"Now many dealers are keen to open stores in shopping malls and sell Chinese Li Ning series products. They make money as soon as they open them, and they can recover the costs back then. Other brands cannot achieve such money-making ability." An industry insider described Li Ning's popularity in this way.
Li Ning's revenue in the first half of this year reached 12.409 billion yuan, an increase of about 21% year-on-year, and profit reached 2.189 billion yuan. Among them, in terms of channel revenue, direct business accounts for 22.5%, franchised dealers account for 47.5%, e-commerce reached 28.5%, and in the same period last year, it was 24.7%, 45% and 29.1% respectively. Li Ning's share of e-commerce channel revenue has declined, which means that franchisees are still the main force in the construction of omni-channel.
"Li Ning also works as a channel, but franchisees have obviously made greater contributions. This is due to Li Ning's brand potential, so Li Ning's profit situation looks better. This requires that companies cannot relax their brand and design construction," Cheng Weixiong pointed out. Yi Fan, senior analyst of Magic Mirror Market Intelligence, told China News Weekly that Li Ning and Anta have different routes. Li Ning focuses on national trends and wants to break the situation where the fashion circle is monopolized by Europe and the United States through the strategy of "single brand, multiple categories, and multiple channels" and get out of Chinese characteristics; Anta actually pays more attention to high-performance sports equipment, adopting the "single focus, multiple brands, and globalization" strategy.
faces growth troubles
The inventory crisis in China's sportswear market in 2011 was behind the major companies' land grabbing and expanding vigorously, resulting in slow reactions from retail terminals and inability to make timely adjustments. The pressure of inventory sales often affects a company's profitability.
In the first half of this year, due to the impact of the epidemic, offline retail was unfavorable, and the average inventory turnover days of Anta and Li Ning both increased year-on-year. Anta, which has the highest average inventory turnover days, increased by 28 days from the same period last year to 145 days, with inventory amount exceeding 8.1 billion yuan, an increase of 7% year-on-year; Li Ning's average inventory turnover days increased by 2 to 55 days year-on-year, with inventory amount increasing by 11% year-on-year to nearly 2 billion yuan.
Zhang Yi believes that in the past two years, Anta and Li Ning have both taken a relatively good model, and short-term gross profit margin and net profit margin fluctuations are normal, and inventory issues are relatively unaffected. However, for enterprises, channel transformation, R&D investment, and product design need to be further improved, especially to build high-end products and achieve brand premiums in order to reach the world stage and truly compete with Nike, Adidas and others.
"Anta and Li Ning each have their own advantages and disadvantages, and they all have the possibility of going to the world. And now in public opinion, they have already shouted that they have gone to the world, but the Chinese market has not yet achieved steady progress. How to go to the world." Cheng Weixiong believes that the development of sportswear still needs to return to the product itself.
In fact, with the help of the national trend, many domestic sportswear brands have begun to frequently conquer the market share of Nike and Adidas. A survey data shows that in the past decade, Chinese consumers' attention to national trends has increased by 528%, far exceeding their attention to foreign brands. Yi Fan believes that "the rise of national trends provides some help to domestic clothing brands, but consumers are gradually becoming more ideal for national trends. In the end, they still have to return to the product itself when placing an order."
According to public data, the overall market size of sports shoes and clothing in my country in 2021 will reach 371.8 billion yuan, and is expected to reach 599 billion yuan in 2025. The booming trend of China's sports shoes and clothing market in recent years can also be reflected through the increase in revenue and profits of Anta and Li Ning.
At present, different groups of people have different trends in their demand for sportswear.Yi Fan said that for young consumers, their demand lies in style design and social value, which demonstrates their personalization. In addition to using their own products, the products also need to satisfy the desire for social sharing; for professional sports consumers, their demand for sports clothing is related to the depth of the sports scene. Product design must ensure that the body is always in a comfortable state during exercise and plays a certain protective role. Performance is the focus; for middle-aged people, the demand focuses on the material of the fabric, and comfort, skin-friendly and breathable are their main demands. Enterprises should clarify product positioning, target population and usage scenarios, and combine the needs of different groups of people, scenario needs, and sports characteristics to meet consumer needs.
Zhang Yi observed that Anta's user group is generally about ten years older than Li Ning's user group, so young people are relatively more likely to accept Li Ning. Anta has also gradually moved closer to the younger group in recent years.
Yifan concluded that in the sports market, it is necessary for brands to compete with Nike and Adidas. On the one hand, the brand needs to have relatively stable product quality, and on the other hand, the brand needs to constantly perceive domestic consumption trends and constantly be close to the aesthetic trends of young consumers. Whether it is Li Ning, Anta, or other sports brands, they can continue to try to cooperate with domestic new designers or well-known overseas designers to launch joint products. With the help of designers' artistic perception and product scarcity, they can continuously stimulate young consumers to place orders and create sports products that meet their personalized pursuits.
Author: Meng Qian
