Daphne Saves Itself All Over The Line: Can The "Mass Shoe King" Fall Back Into A Comeback?

Daphne, who was at its peak in 2012, may not have thought that the year would be a turning point in its own destiny, because after that year, the "Volkswagen shoe king" never recovered.

In April 15, 2019, Daphne surrendered its worst annual performance: according to the 2018 annual financial report, the turnover of the company was HK $4 billion 130 million, down 20.8% from the same period last year, gross profit was HK $2 billion 60 million, down 25.1% compared with the same period last year, and the operating loss was HK $790 million, which was larger than that of the previous year (the operating deficit was HK $688 million 800 thousand last year).

Now its market value is only HK $400 million, far from the market value of HK $17 billion over 7 years ago.

Its core brand stores continued to close, closing nearly 1000 in the past year alone.

The broken wrist is only one of Daphne's self rescue techniques. This fashion woman's shoes are still seeking a more multi-dimensional turn.

In April 25th, the head of Daphne International Secretariat told the economic observer that Daphne has been extending to the sports and leisure market in recent years. At the same time, in order to strengthen the business of e-commerce, Daphne has opened up a special product development channel for the electricity supplier since this year.

Daphne's physical stores are moving further from the streets and shopping malls to shopping centers.

Daphne realized a few years ago that the times have changed and consumers have changed.

But, in the eyes of the industry, the movement of this turn is slow.

"It is not that we do not know the crisis, but that we have not made timely adjustments.

In other words, due to temporary setbacks and failures, we lost the courage to adjust or panic, and slowed down.

Rigidity, inertia and the shielding of vision make the once brilliant enterprise lose the ability to innovate and change or pursue innovation.

Cui Lili, a professor at Shanghai University of Finance and Economics, told the Economic Observer newspaper that "there is no shortage of enterprise cases falling from the shrine in any era. The Kodak in the film era and NOKIA in the smartphone era are all the same, but this is a regrettable story."

Change of store strategy

Daphne, the popular shoe king, will probably continue to shrink its retail network next year, referring to the huge number of physical stores although the famous women's shoe brand has closed nearly 1000 offline stores in the past year.

"Daphne's offline retail channels will continue to move to shopping centers. Before that, we had a lot of presence in street stores and hypermarkets."

In April 24, 2019, the head of Daphne international securities office said to the economic observer.

The strategy was started in 2017, which is based on Daphne's judgement on the consumption habits and consumption behavior of Chinese women's shoes. The Chinese consumer preferences have undergone significant changes over the past few years. Compared with street stores and stores, people are now more willing to go to shopping malls.

Daphne's past 5 years of decline has shown that consumers in the lifestyle field are undergoing such a pformation.

In 2012, Daphne's revenues and profits climbed to its highest peak since its birth.

Based on the performance that is still in the growth channel, Daphne announced in the year: "in line with the long-term development strategy of the company, the Group continues to expand steadily and expand the sales network of China, and focuses on the establishment of the core brand Daphne and shoe store".

According to official data of the year, Daphne's core brand increased by 880 direct sales outlets, while its franchisees decreased by 13. The proportion of Direct stores increased from 81% in the previous year to 85% in that year.

Daphne said to the Economic Observer newspaper that the move is aimed at strengthening the company's control over the brand, which is a better choice for the company at that time when the market was performing well.

Cui Lili believes that the direct battalion for enterprises, funds, personnel, inventory control, but the cost is higher, this mode will not expose too many problems when the enterprise funds are abundant, the franchise mode can expand rapidly, especially in areas where enterprises are not familiar with, can throw stones and ask questions, the shortcoming is that funds, personnel and inventory are not controllable.

Historical results show that in 2013, Daphne's performance began to decline, but in fact, the number of stores continued to grow, and finally reached its peak in 2014. This year, Daphne's physical stores reached 6402 stores.

At the same time, the proportion of its direct stores is further expanding. By the end of 2018, the proportion of Daphne's Direct stores has reached over 90%.

Daphne's former head said that such heavy assets have brought heavier burdens to enterprises.

The rapid expansion of Daphne stores in the past 10 years is also the most ferocious 10 years of China's housing price rise. Meanwhile, the huge number of physical stores and production factories rely on human costs are also increasing rapidly.

Cui Lili believes that when the enterprise is in a better operating period, business expansion can have expected revenue. At this point, the profit and loss balance is not a problem, so it is more inclined to grasp the initiative and weaken the way of joining.

But we still need to pay attention to the proportion of direct battalions.

"In fact, in 2012, China's electricity supplier" double 11 "has gone through 3 years.

Judging from the trend, the electricity supplier is definitely an important development direction. The proportion of direct outlets under the line is so high that the risk must be relatively large.

Cui Lili said.

Electricity supplier rescue plan

Daphne is implementing a new e-commerce rescue plan.

In April 24th, the head of Daphne international securities affairs revealed to the Economic Observer newspaper that at present, Daphne's e-commerce team is now working on joint R & D design department to design and develop products specifically aimed at online products.

"This plan is planned for the second half of 2018 and implemented in 2019."

These people said, "consumer groups are different. Online consumers are generally younger than offline consumers."

In 2018, Daphne's "other brand business" turnover decreased by about 20.6% to HK $580 million, accounting for 14% of its total revenue.

Daphne securities affairs head said that Daphne over the past few years, the proportion of electricity business accounted for total revenue between 5 and 10%.

Cui Lili believes that Daphne's online revenue share is relatively small, a consumer brand with sustainable development space, the proportion of electricity supplier channels and offline channels should not be so wide.

However, for the shoe companies that rely on the store business, the steering line is not a challenge.

As early as 2010, Daphne had already entered Tmall, and then worked with dozens of online sales platforms such as Jingdong, Holle, vip.com and so on.

But since then, Daphne has smashed 30 million yuan to choose investment to set up in 2009, "Yao point 100". For this reason, Daphne has even closed Jingdong, Le Tao and Haoyue buy, and other advantages of e-commerce distribution channels, unfortunately, in May 2010 entered the trial operation "100 points", two years later, due to the chain breaking operation.

The failure of "Yao point 100" has brought a major blow to Daphne's e-commerce business.

It was not until 2013 that Daphne began to attach importance to the development of the electricity supplier in its annual report.

However, at this time, the competition of shoe brand e-commerce has entered a more intense period.

Cui Lili believes that in the process of turning traditional fashion consumer brands to online channels, there will be difficulties in pformation, which will be reflected in many aspects such as cognition, strategy and talent.

The new business channels and business logic do not understand, and the importance of the new business form can not be improved to a certain extent. In the past, many traditional people thought that the electricity supplier was selling the goods from the offline outlets to the online sale. In fact, there was a significant difference in the location of the products sold by different channels. The communication techniques and sales promotion methods will be adjusted accordingly. Furthermore, the high-level managers do not understand the business logic of the electricity supplier, and it is impossible to produce a reliable strategy. In addition, under the temptation of the profits of the existing mainstream market, most enterprises are not at risk, and the new business will certainly not receive enough attention and input. "First of all, we do not understand the electricity supplier. The brand of traditional industry management and operation is too deep.

Cui Lili said.

Inefficient market strategy

As Daphne realized very early, China's consumer and market environment has been changing.

After 2013, the market of sports shoes and clothing has entered a period of recovery. The fusion of functional and fashionable brands quickly recognized the market, and promoted its share in total footwear consumption. At the same time, the consumption scale of traditional footwear (including fashion men's shoes and women's shoes) has declined.

Although it has been criticized by the market in recent years, it has failed to accurately grasp the consumer psychology of customers, but Daphne has been looking forward to doing something in this regard.

A significant change is that you can see sports shoes in shops that only used fashionable women's shoes in the past.

The head of Daphne's Securities Division told the Economic Observer newspaper that the fashion bias in the Chinese market has changed over the past few years: the younger generation is more and more keen on comfortable and casual sports and leisure styles compared with the previously popular ladies.

In this annual report, Daphne also said that the company is committed to strengthening product research and development, focusing on fashionable and comfortable sports shoes, and will expand its product range to meet different needs of customers, adapting to the changing consumer preferences and consumption patterns.

But Daphne still failed to reap the word of mouth.

In 2018, according to the ratio of withdrawal from shops, the contraction ratios of first tier, second tier, three line and four to six line cities were 30.2%, 30.9%, 23.5% and 24% respectively.

This set of figures shows that the decline of Daphne brand comes from the poor performance of all business markets, of which the second tier cities will be even more serious.

Zhang Zhiqiao, a senior executive of Daphne company, said in an interview with the media: "Daphne can not become a fashion brand completely. Its historical brand value is still a cost-effective public shoe, and the market can not completely overturn it."

Cui Lili believes that in the seven years when Daphne's performance and brand fall together, what can be seen is its lost.

In other words, in the fierce new environment, Daphne offered a passive and chaotic market strategy.

Brand positioning, product design, sales policy and channel strategy are all attributed to market strategy.

In the new business format, we say that the new retail will take into account all the contacts from customers, including shop decoration, brand IP, communication, service flow and so on.

Of course, if there is no way of thinking in the digital economy age, we will receive lessons from the market if we continue our old ways.

Cui Lili said.

In other words, behind all market strategy failures, it is, after all, a lack of understanding of consumers.