Sports Shoes Enterprises Start High Storage Channel Integration Strategy

The hidden danger of high storage in sports shoes and clothing industry is breaking out one by one. After the trend of Lining and China is in trouble, Anta, XTEP and PEAK have not been spared. The results showed that XTEP's inventory reached 887 million yuan in the first half of the year, an increase of about 92% compared with the same period last year, while the stock in the first half of Anta increased by 20.3% compared with the same period last year. PEAK also made a 41% increase in worrying.

To ease the pressure on distributors, Anta, XTEP and PEAK have cut orders in the first quarter of next year, while voluntarily reducing the opening plan in 2012.

Reduction of next year's first quarter orders

Recently, Anta Sports Products Limited announced that the growth rate of orders in the second quarter of 2012 was only low. The growth rate of same store sales in the third quarter of 2011 also slowed to the increase in the number of units.

Due to the serious backlog of industry inventory and the sale of brand distributors, Anta voluntarily reduced orders in the first quarter of 2012 and pushed some of the orders to the second quarter of 2012. Anta executives said that the more intense competition in the industry, the current retail discount will rise from 20 percent off to 30 percent off earlier, while giving distributors a more flexible retail discount policy, hoping to allow distributors to sell as soon as possible so that funds return to protect profits.

XTEP also recently announced a 10% cut in the first quarter of next year. XTEP has made a high-profile announcement that orders will increase by 21% in the first quarter of next year, and double-digit growth in orders for clothing and footwear products, with an average price growth of 8% to 10%. The initiative to reduce the order volume (including footwear and clothing) 10%, XTEP interpreted as "to control risks and ensure the healthy operation of the entire distribution system, advance terminal inventory management control".

Slow down the pace of new store expansion

Due to the recent consolidation of consumer retail stocks, Anta said it expects to increase the total number of orders in the first two quarters of next year. Therefore, it will adjust the shop plan of Anta brand stores from 8200 to 7800 to 8000, and the number of Fila and other Anta's life series and children's series will remain unchanged.

Taking into account the worsening trend of the backlog of retail channels, PEAK's plan to open shop in 2011 has also been cut from 800 to 500 to 600. The company has reduced net sales from 400 stores to 200 stores a year. It is expected that 700 new stores will be opened next year and some 500 inefficient or loss shops are expected to close.

By the end of June, XTEP, which had 7438 stores, also slowed down its sales. It is expected that the number of retail outlets will reach 7600 to 7700 by the end of this year. The 2012 shop plan is still under discussion. According to the current business environment, it is estimated that the number of retail outlets with a net increase in the next 12 months will be about 5%, significantly lower than the previously set target of 800 stores per annum.

Start channel integration action

According to the insiders, relying on the continuous expansion of stores and the way of pressing goods to distributors, local brands have seen a high growth on the surface in the past few years, but they also bring many sequelae. For this reason, Lining started the channel integration action in 2010. Nowadays, under the "critical point" that the industry growth rate has slowed down significantly, many sports brands in Quanzhou are also inevitably changing the industry shuffling situation.

"High growth is a good thing, but high growth also obscures some problems. PEAK now needs to enter the stage of internal structural adjustment." PEAK group CEO Xu Zhihua said. For this reason, PEAK took the initiative to reduce the quantity of futures orders in the second quarter of 2012, and adopted the principle of "terminal zero inventory", and the number of orders placed by the distributor, and the corresponding volume of products produced by the factory. "In accordance with the needs of distributors, production can greatly reduce inventory and capital backlog in production and sales process, speed up capital turnover and reduce inventory management costs."

Zhang Tao, vice president of Anta group, also said that the current footwear industry is facing a period of adjustment. "In the past few years, the growth of mainland sports brands was too fast. Now it is a steady return. This is a cyclical problem. But the industry outlook and growth rate is no problem. This cycle is a process of adjustment from the perspective of enterprises.