2011 Sports Shoes And Clothing Industry Channel Construction Policy

On January 19th, 2011, the agencies predicted that the growth of sports sector in textile and garment industry would be slower than that in 2010.

The textile and garment sector of the Hongkong market has not performed well recently.

Rising costs affect movement sector upgrading

Cotton prices have risen rapidly since 2010, especially in the second half of the year, when cotton prices rose more than 100% in the short term.

The state has introduced a series of measures to curb the excessive rise in cotton prices. Cotton prices began to fall after November 2010, but they are at a historical high.

It is predicted that in 2011, the gap between supply and demand of cotton is still as high as 3 million tons, and the supply and demand determines that cotton prices will still be difficult to recede in the short term.

The appreciation of the renminbi has led to export pressure.

After the two exchange reform in June 19, 2010, the RMB exchange rate rose sharply, although the US dollar index remained at a relative high level of around 80, the RMB exchange rate has hit a new high.

Labor costs are rising rapidly.

In recent years, after the Spring Festival, the phenomenon of "labor shortage" appeared almost every year.

In the early December 2010, two months before the Spring Festival, some coastal enterprises had already been embarrassed by the loss of old people and the difficulty of new recruits.

China's population structure determines that the labor cost of manufacturing industry will continue to grow at a high level in the future.

Because of rising raw material prices, rising labor costs and RMB appreciation are expected to remain in a longer period of time, brand manufacturers with stronger bargaining power deserve more optimism.

In terms of valuation, the apparel industry's earnings per share in 2011 is about 14 times. Considering the industry's expected growth rate of around 20% in the next few years, this valuation is quite attractive.

In many sectors of the industry, home textiles and men's clothing, which are in a growing stage, are more worthy of attention than the sports products that are gradually coming into maturity.

Orders become WEATHERVANE

The Li Ning Co said recently that the order of Lining products will end in the second quarter of fiscal year 2011. The total value of orders calculated according to the retail tag price is equivalent to that of the same period in 2010, of which the average retail price of clothing products and shoes has risen by more than 8%, but the number of orders has decreased by more than 7% and 8% respectively.

The calculation group's impact on the dealer's wholesale discounts has been reduced by about 6% compared with the same period in 2010.

In order to "stabilize the morale" and help dealers cope with the pressure of rising costs, Li Ning Co said it would increase the discount rate to dealers.

According to its partners, Li Ning Co's original wholesale discount rate to dealers is 57% to 58%, and the adjusted discount rate will increase by 2%-3% to stabilize the dealer team.

In the coming year, for Lining's distributors and distributors, the survival of the fittest is indispensable.

China's trend is KAPPA brand, and the growth of orders in 2011 is much lower than market expectations.

2011 the order amount increased by only 2.8%, which is far below the market expectation.

In the growth of 2.8%, the unit price increased by 5.7%.

According to product category, shoes orders increased by 24%, clothing decreased by 2.8% and accessories increased by 6.7%.

Over the past few years, China's KAPPA brand's 2 quarter product has been popular with consumers because of its fashionable design and bright colors. Therefore, the Chinese trend finds that its dealers always tend to make more 2 quarter products.

From 2008 to 2010, China's growth in orders in the 2 quarter increased by more than 50%, 31% and 22%, respectively, higher than that in the same industry.

In 2010, the trend of China did not catch the change of consumers' taste in time, which led to the weakness of the retail market and the large inventory problem.

The order in 2011 will increase by 23%.

Orders for clothing and footwear increased by 10% and 8% respectively, while the average selling price increased by 12% and 13% respectively.

The annual growth rate of the mainland sporting goods market is still over 15%.

However, the growth of the first tier cities has slowed down, but the second and three tier cities still have a relatively high growth rate.

It has 7100 stores, and 70% of them are in the second tier and three tier cities.

And the order of 2011 increased by 23% compared with the same period in autumn.

Clothing orders rose 10% and footwear increased by 8%.

In terms of average selling price, clothing increased by 13% and footwear increased by 12%.

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Each channel has its own policy.

Li Ning Co has been affected by its expansion activities, and its main business is starting to go wrong.

In December 20, 2010, Li Ning Co's share price suffered a serious setback, and its market value decreased by HK $3 billion 500 million a day.

Immediately, Lining threw out a series of solutions, including integrating some poor performance stores, and promoting the growth of company's performance by increasing the sales revenue of single stores.

Although Lining did not publish the specific figures, the number of stores that Lining now has over 7000 stores and the drop in orders volume may reach 500-600.

This solution worries investors. Investors are worried not only about the Lining shop operation itself, but the beginning of the whole Chinese sports apparel industry's bottleneck -- the way to increase sales by opening shop continuously, seems to have come to an end.

Previously, Lining management held a meeting, decided to carry out the integration of distribution channels in 2011, the main action is to turn off the poor performance of a single business shop, and then increase the discount store sales to about 10%, while the proposed wholesale discount of 3 percentage points.

But these measures have not rebuilt confidence for investors.