Q&A│How to do clothing sales? Is there any masterstroke to sell quickly?

By Christine Tsui

Translated by Rachel Wang

 

A question goes on the Zhihu.com:

“I am at my 20s. I run a clothing shop for both adults and kids. But the location is much out of way and the business suffers a lot, which I have known a little before I open this store.

It is only 120 meters between my store and the most crowded street of our town. But what’s the point is that few people know my store, so, even on low prices, customers are rare. For instance, the cloth, sold by others for 185RMB, is only for 130RMB in my shop. What’s the worse, my store is the only one in the street, where there is a kindergarten passed by so many parents, and a branch of the State Grid collecting fees of electricity for the whole town every month. However, they are nothing to do with my business!

What’s wrong on earth with my business? How can I deal with it?”

 

The questioner does not mention the profitability, which I suppose would be unsatisfactory enough. Besides, I do not know how long the shop has been opened, so I can only put up the following suggestions:

1.  The flow of customers is the life of the offline stores. The essence of your dilemma is the lack of customers, so the major task for you is to increase the flow.

2. There are two ways to attract more customers. The first is to depend on the natural customer flow, which is exactly the shortage of your store, so the only way is the other one, to deliberately drawing the crowds, in other words, to promote both online and offline. The specific approaches are the followings:

  • The first offline promotion approach is the traditional ones (it may work in our town), for instance, leaflet distribution, billboard hoardings in the places with heavy traffic, and the obvious signs etc.
  • The second offline promotion approach is the joint promotion along with other stores that share the same target customers but with no competing relationships between your stores. For example, you should know which restaurants or amusement places the person buying clothes in your stores would like to go. And you should organize joint promotions with them. They would introduce their customers to you, and in turn you would also introduce yours to them. In addition, you can set the push money in advance.
  • The online marketing can run through social media, like WeChat Microblogs, or establish the online communities, which can maintain all the customers within a community. You can reward the regular customers who recommend your stores to the new ones with a certain percentage of push money to attract more people to your store.

3. Without the flow of customers, it would be in vain whatever sales skill you would like to use, so the customer flow should have the privilege to be solved.

4. The less customers are, the higher the unit price should be set in your store. In the contrary, you sold in lower price than other stores did, which could only lead to a dismal sales performance. It should be a simple formula that Sales Volume = Sales Numbers* Unit Price. So, your sales performance would go down when you not only set the low unit prices, but also suffer from the stagnant customers flows. You cannot compete with the fast fashion brands with prices, for they hold a large sales volume. For you, you should raise the unit volume when you are not able to boost the number of units overnight, which means to ensure the quality and design equal to the high unit prices. Meanwhile, you can also manage to improve the per customer transaction. In other words, you can encourage each customer to buy more than one piece.

5. When it comes to the products, they should be qualified with the demands of your customers. The essence of retail is to sell the suitable items to the right people in the right sites. You should learn about the demands of your customers and try to supply exactly what they want.

6. In a word, the core of your business is not to find certain master strokes, but to improve the customer flow, and then the quality of your goods.

7. By the way, if you have run the store for over one year and have tried all the methods above but still cannot gain any payoff, my only suggestion would be giving up the business. You should conclude from the experience and try to find another location to restart your business. If the real estate of the previous shop is owned by yourself, you can lend it out. As we all know, starting your own business is the kind of process of repeated trial and failure, and at last you may find the right direction.

Views│What is the Future of Luxury Brands?

By Christine Tsui

Translated by Rachel Wang

 

In this essay, I would discuss the future of luxury brands, for the first-half-year financial reports of most luxury brands, including both the top ones, like Chanel, and the entry luxury brands, like Michael Kors, indicate the downturn of the whole industries, though the brands, having changed the development patterns, of Gucci and LV still performed well. Nowadays, with the unsatisfactory performance, where should the luxury brands go?

In my view, what makes the luxury brands luxurious lies in the following factors:

1. The scarcity of materials.

In the selection of materials, luxuries would use rarer materials than common ones: crocodile skin as different brands use, the luxury brands would only choose the Himalayan crocodiles; fibers as they use, the top brands would only accept a certain type from unique animals from Latin America. So, the scarcity is a key feature for luxuries.

However, along with the technology developments, the scarcity advantage has been diminished now.

2. Unique communications with the public.

To maintain a kind of mystery, luxury would like to stand high above the customers, which has been a common style for these brands. Nevertheless, that is exactly what the generation of 90s hold repulsion on.

Meanwhile, the designs of the brands, to reserve the classic elements of brands’ traditions, fail to cater for the young customers in the market.

It has been noticed that the terms of “grace and elegance”, worshiped by Gucci before, are fading out. On the contrary, the fresh designer’s affiliation to Gucci introduces the new sports elements, with animated colors and street-fashion styles, into the traditional brand. Though there still are signs of grace and elegant elements in the looks, the trend has been reversed.

In addition, the silhouettes of clothing are changes obviously. In the Tom Ford period, Gucci was featured with fit clippings to outline the curve of women. But now it turns to the oversize style, utterly different from the designs before.

Not only Gucci draws close to a younger customer group, but LV also cooperates with Supreme, a French street-fashion brand, aiming to attracting more attention from young people.

The current young people have no interest in high-fashion or aloof designs, which leads the designs and marketing methods of LV and Gucci rejuvenate a lot. The brands refusing this trend, Chanel for example, receive gloomy results, only to prove their insistence a mistake.

In conclusion, how can the luxury brands find the way out? In my points of view, the luxury brands should be more amiable to customers, which is not only a direction to pursue, but also a challenge to overcome. Only in this way, the luxury brands can re-gain a firm foothold in the increasingly young market.

Views│A New Twist on Retail——Mini Apps on WeChat

By Christine Tsui

Translated by Rachel Wang

 

In the overwhelming tide of social media, Mini Programs, the download-free apps in WeChat, are booming, which draws much attention. And in the fashion retail area, we are also obliged to be aware of the trend, or we would be lagging behind the speedy development.

In this essay, I would share some Mini Apps, which is much more handy than other applications, neither requiring download nor the cell phone memory.

We can see GAP’s mini app in the following picture. Having integrated all kinds of retail functions, GAP mini app can serve the customers with all links a retail process.

图片 1

This mini app combines the online and offline retail, allowing customers scanning code in the store to find the cloth they want.

Usually, we would like to consult the clerks for the right sizes and colors, which can be skipped in GAP’s stores. Scanning the codes, to get the information of products, offers the customer an extraordinary shopping experience by integrating the online service with the offline stores. What’s more, you can learn about the products information even when you are not in the stores, as long as you know the product number. In other words, GAP’s stocks are accessible to the customers.

Other than the stock information, customers can also find “the store location, sales information, membership privileges and order tracking” in the mini program. What the customers only need to do is to move their fingers in WeChat, without the steps to login in Taobao.com or any other stuff.

For Chinese people, WeChat has been a part of life, on which the mini programs are launched. So the handy programs, not even taking memory, have large advantages on other applications.

So I believe WeChat’s mini apps would replace some elements in stores, for instance, clerks.

Many store clerks actually hold little information of the stock information. Being asked, they still need turn to the computer for stock information of certain product, to the tags for the fabrics type. So in this term the mini program will supply with better shopping experience. GAP is a pioneer in this field, with the most completed mini app.

Vogue’s mini program is also a good example with magazine-standard visual effect. In any album users can click the purchase signs to directly enter the purchasing interface. The whole process would be concise and convenient.

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If you go shopping on other e-commerce platform, you need to login in accounts of Taobao or JDcom. Besides the searching part, after you find the product you want, you have to add them to the shopping bag and register your address. Approximately, you need 4-5 steps to finish the whole purchasing.

In WeChat, shopping can be different. You can be online for 24/7, and do not need to type ID and codes. Two pats on the screen can finish a shopping process in the WeChat. After that, the app will report the order condition and send the messages to the customers.

In a word, convenience can be the biggest advantage of Mini Program, not only in the terms of information supply, but also the customer service, which is far-fetched for other e-commerce forms. So for the question that what can be the new twist on retail business, GAP and Vogue may have given the inspiring answer.

Belle: the Fate from Peak to Valley

By Wu Rong

Translated by Rachel Wang

From http://www.cb.com.cn

On July 27th, 2017, the statements on the Belle official website issued that the privatization proposals took effect and the company launched the delisting mechanism, marking the end of the shoes empire of Belle. After the privatization, Hillhouse Capital Group is going to be the largest shareholder of Belle Group with 57.6% of shares; Deng Yao, the president of the board as well as the founder of Belle, and Sheng Baijiao, CEO, will not engage the privatization, but close out all the shares, which may lead them to cash tens of billions dollars out.

In the view of market value, it may be the largest privatization, with 53.135 billion Hong Kong dollars volume, ever in the Hong Kong stocks market. Dating back to 2013, Belle’s market value overpassed 150 billion Hong Kong dollars with nearly 20 thousands stores, ranking first in Chinese footwear industry.

Delisting and the shrinking of the market value is the reflection of the weakened sales. Since the 2015 fiscal year, Belle has fallen in business. Net profit dropped to 2.934 billion RMB, with a drop of 38.4% in 2015, and in 2016, the retained profit went on worse, declining 38.4% of 2.403 billion dollars. In this year, Belle closed 700 stores, 2 stores a day on average in contrast with the previous opening one stores in two days.

Sheng Baijiao had expressed for many times that the major obstacle for Belle to transform the business mechanism is the limited position in market and the shortage of human resources. But how Belle thrived in the early period? How did Belle transform from a manufacturer to a brand controlling the whole industry chain, and even established an empire of shoes? Why the business pattern does not work now? What is the future path for Belle after the privatization? The answer may be in the following text.

Beginning

Extending in the window period of the high-speed industry

Deng Yao’s business acumen is the key to the Belle’s business success. From 1974 to 1976, he has been a minor celebrity in Hong Kong shoemaking industry. In 1979, Chinese in the initial stage of reform and opening-up, Deng established a brand in Hong Kong with the name of Belle, meaning “the beauties” in French. After the investigation in the mainland market, he developed the business mode of “Design in Hong Kong—Made in Mainland China—Sales in Hong Kong”, cooperating with the inland factories. Utilizing the cheap labor costs in mainland China, Deng Yao made Belle take ten times profits than the usual.

Then, Deng Yao realized that that model had been too sluggish to capture the capricious trends in Hong Kong, in that he built factories in Shenzhen in 1978, shortening the product development period from 6 months to 3 month.

Following the development of the market in mainland, Deng views the huge potential in the domestic market. In 1991, he registered the Belle Co. Limited in Shenzhen, aiming at the mainland market. At that time, it was a seller’s market, and the products, however the designs were made, were easily to be sold. Meanwhile, the Hong Kong pop-stars was in vogue in 1990s, as the K-pop stars today, so the mainland customer would rush to purchase whatever shoes as long as it was in trend in Hong Kong. Belle was a win-win outcome of the complementation of Hong Kong and mainland resources at that time.

Channel

Belle Investment Company for channel controlling

Counterfeit products were booming in the mainland market for Belle’s exquisitely design. In 1994, to protect the brand, Deng Yao made up his mind to develop exclusive shops, and expand the sales network in franchise mode, crush the market of the fake Belle shoes.

In 1995, as the manufacturer, Belle sought to get rid of the control of purchasers, establishing the direct-sale chain sales model, integrating the manufactures, supplies and sales as a retail network. In 1997, Belle signed the deal with 16 exclusive distributors, who sold Belle product respectively in their regions. In 1998, to make full efforts in the mainland market, Deng curbed the business in Hong Kong, when the number of exclusive stores had surged to 600, with 16 thousand thousands staffs in mainland China.

The exclusive distributors rapidly integrated the resources and extended the market shares. However, the conflict was acute as well that distributor would threaten the brand when having a dominant, which was also a huge issue for Belle.

To solve this, Belle Investment Company was established in 2002 by the families of Deng Yao and Sheng Baijiao and all the Belle’s distributors, to be the only agency to sell Belle’s products. In this way, the top management team of Belle regained the control of distribution. In 2004, Belle Group acquired all the assets of Belle Investment Company, marking the accomplishment of the integrated configuration of the entire industry chain. Seizing the initiative in the market, until the moment when retail restraints were utterly abolished in mainland, Belle had controlled 1681 stores in China.

In terms of inner management, Deng Yao gradually empowered to the professional managers. Besides, compared with the domestic sports brands advertised on TV or sports competitions, Belle resorted to retail-oriented sales mode, motivating the production by the exquisite market information.

Channel resources

The first movement advantage in the sales channel

 The abundant and far-sighted channel resources are considered to be the key to Belle’s success. In the late 1990s and the early 2000s, department stores sprang out in the mainland China and Belle was the pioneer to occupy the department retail channels.

Once serving for Belle, independent fashion commenter Christine Tsui analyzes that Belle’s status in the market could not achieve overnight, but gradually from the multi-brand strategy and the reputation among customers.

Nevertheless, following the development of the society, the sales channels verified a lot, causing the decay of department store business. The plunging customer flows impacted all the brands, including Belle, that rely on the department stores heavily.

Observation

Forced to abandon the mass market

The traditional female shoes brands like Belle always tried to attract all the females in their 20s to 40s. However, in the area of pursuing individuation, the market has been broken up on account of the customers’ increasing individuation.

Meanwhile, the competition in the footwear industry was growingly severe. Until 2012, there has been over 7200 brands in China, including many international brands, entry lux brands and fast fashion brands.

What’s the worse, the product circles, from designs to products, in Belle were 3-6 months, but in ZARA and H&M only two weeks. Except the fast fashions, the e-commerce brands were indeed the real rivals, who could realize a popular item from street snaps to a best seller only in 2-3 days, surpassing Belle obviously in supply chains, updates and design styles.

Confronted with the plights, Belle was certainly aware of urgent reform, whereas the cumbersome structure made it harder than expectations. In the dilemma, the first measure was to close stores.

Besides, Belle turned to online stores. Since 2009, Belle has set up a website for its online sale, which experienced severe personnel changes with various management methods, leading to the destructive internal frictions in the company. As a result, Belle failed to enter the Tmall.com and JD.com in the 2013-2016 periods, when the two e-commerce giants extended their business rapidly.

The failure of Belle’s online business, according to Li Chengdong, lies largely in the price strategies. Relying on the offline business, Belle had to protect it through ensuring that the prices online won’t go higher than offline. So the unsatisfactory performance online would made Belle cut the budgets on e-commerce. In consequence, the transformation towards online field failed for the protection of stores.

Ending up with the privatization, Belle may choose the right path, expressed by CEO Sheng Baijiao. “A listed company has to publish the operational data each season, forcing the management group to chasing the short-term profit goals, but after the privatization, Belle will have more possibilities to transform.”

Christine Tsui views the privatization is Belle’s initiative selection. Holding the optimism towards Belle, she says “Many media omitted the fact that the present two biggest shareholders had hold Belle’s share for a long time, which means the two funds still hold an optimistic expectation on Belle.”

Now Belle is in a predicament. If there any chance to get back to the top? Christine Tsui regards it lies in the variation of products and design concept. Aesthetic has changed a lot since 10 years ago, which Belle was failed to adjust to. To be specific, the customers brought Belle shoes ten years ago was in their 20s, but now they have stepped in their middle age. So Belle has to decide whether to get mature with the previous customers or to develop new young customers with updating fashion sense. Belle’s dilemma is not only losing the old customers but also failing to cater for the young. In additional, Belle also needs to organize a younger-in-average team and conceive to the age of internet and intelligence instead of the previous time.

Is Chanel out of fashion?

By Wu Rong

From http://www.cb.com.cn

Translator:Rachel Wang

Chanel didn’t perform up to expectations in the last fiscal year. According to Le Monde newspaper, the annual financial report by Deloitte shows that in 2016 Chanel’s sales volume declined 9% to 5.67 billion dollars, with the retained profits tumb ling 35% to 874 million dollars than the last year, which means Chanel had decreased in both sales and profits for two consecutive years.

Chanel owes the declining performance to the bearish tourism market and sluggish shopping desire thanks to the frequent terrorist attacks in France. However, many industry analyses indicate that Chanel is confronted with many challenges: its products innovation, to some extent, ignores the changing propensity of the young consumers, and the brand is still wary of the digital marketing especially the e-commerce; besides, Chanel still should improve in bringing new customers flow and premium ability. In other words, the major issue for an seemingly aging Chanel is to re-attract the customers to rebound the sales. 

Less innovation? 

According to the public information, the Chanel Group is almost privately owned by the Wertheimer brothers, not yet going public. In this condition, as independent fashion commentator Christine Tsui says, the exact business data is hardly possibly from the official sources, but the dropping is more likely to be true, for many consulting companies, the Deloitte this time, would estimate the core data of Chanel through all kinds of investigations and surveys.

Actually, Chanel has been facing the adverse conditions since 2015. In the reports by Deloitte, Chanel’s sales volume declined 17% to 6.24 billion dollars in 2015, with the retained profits tumbling 23% to 1.6 billion dollars. Even for the cosmetics and perfume business, contributing to the major profit of Chanel, the fell 21% in sales volume than last year with the scale of 2.91billion dollars.

In 2015, the terrorist attacks in Europe cast a shadow over the whole business of the European top luxury brands. However, according to the chief analyst of Yanling Consulting Company, the other top brands all achieved respectable growth in the latest quarter from the perspective of the industry —not to regard the elements of politics and economy—for instance 9% profit increase of Hermes, 13% of Burberry and 15% of LVMH, which indicates the Chanel’s own reasons for the sales decline.

Yang Dajun, the CEO of UTABrand, told the reporter: “In the ready-to-wear business, Chanel still depends on the Classic tweed jacket with tiny variants on the basic looks in each season, instead of remarkable innovations. In the accessories, Chanel made great efforts to popularize the J12 series wrist watch, but it is similar to the former styles. In the handbag line, Chanel launches the Gabrielle handbags,and in the female shoes business,the latest best sellers have been launched for a while; in the perfume field, the newly launched perfume is less popular than the classic No.5.

As Christine Tsui views that many luxury brands still stand high above the customers, including Chanel. It may come from their market positioning and the conservative style of the manage group, so the brands may be inertia to try the new things. The biggest challenge for them is the ignoring of changing propensities of the young consumers. Compared with that, the LVMH Group is a good example. The young customers embraced the jointly-designed product well from LV and Supreme.

In Christine Tsui’s view, the trends of fashion nowadays are the fashionable sports style and the sporty fashion design, which explain the popularization of Vêtements, a French street fashion, and the remarkable sale volumes of the early-started fashionable products lines of Adidas. It is a common challenge for all the old brands to both keep the classics and new tides.

However, according to Lin Yue, it is not the core problem for Chanel’s failure to fit the new design to the current trends. The partially innovation is acceptable for the features and the design of products, which is the same to the Rolex watch, no obvious variant but only tiny changes for decades, but still with stable shipment and reputation. Zhou Ting adds that, in the top brands, Chanel balances the brand image and extension quite well, ranking only second to Hermes, with the innovative strategies as well as enough inheritance of tradition.

Prudent pace in e-commerce

Chanel still exerts itself in big showcases. In China, Chanel held an exhibition for J12, inviting flocks of stars and supermodels to present, and recently, a Gabrielle Chanel Perfume exhibition in Sanlitun in Beijing.

But the average customers increasingly do not accept the big-shows-marketing. Christine Tsui holds that the customers nowadays are fond of the populist, easy-going, and self-optional communication, which incubates the online celebrities and KOLs, who may be more influential than superstars in some fields, customer transformation for example. So the extravagant shows are too remote and not animating at all for most customers.

However, now Chanel is still too prudent in the digitalization, e-commerce especially, as the interview of Bruno Pavlovsky, the president of the clothing department, indicates this conservation. Just as Chanel was not engaged in the last Chinese Valentine’s Day marketing, when Dior, LV and Valentino actively collaborated with the eminent Chinese fashion bloggers, such as Gogoboi and Rebecca etc.

Actually, Chanel is progressive strategies in the digitalization. For instance, Chanel issued the measures of building an overall e-commerce system much earlier than LV and other luxurious brands. So though Chanel is not radical in e-commerce, they will not halt the digital business online.

In the contrast with the conservative actions online, Chanel is more resolute offline to open up new stores. A 600 square meters new store in Paris and other two stores in Soul and Tokyo will open in 2018. But the real issues are marketing and distribution channels. Even in this situation, the brand still opens new physical stores but hesitates to the e-Business, which mostly comes from the senior management groups and brand cultures.

The concentration in the offline stores cannot achieve much in the e-commerce time, whereas the biggest competitor LVMH rushes in the market, whose 24 Sevres has forged a complete circle involving marketing, social media, online and offline services. Christine Tsui reckons the lagging thoughts that e-commerce weakens Chanel’s decency is the major trap. However, to open up new stores may work. In the future, retail will integrate online and offline channels, so the proactive and High-tech stores will be necessary as well.

With about 200 stores in the world, of which over 10 are in China, Chanel should not only vest the retail tasks to the store, but also the business of brand culture popularization and customer care. What’s more, Chanel also need to put more efforts on the new customer flow, for instance, holding the customer activities and the premium experience like the showcases of new products and the fashion classes for the individual customers.

In the Chinese market, “Chanel has got ready to accelerate the pace in China. Many of our customers travel around the world, but they are still willing to have access to Chanel at home, so the price may be the major barrier.” the Chief executive Bruno Pavlovsky said in the public interview last year. Dating back to 2015, Chanel has resort to the uniform price in the global market, marking down the price of three handbag types of 20% and up in the Europe to ensure the price gap under the 5%.

In Lin Yue’s opinion, after the shock of the tough supervision of the three public consumptions and corruptions, Chinese market has emerged many obstacles for the brand premium for Chanel. Furthermore, with the fake products abounding the market, Chanel’s expanding physical stores and unifying the price settings worldwide, which would damage the brand’s additional value and the scarcity to a certain extent.