In recent years, with the rise of e-commerce, the clothing industry has also begun to embark on a path of differentiated development. It not only plays a backbone role in economic construction and development, but also becomes an important force in easing employment pressure and releasing industrial momentum. . However, because my country’s relevant laws, regulations and standard systems for textiles and clothing were formulated relatively late, some clothing companies do not fully understand the trade barriers in the industry. This has led to the emergence of fictitious original prices and ambiguous semantics under the pressure of strong market competition. , false publicity and irregularities such as cut-price sales.
“Mark-cut discount” sales
Recently, through interviews and surveys, it was discovered that Heilan Home (600398) has been highly criticized for its “Mark-cut discount” sales. The controversy has actually touched the development barriers of the clothing industry. As a large-scale professional men’s clothing enterprise that integrates production and sales, it has neglected its social responsibility. It has cut labels and batch discounts on its backlog of inventory in many offline stores and on online shopping platforms such as Alibaba and Weidian. The price is 1-50% off the original price.
As we all know, clothing tags and permanent labels are one of the components of clothing. They not only represent brand characteristics, but also An effective carrier of brand identification is also the promise given by the brand to consumers. In the face of the increasingly complex clothing sales environment and the substantial increase in uncertainty at home and abroad, the market value of many companies has shrunk to varying degrees. Companies like Heilan Home that develop both online and offline are bound to face inventory shortages. A large backlog of problems will directly lead to a decline in profit margins, bring heavy financial burdens, and affect normal operations and long-term development.
During the visit, I interviewed a staff member of Heilan Home who was selling in the store. Regarding the issue of label cutting and sales, the staff member said that because It is one of the processing plants of Heilan House. It currently sells clothes that have been out of season and some off-season goods. There is no difference in quality from the counters. In addition, during the process of communicating with discount store customer service online, I also heard the same rhetoric.
An act of last resort
What is “label cutting” ? Why did Heilan House “cut the label”? In fact, label cutting is a method used by brand companies to protect copyright by destroying the labels of some products that are not sold in specialty stores and removing the original packaging. The company that sells the most cut-label clothes is undoubtedly Heilan Home.
According to analysis by industry insiders, Heilan Home’s label cutting is to protect its own stores. Some clothing would rather cut labels cheaply, so as not to affect the current selling price of the goods. “Cut-label clothing is generally produced by out-of-season products of brand clothing or due to delayed delivery by factories, etc., so the price is much cheaper than the original price. The fabric, workmanship, and texture of the clothing are consistent with the real brand. There is no difference in clothing.” He said, “Many brands such as GXG, Mark Huafei and many first- and second-tier women’s clothing are all cut out and sold at a discount after cutting the labels.”
It is understood that in order to ensure that the sales price of seasonal products is not affected, most manufacturers will completely remove the trademarks before disposing of them. Therefore, the “cut-labeled goods” that are really forced to be destroyed will not be merciful with a pair of scissors. . Either cut it into a crescent shape and dig out all the words on the trademark; or “uproot” the trademark, leaving only two trademark stitches vaguely visible, trying not to be recognized by customers. However, this is not a long-term solution.
Noted that due to the impact of the warm winter in 2019 and the epidemic in early 2020, Heilan House made provision for asset impairment in the fourth quarter of last year and the first quarter of this year respectively. Losses (mainly due to inventory depreciation losses) were 240 million yuan and 170 million yuan. Due to the principle of prudence, the company will still increase the provision for inventory depreciation losses in 2020. At the same time, Heilan House plans to reduce the proportion of main brand down jacket buyouts to 30% in 2020, thereby further reducing the risk of inventory backlog.
Encountering industry development barriers
According to industry analysis, Heilan Zhijia’s operating model is an “asset-light operating model”, that is, the production process is outsourced, and the stores are mainly franchised. Heilan House mainly achieves rapid expansion across the country through franchising, but its operating model is very different from other franchise brands. Its franchisees only need to pay relevant operating expenses and do not need to participate in the specific operation of the franchise store. . This means that the head office, stores, and franchisees are separated from each other and cannot be unified in terms of market demand, product management, and sales data, which will lead to inventory accumulation over time.
“To occupy the market, it depends on the management and control capabilities of the supply chain.” Industry insiders said that Heilan House adopts a consignment sales model for the supply chain. Heilan House orders at least 30,000 pieces of each style of clothing, and many of them are sold on consignment. If they cannot be sold, they are returned to the OEM. This part will all become tail goods. In order to avoid infringement, we can only cut the label and deal with it.
The cyclic accumulation of inventory will cause rounds of “cutting and discounting” sales
Industry insiders said that Heilan House, as a synonym for “men’s wardrobe”, in the context of the development of the new retail model, has not only failed to address inventory imbalances, low profits, customer loss, If you carry out corporate reforms due to sales bottlenecks and other issues, but instead use non-compliant sales models to deal with overstocked inventory, you will inevitably lose the credibility of customers and franchisees, and ultimately cause irreparable losses.
Heilan House’s stock price fell</p