The music of Smith Barney and ITAT "iron triangle"

On the road of China's clothing retail, there has been a hundred schools of thought contending. Different manufacturers and different retailers have tried and broke through the retail of clothing in their own different modes. There are successes and failures in this process, both bitter and happy. Different models have success and frustration. For example, the successful listing of Metersbonwe and the IPO of ITAT were not achieved; the same model also has a lot of success and frustration, such as the break-up of VANCL's successor and PPG's funding chain. .

ITAT's "iron triangle":

ITAT integrates domestic apparel manufacturers and commercial real estate resources to form the "Iron Triangle" cooperation alliance of "clothing manufacturers + commercial real estate developers + ITAT Group". Clothing manufacturers are responsible for supplying goods, and commercial real estate developers are responsible for the services of property premises. The ITAT is responsible for the operation and management of the stores, and the three share the profit from sales in proportion.

This novel "zero field rent, zero inventory" model contributed to the rapid expansion of ITAT. In the four years from 2004 to 2008, ITAT has opened more than 9 ITAT fashion stores, 123 department store member clubs, and 651 chain member stores, becoming one of the largest apparel chain retailers in China and setting a day in the country. 52 store records. The seemingly perfect clothing retail model and magical shop opening speed have earned ITAT the favor of the capital market. ITAT has obtained a total of 120 million U.S. dollars in venture capital for two consecutive rounds. Investors include Blue Mountain Fund, Morgan Stanley, Citadel, Merrill Lynch and other top international investment institutions.

However, under the fascinating external scenery, ITAT has not solved its hidden problems from beginning to end. It is that internal strength is not solid, single store management is not good, store service and product quality are not high, and many stores are not Too booming property, selling products are mostly slow-moving clothing. Therefore, compared with the pace of expansion of the stores, most of the operating conditions of the stores are bleak, especially in the first-tier cities. With low price sensitivity and high brand recognition, ITAT stores gradually fade out of people's attention and attention.

However, ITAT is still trying to make itself stronger by going public, driven by venture capital funding. Regrettably, in March 2008, ITAT listed sponsors Goldman Sachs and Merrill Lynch have withdrawn from the process of sponsoring their listing. In addition, the Hong Kong Stock Exchange has not passed the hearing and the domestic apparel retail giant ITAT is listed on the stock market, with the financial crisis. With the arrival of the tsunami, there is no hope of listing in 2009.

Metersbonwe's chain of music:

In April 1995, the first Metersbonwe store was opened in Wenzhou City, Zhejiang Province. In 2008, Metersbonwe owned Shanghai, Wenzhou, Beijing, Hangzhou, Chongqing, Chengdu, Guangzhou, Shenyang and Xian. There are 17 branches in Tianjin, Jinan, Kunming, Fuzhou, Harbin, Ningbo, Nanchang, and Zhongshan, covering nearly 1,000 cities across the country and opening more than 2,000 specialty stores. June 2008 Shanghai Metersbonwe Fashion Co., Ltd. IPO (initial public offering) application was approved.

Metersbonwe made its own design and brand as a breakthrough point and outsourced its production, leaving only the brand “Metersbonwe”. Through this model, Metersbonwe has mastered the core of its own success. Independent design ability, rapidly synthesizing manufacturing resources and retail resources throughout the country, and successfully establishing chain stores based on franchise stores. His chain stores are divided into two types, one is a direct-operated store, and the other is a franchise store in the country. Of the more than 2,000 directly-operated and franchised stores owned by the company, franchise stores accounted for more than 80 percent, and directly-operated stores accounted for more than 10 percent. Franchise stores and companies have effectively become a community of interests, and franchisees are making profits. In an effort to sell, Metersbonwe has gained huge market share and brand expansion in addition to making money.

After the listing, with more funds, Metersbonwe will achieve a faster expansion of clothing chain retail sales, and will also be the last to smile on the clothing retail road.

PPG's direct marketing:

In October 2005, the 33-year-old Li Liang created the PPG model to make the fashion industry shine. PPG uses men's apparel as the core product. By integrating the e-commerce model with the traditional retail industry, the PPG replaces the traditional clothing retail store with an online platform and call center, and conducts direct apparel sales through the Internet. PPG is a no-store, no-factory, non-distribution system. The products rely on OEM OEMs to sell new models of clothing retail that rely on call centers.

Once the PPG model emerged, it attracted the attention of the market. Afterwards, the participation of investment institutions such as Huaying Venture Capital and Jifu Asia made it more emboldened. In order to realize rapid development, PPG relied on the horror strategy of TV advertising. In 2007, its annual advertising budget was 230 million yuan. The huge amount of advertising investment has made PPG's brands well-known in first-tier cities such as Shanghai and Beijing, and their sales have increased by nearly 10 times from 2006.

However, PPG also has its own hidden dangers at the beginning of development, that is, the quality of goods. Since PPG is not involved in the production process and does not have its own factory, it takes goods directly from the manufacturers. Therefore, the quality of its products depends on the supplier. PPG has not controlled the quality of its own products. Under such conditions, if PPG is only indulging in the novelty of its model, and without strict control over the quality of the product, the result is self-evident, that is, losing the trust of end-consumers.

Since the sharp increase in sales of PPG was caused by a large number of advertisements, it has the characteristic of short-term effect. Therefore, after stopping advertising bombing, the accompanying sales must be accompanied by a decline in sales volume. The decline in sales volume, coupled with the consumption of funds by the huge advertising in the previous period, eventually led to the breakage of its capital chain. The outstanding performance of the fund's fracture was the inability of suppliers to pay back the goods. In May 2008, the supplier sued the court. Since then, the lawsuit has continued.

In fact, from then on, it indicates that the disillusionment of the PPG myth began. In November 2008, the disappearance of Li Liang, the founder of PPG, confirmed this prediction.

VANCL's later fun:

Vanke Eslite and PPG are all advocates of the apparel network direct marketing model. The difference is that PPG is considered to be the founder of the online direct sales model, and Vanke Espin is just a follower. But in the field of business, it is not the founder who is better, nor is it his follower. The same is true, PPG crumbling under the aura of the new clothing retail model, and Vanke Eslite is a foregone conclusion. Different from PPG's "high profile", Vanke Eslite is a bit "low-key". Its investment in advertising is not as crazy as PPG. Its investment in advertising on the Internet is also based on the statistics of the transaction slip and the way the website distributes profits. Make a certain transfer. Moreover, since the founder of Vanke Espin has a wealth of experience in Internet operations, this also makes it easier for Eslite to sell online.

Of course, Eslite should not be blindly optimistic because PGC's lessons are in front of its eyes. Therefore, Eslite should learn more about the deficiency of PPG, pay more attention to the quality of products, and be more cautious in the use of funds. Only in this way, Eslite can Really come from behind.

In fact, the innovation of clothing retail model just makes a company have a good start. How to use this new model, how to avoid the drawbacks of the new model, and lay a good foundation is the key to business success. ITAT owns the "Iron Triangle", but if it can't work hard to improve the quality and style of the clothes and strengthen store management, the "iron" triangle will also appear loose. Vanke Eslite has used the apparel network direct sales model, but if it can't learn from the past, then "get it right" can't guarantee that it will "get on!"