Chapter 38 Chapter 10 Competition (8)

Along with the process of urbanization and the growth of regional economy, in addition to national giants, the sporting goods industry has also produced regional kings.Yunnan Aolong Expo is the "King of Yunnan" in this industry, controlling 90% of the sales of "Li Ning", 60% of Nike, and 80% of Adidas in Yunnan. Moreover, Aolong Expo is still expanding outwards.Multinational sporting goods distributors are also actively entering the Chinese market. In November 2007, the new French President Nicolas Sarkozy visited China and vigorously promoted economic and trade cooperation between the two countries.The French Decathlon Group, which ranks first in Europe and second in the world in the sports industry retail industry, also announced its strategy of seeking channels as soon as possible and increasing its expansion in China.It made a high-profile attack, and the first stop for investing in professional sporting goods stores was not the first-tier cities Beijing and Shanghai, but the second-tier city Xiamen.

After successfully developing the franchise model, this model has been the main sales channel of Li Ning Company for many years.Until 2007, Li Ning still obtained 80% of its sales through this channel. For the first-tier brands, the future competition will spread from the increasingly severe first-tier market to the second and third-tier markets.Large-scale channel operators hope to occupy the old territory of local princes through direct sales, acquisitions, alliances and other methods.As for the second- and third-tier dealers who originally occupied geographical advantages, such as regional sports brand channels such as Oron World Expo, Cross World Sports, Longzhijie, Huachang Sports, etc., they will also carry out more in-depth downward extension and defense. war.

Gome and Suning Appliance are channel giants in the electrical appliance industry respectively. The emergence of such a strong channel has changed the competition pattern of China's home appliance industry and brought unexpected pressure to home appliance manufacturers, resulting in a price war.In the sporting goods industry, what will happen to the emergence of channel giants? Good thing "This is a good change." Li Ning himself commented on this.When Li Ning was asked by a participating reporter at a meeting in December 2007, he quickly threw out his answer: Channels can promote industrial development, which is a good thing for sporting goods companies.In fact, Li Ning has already conducted investigation and deliberation on the construction and development of channels.

Channels have always been the strong point of Li Ning Company.As the first sporting goods manufacturer to spread the net in China, "Li Ning" started the construction of various channels such as exclusive stores as early as 1990. When the second CEO Zhang Zhiyong took office in 2001, the first task was to strengthen channel construction.It is precisely because of the solid channels that Nike and Adidas have had to catch up behind "Li Ning" for several years.Because of its early start, at the end of 2004, the total number of stores displayed in the financial report of Li Ning Company, which had just been listed, reached 2,887, of which 2,526 were franchised retail outlets, 120 self-operated retail stores and self-operated special franchisees. There are 241 counters.After going public, with financial support, Li Ning Company accelerated its channel construction. According to the company's financial report in 2005, by the end of 2005, the number of "Li Ning" stores had increased to 3,373. At the beginning of 2006, the distribution network of "Li Ning" products covered 3005 franchise stores, 111 directly-operated retail stores and 257 sales counters in department stores.The first-tier cities plan to maintain the status quo. For the second- and third-tier cities where Nike and Adidas are relatively weak, the company plans to allocate resources to ensure the development of new franchise stores and the continuation of existing stores.

Quantity is not the only indicator.For channel construction, Zhang Zhiyong's understanding is that two dimensions must be considered: horizontal growth and vertical growth.Level growth is based on the number of stores.Vertical growth refers to the quality of the store, that is, increasing the income of a single store. Therefore, Li Ning Company has very strict requirements on stores.For example, in the third-tier market, "Li Ning" has also set a set of strict standards for opening stores. For example, the standard for opening a new store in the next-tier market cannot be less than 70 square meters.In addition to opening new stores, "Li Ning" has also upgraded existing stores.

Beginning in 2005, Li Ning Company launched a plan to upgrade all its specialty stores to the fourth-generation image stores.The fourth-generation image store not only needs to continue the characteristics of "young and fashionable style and bright colors", but also plans the storefront according to sports events, strengthens sports fashion in detail design, improves space utilization rate, and emphasizes the overall linkage within the region.The image store considers product display, advertising posters, free space layout, cash register setting, concept area and other aspects in place.The purpose of these improvements is to reflect the brand appeal of "internationalization, specialization and fashion", so that consumers can feel the charm of Li-Ning brand when they enter the store.

This move was favored by the capital market, and Merrill Lynch issued a research report maintaining the "buy" rating on Li Ning's stock.The reason is that "the consumer demand of the young people in the Mainland is on the rise, brand promotion is becoming more and more important, and Li-Ning is the company in the industry that knows how to promote and build a brand."For such a large-scale upgrade, in addition to the cost of store upgrades, Merrill Lynch estimates that "Li Ning" will also need to pay the price: "In the first half of the year, 10% of Li Ning's stores will be converted into fourth-generation image stores, which will cause the store to be closed for 3~ 5 weeks, resulting in a drop in sales during the same period", but obviously this investment is more worthwhile, "there will be more new fourth-generation image stores opening in the second half of the year, and the stores do not need to be remodeled, so sales will pick up."