Fabric Products,Fabric Information,Fabric Factories,Fabric Suppliers Fabric News Is the apparel industry’s huge loss of 400 billion caused by the epidemic? Luxury goods are increasing in price, and Nike spends 200 million US dollars to lay off employees

Is the apparel industry’s huge loss of 400 billion caused by the epidemic? Luxury goods are increasing in price, and Nike spends 200 million US dollars to lay off employees



In the second quarter of 2020, clothing giants and companies handed over the “worst” report card in ten years, with the market predicting a huge loss of nearly 400 billion yuan. When many people def…

In the second quarter of 2020, clothing giants and companies handed over the “worst” report card in ten years, with the market predicting a huge loss of nearly 400 billion yuan.

When many people define the epidemic as the “scapegoat” responsible for the tragic situation of the clothing industry, carefully If you sort out the responses and solutions of the most representative giants in the industry, you will find that everything is changing.

Why did Nike, which lost 5 billion, spend another 250 million US dollars on layoffs?

On June 26, Nike, the global leader in sporting goods, released its fourth quarter financial report for fiscal year 2020. Nike, which has not suffered losses all year round, suffered a rare loss.

Affected by the epidemic, Nike’s sales fell 38% year-on-year to US$6.3 billion in the three months ended May 31, the largest decline in the past 10 years. The interest rate shrank to 37%, and it rarely recorded a net loss of US$790 million (over 5 billion yuan). The net profit in the same period last year was US$989 million, a year-on-year decrease of 179.88%, and the revenue fell by 38.14% year-on-year to US$6.313 billion.

Meanwhile, on the day Nike announced dismal earnings, Nike CEO John Donahoe also sent an email to employees warning employees that the company was about to lay off employees and expected to The layoffs will be carried out in two waves (July and autumn).

On July 23, Nike issued a statement. Although it did not disclose the specific number of layoffs, it made it clear that it expected the one-time cost to be approximately US$200 million to US$250 million. Some analysts believe that this means that Nike’s layoffs are not trivial. The group currently has about 76,700 employees worldwide.

Having already lost 5 billion yuan, why should we spend another 250 million US dollars on layoffs?

In fact, according to the statement, this layoff is an extension of the new strategic restructuring plan proposed by Nike Group in 2017. In the past two years, the group has been increasing its direct-operated stores, reducing the number of third-party dealers, and simplifying its regional structure from the original six to four business units: North America, EMEA, Greater China, and Asia Pacific and Latin America. At the same time, the products are streamlined and the production cycle is shortened.

“Soon, we will be forced to make some difficult choices that may result in a net loss of jobs.” John Donahoe said the purpose of this adjustment It is not to cut costs, but to focus resources on the group’s advantageous projects. The outbreak of the epidemic has made the group more deeply aware of the importance of creating a seamless experience for consumers in the market and enhancing its own initiative. In the future, the group will Increase investment in end-to-end technology areas to accelerate digital transformation.

It is worth mentioning that Nike’s Greater China market has achieved positive growth despite adversity. Nike’s Greater China revenue increased by 8% to US$6.68 billion in fiscal year 2020. Pre-tax profit reached US$2.49 billion, a year-on-year increase of 5%.

Matt Friend, Nike executive vice president and chief financial officer, said: “The accelerated development of digital technology not only reflects the short-term challenges facing physical retail, but also the new markets of the future. A signal of strategic shift.”

Nike specifically mentioned, “In Greater China, this approach has worked.” Nike is planning to transfer the inventory accumulated during the epidemic to digital Channel promotion.

Fast fashion company Zara is also using the epidemic to accelerate its transformation.

In early June, Zara parent company Inditex released its first quarter financial report of this year. Inditex had a net loss of 409 million euros in the first quarter of this year and announced that it would permanently close 1,000 to 1,000 stores by the end of 2021. 1,200 offline stores – accounting for 13% to 16% of the total number of stores.

This statement that attracted the attention of the outside world has several keywords: closing offline stores, consumption habits after the epidemic, and online live broadcast rooms.

Inditex Group Executive Chairman Pablo Isla announced the Inditex Group’s plan for 2020-2022 – Inditex Group will invest 1 billion euros in the next two years to promote online business , investing 1.7 billion euros to further integrate store platforms.

It is worth noting that Pablo Isla’s goal for the Inditex Group is that by the end of 2020, all products of all brands can be purchased online anywhere in the world.

From 2020 to 2022, the Inditex Group plans to fully deploy its proprietary digital platform – Inditex Open Platform (IOP). It is reported that the Inditex Open Platform (IOP), which began to be configured in 2018, is currently 60% operational.

Financial commentator Ye Tan said that the current business channels and models have undergone great changes. If online marketing can be combined with dealers, the transformation can be successful and the company can stand out. If online marketing and offline marketing cannot be connected for a long time, such companies will be swallowed up.

Luxury goods are collectively rushing towards price increases

With sports Different from the supplies and fast fashion giants who took advantage of the epidemic to seize the time to carry out digital transformation, luxury brands’ anti-epidemic method is to collectively rush on the road of price increases.

On July 2, the luxury brand Dior began to adjust the prices of lady dior, book tote, and 30 montaigne series bags. Among them, the price increase of lady dior was 50 to 500 US dollars, and the price of book tote was 50 to 500 US dollars. The price increase ranges from US$100 to US$450, and the price increase of 30 montaigne ranges from US$50 to US$600.

This is not the first time Dior has raised prices this year. Starting from January 2 this year, some of Dior’s handbags and leather goods have raised their prices by more than 13%.

Coincidentally, this year the price of Chanel’s classic handbags has risenPrice increases ranged from 5% to 17%, Prada product prices increased by less than 10%, and some Celine handbags saw an annual increase of 14.6%. LV raised prices twice in March and May this year. The average price increase in May was 1,000 to 3,000 yuan, which was much higher than the 600 to 2,000 yuan price increase in March.

Although Chanel stated in the statement that the price increase was due to the increase in raw materials, this statement did not convince everyone. Industry insiders pointed out that the price of luxury goods has never been determined by cost – the symbolic value is higher than the use value, which gives it room for an imaginative premium. It is determined by intangible factors, namely emotions, desires and needs.

Long queues form at the door of luxury brands. Photo by Hou Jun, reporter of “China Economic Weekly”

According to a report by Ruder Finn, the global luxury goods market will plummet by 25% to 30% in the first quarter of 2020. The annual revenue of the luxury goods industry will be 60 billion to 70 billion pounds (approximately RMB 540 billion to 630 billion yuan).

Global management consulting firm Oliver Wyman conducted a survey on the price increase of luxury goods. The Chinese clothing market did not usher in “retaliatory consumption” in the past April and May. Mainly because the interviewees, who are mainly from middle and low incomes, adopt conservative consumption strategies. However, the survey also showed that 54% of high-income people said they would still spend money on products that provide high quality and functionality.

Im Waters, a partner at Oliver Wyman and the leader of the project, said, “The (shoes and clothing) market after the new crown pneumonia epidemic will be different between income levels and different cities. More obvious polarization.”

This may explain why when consumption in the Chinese market restarted, there were signs outside the stores of leading luxury brands such as Hermès, Chanel, Gucci, and Louis Vuitton. The scene of queuing up to buy luxury goods.

Luxury industry analyst Divya Haria told China Economic Weekly that the epidemic has accelerated polarization, and China’s high-income and high-net-worth groups have been affected by the short-term economic recession. The impact is limited, and there is still enough cash on hand to buy luxury goods. In a crisis, buyers will stick to more established brands and they want the best. Post-epidemic travel restrictions will undoubtedly bring more travel consumption back home. In order to maintain their scarcity, price increases have become a conventional means for luxury brands to maintain and enhance their brand value.

However, not all brands can use the price increase strategy. Although there are still long queues in front of luxury stores, the hidden cost is that excessive price increases will dampen sentiments. loss of consumers.

Ma Ying, secretary-general of the Garment Branch of the China Chamber of Commerce for Textile Import and Export, said in an interview with reporters that judging from the consumption trend after the epidemic, consumers tend to use limited consumption funds. Pursue the ultimate product cost-effectiveness without reducing your consumption level and quality of life.

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