Textile And Clothing Retail Industry: Dismantling The "High-End Discount Store" Model

　　 Wal-Mart The excellent cost control ability and perfect supply chain system have become a classic case that every business school must talk about. Most managers of retail enterprises will regard Wal Mart, the world's No. 1 retailer, as an example to learn and follow. However, Wal Mart announced in 2006 that it would try its best to learn from another retail enterprise. Target is the company that became the teacher of Wal Mart. As the fourth largest retailer in the United States with an operating income of 52.62 billion dollars and ranked 29th in the Fortune 500 in 2006, Target's profit margin reached 31% in that year, while Wal Mart's was 21%.

Target's success is closely related to its positioning, which is different from Wal Mart's daily low price and one-stop shopping mode, and also different from high-end department stores that pursue high-quality goods and comfortable shopping environment. Target targets between the two, that is, the "high-end discount" sales model management Famous brand goods that are discounted due to out of season or broken size.

Target broke the barriers between consumers and wore high-end clothes latest fashion The fashionable girls of Wal Mart can be as enthusiastic about their products as housewives - this is what Wal Mart wants to learn. In addition to Wal Mart, there are many retailers around the world that imitate Target's positioning, but few have succeeded. Among these imitators, Beijing Shangpin Commercial Development Co., Ltd. (including four Shangpin discount stores and one Shangpin premium department store), founded in 2000, has an astonishing momentum of rapid development, with sales of 620 million yuan in 2007 and 800 million yuan in 2008.

　　 No discount on value proposition

The core of the success of the "high-end discount" sales model is: on the one hand, fashion clothing brand products have a strong timeliness. Once they are out of season, they will be severely devalued. The longer the out of season is, the more severe the devaluation will be. Therefore, all clothing manufacturers have the need to quickly clean up inventory to recover funds and reduce losses; On the other hand, some consumers have the consumption demand to buy brand-name products at low prices due to their limited consumption capacity or different emphasis on product demand (focusing only on quality and brand, but not on fashion and style). The "high-end discount" sales model just sets up a platform that can bridge the needs of both sides: while attracting well-known brands to clean up inventory, it provides consumers with high-quality and inexpensive goods.

However, why are few retail enterprises able to successfully implement a business model that seems so simple and perfect, and seems to have no technical content?

To succeed in a business model, it is first necessary to clarify what the enterprise's value proposition is, or what kind of value it can provide for customers. Shopin has a very clear and definite answer to this question - starting from the real needs of consumers and suppliers, it can not discount the value proposition of providing them with value.

Consumers who shop in discount stores hope that the goods they buy are worth more than they are worth, and the basis of "value" is that there is a clear scale in the market to measure the value of the target goods. Therefore, the standard for Shopin to choose merchants is to have brands with formal image counters in major well-known malls in Beijing, and try to choose side hall brands (brands with stores near the edge of the mall, because of the large passenger flow of side hall, the rent is also higher, and it is generally believed that the strength of side hall brands is higher than that of middle hall brands). In the view of Shangpin, being able to have its own image counter in a well-known mall represents the strength of the brand and public recognition, and their commodity value is easier to be measured and recognized by consumers.

There is a kind of discount retail stores that will offer very low discounts, but in fact, they introduce brands that consumers do not understand, even low-quality branded goods. This practice of underestimating or ignoring consumers' identification ability essentially ignores customer value. For example, the once famous retail store I T. The business model designed by A. T carefully takes into account the interests of commercial real estate developers with sparse passenger flow, clothing suppliers with excess capacity and themselves, but it neglects to provide real value for consumers. In the end, this deficiency makes it difficult to sustain its seemingly "perfect" business model.

To provide value to consumers is not to provide and meet all the needs of consumers at no cost, but to seize the most important value aspiration of consumers. The main demand of consumers for discount stores is high quality and low price. Through the selection of investment promotion brands and the supervision of commodities, Shangpin can achieve the goal of "excellent quality"; Low price and high quality products will control costs by reducing other unnecessary inputs, such as shopping environment, timeliness of products, etc.

From the perspective of suppliers, suppliers are generally unwilling to make more investment in clearing inventory. However, when merchants enter the retail channel, they usually have to pay a certain entrance fee, as well as a variety of miscellaneous expenses such as shopping mall management fees, advertising fees, and store celebration fees. In addition to paying a deposit of about 5000 yuan (to ensure compliance with the provisions of the mall and adequate supply of goods), the supplier has no other additional costs when entering Shopin.

Li Yan, one of the founders of Shopin Discount, was once the general manager of Batty's North China region. This experience made him very familiar with the needs and pains of suppliers. After the establishment of Shopin, many processes were formulated to highlight the purpose of serving suppliers.

First, suppliers can adopt different cooperation methods according to their own conditions. At present, Shangpin Commercial mainly cooperates with suppliers in two main ways: joint venture and leasing. Joint operation refers to the form of cooperation in which Shangpin Commerce and suppliers agree on the discount rate (the proportion of suppliers and stores) before entering the site. After entering the site, suppliers will collect cash in the stores uniformly, and both parties will share the sales according to the discount rate. Both parties can decide whether to cooperate in a long term or a short term depending on the sales situation. For some big brands that can open factory stores, the two sides can also discuss the cooperation mode of fixed location and own shelves. Leasing refers to the cooperation mode in which both parties agree on a fixed business location before entering the site and suppliers pay rent to Shopin Commercial on schedule.

Secondly, the original intention of Shopin to provide value to suppliers is to speed up the return of funds. Therefore, in order to ensure that suppliers can make profits even when the discount rate of goods is high, the discount rate set by Shopin is lower than that of traditional retail stores. Another way to reduce the pressure on suppliers is to speed up the cash flow of suppliers. Compared with the three-month or even half year settlement period of many shopping malls, the premium discount can be settled once a month for suppliers. In addition, Shopin discount will also provide some free services according to the needs of merchants, such as recommending excellent shopping guides who have previously filed with Shopin. {page_break}

　 Technical content of "low price and high quality"

After clarifying the value proposition of the enterprise, the enterprise needs to fully deploy its own resources and capabilities to ensure the operation of a business model. The most difficult and successful key of the premium model is to see whether it can attract more upstream manufacturers and give more favorable discounts. With the arrival of more consumers, more upstream manufacturers will be attracted. However, in the initial stage of entrepreneurship, that is, when the enterprise is short of resources, how can we complete the virtuous circle between suppliers and consumers?

In this regard, Shopin Discount has its own ideas. In 2000, the first store of Shopin Discount opened in Wangfujing Gongmei Building, which is mainly engaged in sports brands. The reason why we choose sports brands as our main products is that sports brands are relatively stable. Whether it is Adidas, Nike or Li Ning, their accumulation over the years has enabled them to have a stable audience and a solid market position. To sell their products, they do not need to spend extra effort and time to explain their positioning as "famous products" to consumers. In addition, the functional appeal of the sports brand itself also offset the influence of too old product styles. However, the fashion brands are rapidly updated, and consumers do not have a unified understanding of which brands are "famous products", which is not conducive to a high-end discount retail store spreading its positioning at the initial stage of its establishment.

In the case of insufficient channel influence, many well-known brands are unwilling to cooperate with it. In addition, they are worried that discount stores will damage the brand image, which makes cooperation with well-known brands even more difficult. In the face of this dilemma, in principle, Shopin discounts try to win direct sales from manufacturers. However, if it is really difficult to cooperate with manufacturers, it will tend to be a strong first level agent - these merchants are relatively formal, easy to effectively control product quality, and have sufficient supplies. It is also easier to achieve low prices in terms of promotional discounts.

The development of Shopin discount is not expected to be achieved at one step, but to make full use of existing resources as far as possible to improve consumers' shopping experience without increasing investment. This kind of experience is not only the shopping environment, but also the psychological changes of shopping. Because the store area and goods are limited, consumers are likely to gradually lose the freshness of premium discount. For this reason, Shopin discount often makes adjustments and changes to the store display, increasing consumers' freshness to the store, and making up for the monotony of goods and the shortage of supply.

This method of improving efficiency through effective management has continued to this day. Every once in a while, Shopin Discount will organize a certain category or several categories of goods, in the form of theme, with a special store area, through unified external publicity and promotion, to focus on introducing different product combinations to consumers. The frequent change of theme has increased the return rate and loyalty of consumers, and at the same time, it has also made consumers accustomed to the way and time of the theme sale of premium discount.

With consumers' recognition and familiarity with the Shopin discount model, Shopin discount has attracted more attention from suppliers, and correspondingly attracted more suppliers to settle in. In order to strictly control the supply quality of suppliers in the sales process, Shopin Discount has also set up several special inspection teams. The team members have received professional training and can see the fake goods at a glance. The inspection team was not in the office, but went to various shopping malls and their own stores for supervision and investigation. The investigation included whether there were counterfeit and shoddy goods such as changing the standard, and whether the same product was the lowest price in Beijing. For suppliers who violate the principle of "low price and high quality" of Shopin discount, Shopin discount will be severely punished. If the goods violate the promise of the lowest price in Beijing stipulated in the original contract, a ticket may be the sales volume of the business for one month.

All on-site management personnel and investment promotion personnel of Shopin Discount shall conduct market research every week to ensure that they can grasp the sales overview of goods in the market, estimate the costs of suppliers and the status of goods in the market relatively accurately, so as to ensure that they can take a favorable position in the admission negotiation and enhance their negotiation and bargaining ability, When signing a contract, it is easier to set the premium discount as the lowest in the city. Another advantage of understanding the cost of merchants is that in the promotion season, Shopin discount can take more flexible and thorough measures to deal with discount promotions in retail malls.

　 Expansion and transformation

With the stability of market position, there is an expanding demand for premium discount. In the process of expansion, Shopin Discount adheres to the business strategy of single store profitability and gradual progress, abandons the blind pursuit of speed, quantity, scale and market popularity, and strives for a balanced development of speed and efficiency.

This seemingly well-known criterion is often difficult to adhere to in the process of implementation. After all, it is easier to gain overall profit growth through the expansion of stores than to increase the profitability of individual stores, which is also the fundamental reason why many chain enterprises eventually get into trouble.

The choice of store location is the basis of success or failure of retail department stores. Every time a new store is opened, Shopin Discount will comprehensively consider and qualitatively analyze the cultural environment, business environment, traffic conditions and other factors surrounding the new store. Among these factors, the most important indicator of Shangpin is the guarantee of passenger flow. 1. In order to increase the possibility of cooperation, T.A.T selected commercial real estate projects with remote locations and sparse population. In the early stage, such a partner is indeed more conducive to its own platform building and expansion, but it will eventually become one of the incentives for its decline.

Since the opening of the Shopin Asian Games Village store, Shopin Commerce has intended to form a neighborhood with a large household appliance store and a supermarket in the selection of each new store. For example, the Asian Games Village Store and Wumart Mall, Gome Appliance, Wukesong Store and Wangshi Baili Mall, Suning Appliance, Shouti Store and Carrefour Mall, Gome Appliance, etc. Practice has proved that this is a very attractive form of business combination, which has formed its own advantages over the traditional single comprehensive department stores. Through industry segmentation and complementary advantages, the sales level of Shangpin single stores has been improved.

Although the business model of Shopin discount and the natural separation of community retail stores make them have no competitors in a sense. However, many high-end department stores have increased their sales promotion efforts in recent years, especially today when the overall economy is depressed and people's consumption has weakened, traditional department stores have tried to wring the last drop of the price sponge for consumers. At this time, the price of Shopin discount no longer has outstanding advantages, and there is a gap between Shopin discount and department stores in terms of shopping experience and timeliness.

Although high-end discount stores are still in the ascendant, the trend of transformation has begun to emerge. After all, it is still a business model subject to others. In recent years, Target began to gradually reduce the number of national brands sold in its discount stores, and instead sold its own brands, especially those specially designed by designers. In the future, Shopin Discount also needs to continuously improve this business model, which has achieved certain success.