Heilan House’s business model helped it quickly open up the market. However, the market is limited. Heilan Home is not a convenience store and cannot expand indefinitely. The number of stores reaching 6,000 is already the peak of its stage. After there is no need to expand, this business model is no longer of much use, and the core that Heilan House is most proud of has become worthless.
Big consumption, a high-frequency hot word in recent years.
However, investors seem to only understand big consumption by eating and drinking. Kweichow Moutai, which has repeatedly hit new highs, and Haitian Flavor Industry, whose market value is close to PetroChina, all reflect investors’ understanding of big consumption. “Eat and drink” preferences. However, other large consumption sub-sectors are obviously “unpopular”, especially the “clothing” in food, clothing, housing and transportation, which is like an “orphan” that no one wants, receiving a cold look in the market.
According to data, since this year, the food and beverage sector as a whole has risen by a maximum of 68%, while the textile and clothing sector has risen by a maximum of only 15%. The difference between the growth rates of the two sectors is 53%. Investment This shows the degree of “eccentricity” between the two plates.
The overall trend of the textile and clothing sector is not good, and the performance of the leader in the sector, such as “men’s wardrobe”-Heilan House, is even more impressive disappointment. The once popular clothing brand with a market value of over 80 billion has now fallen from the altar. The current stock price of Heilan House is only 6.24 yuan, and its market value is only 26.95 billion, less than one-third of its peak. Following the decline in stock prices is performance. According to the latest data, Heilan House’s performance in the first half of 2020 has declined sharply, with revenue falling 24.43% year-on-year and net profit falling 55.42% year-on-year.
The textile and apparel leader that once “swept” the country with more than 6,000 stores has now seen both its stock price and performance plummet. Is the “man’s wardrobe” really going out of style?
Rely on the “magical” business model to break out of the siege
For For the vast majority of textile and apparel companies, the way to win is either through excellent quality, fashionable design, or extraordinary marketing methods. Only Heilan House relies on a set of “magic” “The business model stands out.
Heilan House has an original “asset-light” business model. In terms of the online supply chain, it does not have a factory, but relies on OEMs. All clothing designs are Provided by the supplier’s designers. The headquarters will evaluate styles based on current popular trends before placing orders, and it has a “returnable joint venture” relationship with suppliers. This gives Heilan Home an absolute advantage. You don’t have to worry about not selling the goods. You only need to build and promote the brand, which saves a lot of effort.
As for offline, Heilan Home’s franchisees do not participate in store management. Their product placement, store management, All work including business methods are standardized and managed by Heilan House, and even store locations are determined by it. Franchisees are more like investors. This method also allows Heilan House to quickly raise a large amount of funds. And use this to quickly open up the third and fourth tier markets.
Heilan House relies on its novel business model, standardized and process-based management methods, coupled with asset-light and the ability to quickly raise funds.” “Magical” business model breaks through the siege.
In 2014, Heilan Home successfully acquired the A-share market through a backdoor transaction with Kainuo Technology. During the bull market in 2015, Heilan House’s market value reached a maximum of 82.5 billion, making it a well-deserved leading company in the textile and apparel industry.
The clothing “porter” model is no longer working.
With this “magical” business model, Heilan House quickly opened up the market.
However, after relying on this business model for 20 years of brutal development, this clothing “porter” model began to fail.
According to data, in the past three years, Heilan House’s performance has begun to “plateau”, with profit growth basically maintaining around 5%, which is the same as in 2014 and 2015. The ultra-high profit growth rate creates a huge contrast. In 2020, Heilan House’s performance has declined significantly. According to data from the 2020 semi-annual report, Heilan House achieved operating income of 8.102 billion yuan, a year-on-year decrease of 24.43%; it achieved net profit of 947 million yuan, a year-on-year decrease of 55.42%.
Although there are black swan factors such as the epidemic, in the second quarter after the epidemic was controlled, the performance of Heilan House still did not have much improvement. It improved, and profits still fell by 11.48% compared with the same period last year.
In addition to the decline in performance, there is another important problem facing Heilan Home, which is the extremely high backlog of goods.
Heilan House has always been known as “asset-light”, but after continuous development, Heilan House��’s business model has also undergone certain changes. Returnable goods and non-returnable goods are basically “55 yuan”. Now the inventory of non-returnable goods is as high as 8 billion. The ultra-high stocking has undoubtedly become a huge advantage of Heilan House. Burden, especially clothing is seasonal. Once a certain point is passed, this batch of clothes may not be sold directly, which means that the 8 billion inventory is likely to be accrued.
Success is also a failure, and the shortcomings of the business model appear
With its unique business model, Heilan Home has indeed achieved good results in the past few years, and the number of stores has also soared rapidly, once exceeding 6,000. However, after developing to a certain level, the disadvantages of this business model slowly began to appear.
The first disadvantage is that the old business model no longer applies. Heilan House’s business model helped it quickly open up the market. However, the market is limited. Heilan Home is not a convenience store and cannot expand indefinitely. The number of stores reaching 6,000 is already the peak of its stage. After there is no need to expand, this business model is no longer of much use, and the core that Heilan House is most proud of has become worthless.
The second drawback is insufficient design capabilities. If textile and clothing companies want to achieve rapid development, they must have strong design capabilities. Domestic Semir, foreign Uniqlo and ZARA have all achieved success by relying on design. As for Heilan House’s foundry model, clothing design is improved by suppliers. In this aspect, Heilan House can be said to be far inferior to other textile and apparel companies, and its competitiveness in the textile and apparel industry is insufficient.
The third drawback is the serious “middle-aged” image. Heilan House relies on standardization and model-based operations, which is efficient and feasible during the expansion stage, but appears to lack vitality during the smooth operation stage. Heilan House has always given everyone the impression of being a “middle-aged man’s wardrobe”. In this youthful and personalized society, Heilan House has been abandoned by young people.
The business model that once allowed it to expand rapidly has now become a burden for Heilan House. If the model cannot be changed quickly, the former clothing leader may not be able to escape the fate of decline. </p
