Recently, sports brand Kappa has attracted industry attention for hosting the Spring/Summer 2022 Sports Fashion Show. In recent years, the brand has been groping for how to "please" young audiences and continue to attack in the field of sports fashion, but from the current situation, its performance is not optimistic. In contrast, Philae, which has a similar positioning, has become the growth engine of ANTA Group. Why are the fates of the two similar brands so different?
Kappa embraces fashion trends
It is reported that Kappa recently held the 2022 Spring/Summer Sports Fashion Show, showing clothing including sports suits, denim jackets, jackets, knitwear, etc., and incorporating a large number of football elements. In this show, Kappa selected the brand youth ambassador Mika as the finale guest to walk the catwalk, and young singer Shirinayi Gao appeared in the online live broadcast to interact.
In May 2021, Capa cooperated with domestic designer Zhou Xiangyu to launch the Chinese debut of a sports fashion series with the concept of "binary", emphasizing the concepts of personality, expression and pioneerism, aiming at young customers.
In addition to hosting clothing shows, the brand also frequently co-branded with other brands. In December 2021, Kappa joined forces with British fashion brand Palece to launch a sweatshirt, hat and accessory that combines elements from both sides. It is reported that Palace is a trendy brand that focuses on skateboarding clothing, and its personalized style is quite sought after by young consumers, and every product sale can trigger a lot of rushing. In September 2021, Kappa also launched a joint collection with CanalStreet, a collection of chao brand stores. It is understood that Kenny Street is a streetwear collection store born in New York, USA, and the two sides jointly signed to commemorate the first olympic participation of skateboarding.
In addition, in recent years, Kappa has paid more attention to the female market. In October 2021, Kappa and Australian luxury clothing brand OZENA jointly launched a series of fresh colored clothing, which debuted at OZZANA Shanghai Fashion Week.
Kappa and OZLANA co-branded clothing (screenshot from Kappa's official Weibo)
In August 2021, Kappa and French jewelry brand Agatha jointly launched the "Love of Faith" series of products, including sports satchels, sneakers, jewelry and so on. According to reports, the "Love of Faith" series aims to express the vision in love.
Co-branded products of Kappa and Kasha (Screenshot from Kappa's official Weibo)
Heavy marketing under the performance is not optimistic
Although Kappa has done a lot of marketing, the performance is not optimistic. According to the interim financial report of China Trends (Group) Limited (hereinafter referred to as China Trends) Limited (hereinafter referred to as "China Trends"), the entire owner of Kappa's interests in Chinese mainland and Macau, the operating loss for the entire Group reached $770 million, down 160% year-on-year.
According to the financial report, Kappa's clothing category is the main business of China Trend, accounting for 61.8% of the group's sales, followed by Kappa's footwear, which accounts for nearly 85% of the total sales. However, the sales of Kappa clothing fell by 6.1% year-on-year, and although the performance of footwear and accessories has improved, the overall sales of Kappa have decreased by 0.1%.
In this regard, China's trend said that due to the local outbreak of the new crown pneumonia epidemic in China and the impact of many unfavorable factors such as rainy weather in the north, the sales revenue in August and September 2021 was less than expected.
Cheng Weixiong, a brand management expert in the footwear industry and general manager of Shanghai Liangqi Brand Management Co., Ltd., said in an interview with the media that the impact of the epidemic is objective, but Kappa can still increase revenue by increasing online business, and will not turn profit into loss. This shows that the brand has failed in the transformation of brand positioning, product positioning, channel positioning, organizational positioning, business model, etc., which is very different from the Feile brand, which is also a sports fashion positioning.
It is worth mentioning that Kappa also had a highlight moment, founded in Italy in 1916, and has made a name for itself in the professional sports market by sponsoring football teams such as Juventus, AC Milan and Ajax. In 2002, Kappa entered the Chinese market for the first time. In 2006, China moved to buy out the ownership and perpetual operation rights of the Kapa Chinese mainland and Macau brands. The following year, China Trend was listed in Hong Kong.
At that time, Kappa made sportswear into a waist-tightening design, and equipped with sequin decoration, large patterns, and large color blocks, which won the love of many young consumers and opened the road to rapid development. In 2010, China Trend's revenue reached 4.262 billion yuan and net profit was 1.464 billion yuan.
However, in 2011, the entire Chinese sporting goods market entered a period of deep adjustment, and "store closures", "layoffs", "cold winter" and "bottleneck" became the keywords of the industry. Kappa adopted an asset-light model at that time, and the channels were mainly based on the stores of agents around the world. Shi Kunpeng, an expert in the garment industry, told the China Business Daily reporter that when the entire market is booming, the asset-light model can quickly help the brand expand and save the cost of rent personnel. However, in the case of the entire market situation is not optimistic, the agent will quickly withdraw from the stop loss, and the brand side will lose a large number of channels.
Cheng Weixiong told the China Business Daily reporter that China's trend in the choice of channel model to join the main, the proportion of direct operation is small, offline channels do not have the dominant right, and franchisees, licensors are easy to be guided by their own interests and deviate from the brand direction. In 2011, China Trend's net profit was only 102 million yuan.
In addition, Cheng Weixiong believes that Kappa's previous target audience was mainly post-80s, and now the post-90s, post-95s, and post-00s consumers have more diversified requirements and consumption concepts for sports fashion clothing, and it is difficult to win the hearts of these new users by relying on the original "routine". In product development, if the brand does not have a unique personality, it is difficult to make a comeback.
Kappa is nothing less than Philae
In contrast, Philae's life is much better, and it has become the growth engine of an ANTA Group. It is understood that Philae was also "born" in Italy. At first, its products were mainly tennis and golf equipment, and then launched basketball, skiing, mountaineering, yoga and other product lines.
After several changes of ownership, in 2009, ANTA Group acquired the trademark use rights and franchise rights of Phila in China for a total price of about HK$600 million.
ANTA Group positions Feile as a high-end fashion sports brand, and adjusts the product design, sales links and marketing promotion of Feile accordingly. In terms of product design, Yao Weixiong, president of Feile Greater China, admitted that what he values most is the innovation of products. "As a brand, repeating past successful products, consumers quickly tire of it. Your product has enough freshness for consumers to chase you."
In terms of channels, Fei Le mainly focuses on the direct operation model. Yao Weixiong said that the brand and the dealer are still cooperative relations after all, and the self-operation can achieve 100% control over the entire store, from decoration, display to sale, all directly controlled by the headquarters. In addition, the direct operation model can also allow brands to react quickly to market consumption trends, which is also crucial for a sports brand that is positioned as a fashion and needs to keep up with the trend.
In the first half of 2021, Phillips revenue increased by 51.4% year-on-year to RMB10.827 billion, accounting for 47.5% of the Group's overall revenue.
Anta Group told the China Business Daily reporter that Feile maintained a very considerable growth rate, and in the future, the brand will promote three top strategies, namely top brands, top goods, and top channels, and promote the development of the entire Fei Le business in the Chinese market. In terms of products, Phillips will launch more new products and cooperate with other high-end IP to expand the brand influence. In terms of channels, in 2021, Philae opened the world's largest flagship store in Wangfujing, Beijing, and Phillip will continue to cooperate with high-end business districts in China to open more flagship stores.
Cheng Weixiong said that although the development experience of Feile and Kappa is similar, Phillip independently grasps the brand in operation, does not deviate too much from the brand positioning, the fit between the brand and the product, channel and user is close, and the sales channel is mainly direct sales, and will not be blindly developed for short-term interests.
It is understood that Kappa has begun to reform the channel and adopt a quasi-direct operation model. According to media reports, the quasi-direct operation model refers to Kappa canceling the traditional "order meeting" form, establishing cloud warehouses in major regions of China, opening up online and offline full links, and coordinating the management of goods inventory in the region, so that a batch of goods can meet multiple stores in offline areas.
In Cheng Weixiong's view, the direct channel model is more conducive to the cultivation of brands. He said that if Kappa continues to take the high-end sports fashion route, it must return to the DNA of the brand and choose between business and brand. "Doing business means pursuing short-term scale and disorderly development, and being a brand means making breakthroughs in product research and development." Cheng Weixiong said.
At a time when sports brands are becoming more and more competitive, can Kappa regain its former glory? Journalists will continue to pay attention. (Reporter: Jie Yuxing text/photo)
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