Li Ning on what price! Consumers do not pay!

Li Ning

“Li Ning is a brand that is hung in the middle. The best is not the most expensive one. The most expensive one is not even more. The rate of price increase is N times faster than that of the brand. Style technology The Nike and Adidas were getting farther and farther and the price was getting closer."

The trend of price hikes has been spreading to sporting goods. In the face of high-profile expressions of rising prices by Li Ning, consumers have expressed their dissatisfaction and concern. “Li Ning is a brand that is hung in the middle, the best is not the most expensive. The price is not even more than the most affordable, the price of the rate of increase than the brand's propaganda speed N times faster, the style of technology was Nike, Adidas goes further and further, the price is getting closer and closer." At the time when the trend of prices has spread to sporting goods, consumers have expressed their dissatisfaction and concern in the face of the high-profile expression of rising prices by Li Ning.

According to a survey by the reporter, Li Ning’s price increase is likely to encounter an embarrassing situation where consumers do not buy it, and at the same time, they face the danger of the market being divided and the future is worrying.

Consumers do not buy it

At the Li Ning store in Xidan, Beijing, sales staff told reporters that down jackets sold in the spring of 2011 were about 50 yuan more expensive than winter 2010.

The reporter saw that the new short-sleeved T-shirt is about 200 yuan, and the price of the new trousers is more than 300 yuan. For rumors of a 20% increase, sales staff said that according to his feelings, the current clothing category rose little, about 8%. The increase in footwear is larger at the 100 yuan interval.

Talking about the reasons for the price increase, the salesman said that the rise in raw materials is only a small part, especially for clothes, mainly the increase in design and promotion costs. He pointed to the shelves and said that the sports brands are now taking the leisure route, with more and more colors and styles, and a large increase in design costs. "The spokesperson has become Lin Chi-ling, and the promotion costs have increased greatly. All these will reflect on the cost of clothing."

The reporter proposed: “Some people say that Li Ning is now chasing the world's first-line brands, so the price must first catch up?” Sales staff responded that Nike and other first-line brands of shoes and clothing will also appear open line and other issues, Li Ning in quality Can catch up with first-line brands.

In this regard, consumers do not buy it. A consumer interviewed said: “Looking at a 499 yuan Li Ning travel shoe a few days ago, I feel that I can buy a shamrock for 200 yuan, and I did not buy it decisively.”

In Xidan's Nike store in Beijing, the reporter saw the price of the T-shirt was basically 200-300 yuan, and the price of the T-shirt similar to that of the Li Ning brand was basically 200 yuan. The reporter interviewed several consumers at random. They all said that if Li Ning's price caught up with Nike, he would definitely choose Nike.

The reporter then visited the Adidas store. Adidas’s sales staff told the reporter that he did not receive a price increase notification at the moment and he himself did not feel that the price had improved. With regard to “If Nike and Adidas raise prices, will they still buy? Will they choose to replace them with other brands?” Most of the randomly interviewed consumers stated that they would reduce their purchases and would hesitate to purchase them, but they must also purchase it. select.

The sales staff said that Li Ning set the July-September goods in February this year. “Manufacturers have already determined the style when they order, and they also produce and price the sample product according to the price of the tag.” Therefore, In the next six months, it is unlikely that there will be price fluctuations.

Worrying performance

In the 2010 interim report of China's listed sporting goods company, Li Ning recorded a revenue of 4.5046 billion yuan and a net profit of 15.6%. During the same period, Anta reported a revenue of 34.531 billion yuan and a net profit of 27.2%. China Mobile's revenue was 2.1453 billion yuan and its net profit was 44.1%. Xtep revenue was 2.0402 billion yuan and net profit was 21.8%. Li Ning's revenue ranked first and net profit margin ranked last.

Industry sources explained that the reason for the unfavorable profitability was that Li Ning digested the old standard stock as soon as possible in order to comply with the bid change strategy. In the first two quarters of last year (ie, the accounting period of the 2010 interim report), Li Ning took stock of the old standard stock. Clearing strategy for "low turnover for high turnover".

However, Li Ning has changed its brand name from the third quarter of last year to a year now. At the recent Li Ning brand product ordering meeting, Li Ning suffered a significant drop in orders.

In Li Ning’s 2011 third-quarter Li Ning brand product ordering, according to the retail brand price, the amount of orders fell by more than 8% year-on-year; wholesale prices fell by about 14%, and orders for shoes and service products dropped by about 17%. There is an average retail price increase of about 10%.

At the same time, in the annual report of Li Ning announced in March, by the end of 2010, the cumulative amount of losses reached 201.3 million yuan.

Over the past ten years, the basic model for the growth of the Li Ning brand has been the expansion of channels. From the more than 1,000 stores from 67 years ago to more than 7,900 stores, the size of Li Ning has expanded rapidly. However, with the entire Chinese market, The increase in the cost of sales and other links, including the increase in the cost of retail channels, Li Ning will bear a heavier bag, which is probably when the channel began to frantically expand, did not expect.

Li Ning began to change the new trademark from the third quarter of last year, with the intention of obtaining brand premium through the promotion of the brand image, and thus pushing up the price of the tag.

When the international first-line sports brands have cut prices to occupy the market, Li Ning's move against the trend of increasing prices will probably encounter the situation in which consumers do not buy it. The wishful thinking of pushing up the price of new high-price tag will inevitably fail, and the company’s declining performance will be enough. Let Li Ning "eat too much."

How to win the market in the future

What will the future Li Ning win the market?

The competition faced by Li Ning, in addition to sporting adidas, Nike and other brands, such as H & M, Zara and other non-sports products monopoly brand, is also trying to get a share of casual wear.

Zhang Zhiyong, general manager of Li Ning, disclosed that the main price segment of Li Ning brand is between 250 and 390 yuan, accounting for about 70% of the price. The foreign high-end brands represented by Nike and Adidas are also approaching the mid-range market through price cuts, promotions, and other means. Li Ning's brand influence is obviously hard to beat.

At the same time, a large number of domestic brands occupying the market in the second and third tier cities have also had enough strength to move from the low end to the middle end. The future competition in the mid-range market is bound to be extremely fierce.

Right now, despite the pressure of rising costs and insufficient supply of goods, Nike and Adidas are not willing to raise prices, and they would not like to rise too much. Many agents predict that the 10% price increase may be the limit.

At this time, Li Ning Company insisted that: “Because of the influence of wages and raw material costs, it is estimated that the cost will increase by an average of 20% this year and the product price will have a double-digit increase.” Zhang Xiaoyan, Director of External Affairs and Public Relations of Li Ning Co., Ltd. said: “Now cost The rise is so severe that you have to ask, which company has problems if prices do not rise.” Such an open statement may very well affect market performance.

In the interview, many consumers viewed the high-profile expression at this time as a follow-up to the price increase. It is worth noting that the so-called raw material cotton is still doubtful whether it will keep increasing prices. Tang Yu, a researcher at the Institute of Medium Term Research, said: "Since China joined the World Trade Organization, there has been a gap in cotton every year. China imports every year. In the first half of the year, it mainly uses US cotton, and in the second half of the year it mainly uses Indian cotton. After October, domestic new cotton is listed. Under the market adjustment, cotton prices will naturally fall.” While cotton supply and demand will not be abnormal, prices will naturally not fluctuate significantly.