Why Does BELLE Shoe Company Continue To Close?

China's largest home

International must continue to close.

Belle International Holdings Ltd (01880.HK) recently released the company's 2016/2017 fiscal year second quarter earnings report, this year 6-8 months, the group in the mainland net reduced 276 Stores - that is to say, an average of 3 stores per day.

BELLE group has two main businesses, one is footwear business, the other is sports.

Business.

During the second quarter, the same store sales of the footwear industry in the mainland dropped by 10%.

Although the decline narrowed significantly compared with the previous two quarters, it was still 7.7% higher than that of the same period last year, which is the eleventh consecutive quarterly decline since the fourth quarter of fiscal year 2013/14, while the sales of sports and clothing stores maintained a steady growth of 6%.

This trend of "ice and fire" has been going on for quite a long time.

BELLE 2015/2016 report shows that sales of footwear business decreased by 8.5% to 21 billion 74 million yuan compared with last year, sales of sports and clothing business increased 16.2% to 19 billion 716 million yuan, and footwear business income accounted for 51.7% of total business revenue, compared with 57.6% in the previous financial year, the proportion dropped again.

Footwear business has been falling year after year, which ended last year in China's shoe market for 7 years.

From 2006 to 2014, BELLE international ranked first in the Chinese footwear market, but was surpassed by Nike in 2015.

The market share of BELLE and Nike was 7.2% and 5.3% in 2014 respectively, compared with 6.3% and 6.5% last year.

BELLE has had unlimited scenery.

In addition to its flagship brand BELLE (Belle), Staccato, the largest shoe retailer in China, has its own brands such as Staccato (Staccato), real Joy&Peace, Tata (Teenmix), Teenmix (Teenmix), Senda (Senda), and best picture (Basto). It also represents the sale of international brands such as Bata and Clarks in China.

From a small factory set up to invest HK $2 million in 1992, BELLE has gradually developed into a listed company with a market value of more than HK $100 billion.

From 2010 to 2012, BELLE had a net increase of 1500 to 2000 stores a year.

In the craziest 2011, a new store will open in less than two days.

The huge scale of stores has made BELLE International's "status".

When consumers enter a department store, they may see that more than half of the shoe counters are BELLE's brands. They choose BELLE shoes.

At that time, BELLE won the control over the retail terminal by multi brand matrix.

BELLE shoes are hard to sell, which reflects the collective dilemma of brands that rely heavily on department stores.

With the change of consumption habits, the attraction and traffic of department stores began to decline, the channel of e-commerce began to rise, and the core strengths of BELLE were fundamentally disintegrated. There was no way to replicate the "horse racing enclosure" under the online business.

Even this past advantage began to become a burden of pformation.

The impact of the electricity supplier is also reflected in the fact that the price information is more pparent and the price is more convenient, so the consumers nowadays become more smart in buying shoes.

The cost performance of BELLE shoes does not satisfy consumers.

"BELLE's shoe design is not new, but the price is not cheap."

When asked why there was no intention to buy, consumers in many tier cities mentioned the most direct reason to the interface journalist.

Especially for young consumers, BELLE is far inferior to some fast fashion brands in terms of price performance, personalization and catching up trend.

Since 2014, the pace of BELLE's expansion has stagnated.

In 2014 6-8, the number of stores in BELLE's mainland decreased by 56.

This is the first time that BELLE has seen a negative growth in the number of shops, closing a store on an average of less than two days.

In addition, due to the increase of labor costs and other factors, a large number of mainland subcontractors shrink, a considerable portion of which began to pform and develop their own brands.

There are quite a number of such OEM enterprises in Houjie, Dongguan. Their independent brands are now sold through Taobao, Jingdong and other platforms, and there will undoubtedly be part of the buying group.

BELLE international CEO Sheng Bai Jiao said a few months ago that the group considered the possibility of pformation from the traditional department store's sales mode in the future, but he stressed that the direction of pformation has not yet been determined.

Despite the downside of its own brand competition, BELLE is able to benefit from Nike's development in the Chinese market, BELLE is its largest distributor in China.

At the same time, BELLE is also the main agent of Adidas, Puma, Cat and other sports and outdoor products brands in the Chinese market.

The sustained growth of China's sports industry provides opportunities for BELLE to make profits in this field.

However, in the long run, if the current agency mode is maintained, sports and clothing business will hardly continue to become a new profit growth point for BELLE.

Because the agency brand is less gross than the proprietary brand, plus the two major trump cards of BELLE agents, Nike and Adidas are more and more dealers in China. It is unwise for BELLE to rely on the performance of the agent brand to seek the growth of the overall performance.

BELLE is also aware of this problem. In the development of sports and apparel business, the layout of brand agents and distribution agents has been strengthened.

In March of this year, BELLE announced the acquisition of a 29% stake in Fashion Box SpA, the parent company of the denim brand Replay, Italy. The two sides will establish a joint venture to promote the development of Replay brand in the Greater China market.

In August 2013, BELLE had acquired Barok, a Japanese clothing retailer.

But in the electricity supplier, BELLE's action is very hesitant.

Sheng Bai pepper once said that for the electricity business has been "do not want to understand."

This confusion is also reflected in its action in the channel of e-commerce.

BELLE has its own excellent shopping mall founded in 2011 and has business on other e-commerce platforms.

But BELLE has been wavering about whether to make brand or to make channels, how to balance the conflict between online and offline, and whether the electricity supplier should use only the platform for handling seasonal style inventory.

At present, the sales of BELLE's e-commerce business is not large, the proportion is less than 4%, and the overall sales are limited.

But BELLE said it would invest more resources in this area.