From the city to the countryside, where else can Xtep go?

Image source @ Visual China

Wen | to consume

Walking on the street used to be almost a pair of Adinekes, but now, you can see a variety of sneakers, such as Li Ning's high-top shoes and Fei Le's panda shoes.

Unconsciously, "wearing domestic products" has gradually become a fashion label for young people. But in major city capitals, you will rarely find sneakers with an "X" logo.

When we shouted in support of domestic products, support for Li Ning, and support for Anta, it seems that we have completely forgotten the existence of the same domestic brand Xtep.

But if you go back to your hometown, you will be surprised to find that the sports youth who shuttled through the path were all dressed up.

"I've never felt that wearing a special step is very low, like my age, but more important to the price, wear it is comfortable." Jiang Hao, who has been running a restaurant in his hometown for twenty years, said.

Although under the "star" aura of Tongbao Ning and Anta, the special step that has been focusing on third- and fourth-tier cities seems to be a bit lonely. But judging from the performance of the past year, Xtep seems to have begun to improve. With tens of billions of revenue and a net profit margin of 9.1%, it should be said that in the past year, Xtep has handed over a satisfactory answer sheet to shareholders.

Xtep has made changes, in product research and development, Xtep invested in the heart, but from the second-tier store sales results, Xtep is no longer the first choice for urban youth sports, in the sinking market of the third and fourth lines, Xtep gradually found an exclusive market positioning.

With the rise of the consumption power of small towns, Xtep has to sink, from the city to the countryside, where can Xtep go?

"Eighteen-line town", the vacuum zone of sports brands?

A small eighteen-line town, school teachers, work is not so tired, every day on time to work, do not high-intensity ineffective competition, to live a textured life, for recent graduates, can not live this life, rent is one of the best proof.

The house that Zhao Ting rented in this small city, two bedrooms and one living room, for only five hundred and one month, this price is one-sixth of the first-tier city beijing and one-third of the second-tier city of Wuhan.

Giving up the inner volume of the big city, going home to live a "lying flat" life, before graduating, Zhao Ting planned in this way. More than a year after graduation, I also began to wonder, back to my hometown, can I really live the life I want?

Greetings to her, who had not been in touch for a long time, Zhao Ting's voice on the phone sounded energetic. When she told me that after she left work at six o'clock, she would appear in the gym at half past seven, I was a little surprised, and I had always been under the impression that Zhao Ting did not love sports so much.

Wearing a sports suit and stepping on a pair of special shoes, Zhao Ting sent a selfie in the mirror, looking like he has indeed lost a lot of weight.

The small-town youth who fall in love with sports is not the only one zhao Ting. Three years ago, Xiao Jie, a young man in a mountain village in Fujian Province, posted a video of a "self-made electric drill treadmill" to the Internet, and soon this video exploded out of the circle, which is enough to illustrate the yearning of small-town youth for sports.

In the news, the small-town youth's homemade treadmills are rough but full of creativity, some people use stainless steel welding, some people use rolling pins to make running belts, and some people simply run on the tracks of excavators.

A man running on an excavator

For that time, moving the "treadmill back to the village" in this way may have been just a piece of news at the time, but that year, the sales data of the thousand-yuan treadmill on Tmall, the small town youth accounted for 70%, almost all of them were new customers.

If national fitness is only the trend of the past two years, it has already appeared two years ago, which is reflected in the importance that the state attaches to the sports industry.

According to the data, as of the end of 2019, there were 3.5444 million sports venues in the country, with a per capita sports area of 2.08 square meters; the State General Administration of Sport supports 1200 to 1400 large public sports venues to open to the public for free or low fees every year.

The treadmill into the "field" is not an isolated case in the news, and the e-commerce platform that is good at big data collection has a "coincidence" discovery. Also in 2019, in the financial reports of the three major domestic e-commerce giants in Q2 that year, the word "sinking market" appeared invariably. Alibaba directly mentioned in the earnings report that more than 70% of the new consumers in the quarter came from the sinking market.

In the past two years, the consumption concept conveyed by small-town youth to the social platform is no longer just a soil tide. The rise of the national tide has allowed Li Ning to have China's Li Ning, and the national fitness is in the ascendant, so that more xtep shoes can step on the treadmill.

For traditional shoe companies, this is a market opportunity for local shoe brands, and it is also a bright willow after the market crisis brought about by overcapacity in the industry. Grasping the sports consumption demand released by third- and fourth-tier cities is grasped by traditional shoe companies.

"I chose Xtep because it is so expensive from Nike, and at least it is a well-known brand, and the style is not bad." Zhao Ting's xtile shoes were ordered from the Internet and only used more than 200.

From the perspective of Xtep's product structure, the proportion of sales in the Tao system platform is still not low. The research data given by Everbright Securities is more than 35%, and it is much higher than other domestic sports shoes and apparel leaders.

The third- and fourth-tier small cities are not the vacuum area of the sports market, and the quality should be trendy town youth, gradually igniting a strong demand for sports, can Xtep really occupy this market cake?

Seize the miscellaneous space and become the exclusive product of the young people in the town

Young people in small towns choose Xtep, starting with where the demand comes from.

Keeping up with the boom in running events is an indispensable way for Xtep to convey the concept of sports to the public in recent years and further build its brand power.

Walk into Xtep's offline stores and see the joint activities of marathon and Xtep. In an offline store in Wuhan, we found during the visit that the store still showed the group purchase activity of the Xtep store joint marathon during the marathon event, and the clerk told us that the activity could not be participated in now.

According to the "2018 China Marathon Annual Main Report", China's marathon events are hot, with 1581 marathon events held in China and 5.83 million participants throughout the year, and the total output of the annual industry driven by marathon events was 74.6 billion.

Relying on the "national marathon fever", in 2019, Xtep held more than 430 running activities, carried out marathons in more than 20 domestic cities, sponsored 53 events, and established 8 running clubs.

The rise of the national fitness fever, Xtep is deeply involved in it, and has repeatedly emphasized that it is the first brand in China's marathon, but it is not a coincidence that small-town youth who fall in love with sports and fitness choose Xtep.

As a second-tier brand, Xtep's pricing is usually lower than that of competitors such as ANTA and Li Ning, mainly targeting consumer groups in the second-tier market, and Xtep seizes the national fitness boom and goes to small-town youth, which is not just the current market layout of Xtep.

As early as 2012, Xtep has begun to vigorously lay out the domestic third- and fourth-tier cities. At that time, He Ruibo, chief financial officer of Xtep, said that Xtep planned to go deep into the third and fourth-tier cities in China in the next step, and would carefully consider laying online platforms and other outlets in Southeast Asia in the future.

Compared with Adidas and Nike's layout of first- and second-tier market channels, Xtep has now successfully moved towards small-town youth with a unit price of about 300 yuan.

Choosing to sink the market is a differentiated choice for the Xtep brand market.

Everbright Securities Research Report mentioned that at present, the sports shoe industry in low-tier cities is estimated to still occupy about 20% of the market share. For Xtep, its main product pricing is close to that of miscellaneous brands, but in terms of product performance, it matches leading brands.

The launch of low-cost and high-quality sports shoes and apparel products, for the future of Xtep, can use brand advantages, cost-effective advantages and differentiated competition with high-end brands to seize the miscellaneous brand market.

For young office workers in first- and second-tier cities, they have to save money from their salaries and buy Nike Adi no matter what. Nike per capita doesn't seem to be an illusion, but are miscellaneous sneakers really so selectively gone?

Last year, after the sudden outbreak of the epidemic in Putian, Fujian Province, Putian shoes returned to the public eye. Before the epidemic, the market size of Putian shoes was large enough.

According to CCTV, there are more than 4,200 footwear enterprises in Putian, with more than 500,000 employees, an annual output value of more than 100 billion yuan, and an annual output of 1.26 billion pairs, accounting for 9.3% of the national output.

In 2019, an OECD report showed that from 2013 to 2016, footwear was the most counterfeit category among counterfeit and pirated goods seized.

If it is the Jinjiang River to the sun, Putian to the dark, then the special step born in Jinjiang, perhaps really by virtue of the cost performance, won the favor of the town youth.

"Can't go up to the table" special step

Time is changing, Xtep ushered in a huge demand for third- and fourth-tier markets, but at present, in second-tier cities, does Xtep really sell well?

During this year's Spring Festival holiday, Fan Zhe and his family went to the nearby square to visit, where nike, Adidas, FILA major sports brand discount stores.

After the donation incidents in Xinjiang cotton and Henan, I thought that everyone would give up Adi and Nike like him, but I did not expect that this year's Nike discount stores were still lively. The long queue at the door to sweep the health code, the store's shoe rack is full of people, if you want to try on it, you can only take off your shoes in place.

At the cash register queue, from time to time, people will come over and ask, "Would you like to join him in the 860 minus 200 event offers."

Nike and Adi as industry giants, their product influence can not be erased in one event. Once the patriotic sentiment fades and the aura of domestic products is difficult to sustain, consumers will still return to the product power itself.

During the period when patriotism broke out, Fan Zhe also began to support domestic products, replaced the Adidas cushion shoes with nearly a thousand on his feet, and bought a pair of Li Ning red rabbit running shoes in his early three hundreds, although the softness was not as good as Adi, but Fan Zhe felt that it was "cooler" to run.

When it comes to Xtep, Fan Zhe has almost no impression, and the friends who train together rarely buy Xtep's sneakers. Because they felt that Xtep's shoes didn't run very well when worn.

This also reflects that the level of product technology of Xtep in the field of professional sports is still relatively backward. For example, in terms of "footwear midsole technology", the launch time of Xtep-related technologies will be much later than ANTA, Li Ning and so on.

In the figure below, taking the material cushioning function as an example, in the two categories dominated by the market, XTEP did not launch the midsoles technology of the power nest until 2021.

Each brand midsole technology launch time/de-consumption mapping

According to the company's annual report data, Xtep's expenditure on research and development in 2021 was 252 million yuan, an increase of 13% year-on-year. The company's R&D investment in 2017-2021 only achieved a compound growth of about 12%. Xtep's R&D investment in 2021 is evident.

So, can Xtep's blood investment this time be exchanged for cost-effective sales growth?

With a certain brand awareness, Xtep did not put the main sales channels online, the data shows that Xtep's revenue is mainly offline, and the proportion of online and offline revenue is 20%: 80%.

We compared the shoes with the highest sales volume in the online Xtep flagship store and found that compared with Li Ning's 500 yuan running shoes and 20,000+ sales, Xtep's hot sales are only about 100 yuan of shoes.

Anta and Li Ning Taobao flagship store hot product comparison go to consumption mapping

Offline, we visited two brick-and-mortar stores in Wuhan Optics Valley Pedestrian Street. The loudspeaker at the entrance of the store repeatedly played "Select two pieces 5.5% off, welcome to enter the store to buy", and the people who walked into the store followed the sound were like "the big mother who picked up leaks in the vegetable market". Curious about how cheap it would be, we walked into the store anyway.

The front foot just stepped into the store, and the back foot was followed by a shopping guide, enthusiastically asking what kind of shoes you wanted. When asked about the best-selling shoes in the store, the shopping guide did not hesitate to take out a foam green hot sale shock absorbing spinning shoes of the season.

Glancing at the price of 439 yuan, I can't help but let people retreat under their real names. When asked why the price is higher than the average price of shoes in the store for 200, the shopping guide only prevaricated on the grounds that "the material is better and it is more comfortable to wear".

Within five minutes of our stay, a couple also went into the store, looked at the seasonal explosive shoes recommended by the shopping guide, asked the price, the two looked at each other, and threw a sentence of "Thank you, let's see again" to the shopping guide and walked out of the store.

The hot sale of online 100-yuan shoes and the difficulty of selling offline 400-yuan shoes also show that the status of XTEP in the hearts of the people still needs to be improved. It used to be "very cheap, but I won't buy it", and now it is "not cheap, but it is not worth buying", said an old fan who has supported domestic products for many years.

In summary, under the high research and development cost investment of Xtep last year, the change in sales revenue brought by Xtep is not very obvious, and its cost performance is temporarily difficult to show its advantages.

Of course, the consideration of the benefits of R&D investment is not something that can be seen at the moment, and it will take time to test.

Second-tier city stores are empty, urban youth do not buy it, under the blood of research and development investment, Xtep failed to exchange for the sales benefits of second-tier cities, Xtep from the city to the countryside, after sinking into the third and fourth lines, where can Xtep go?

Write at the end

Jinjiang is a city known as the "shoe capital of China", and more than 3,000 shoe and garment factories such as Delhui, Xidelong, Anta and Xtep have come out of the city.

After years of turbulence and extensive barbaric growth, the grassroots vitality of traditional shoe manufacturing has gradually disappeared.

Delhui and Xidelong have fallen, market demand has gradually returned to sanity, the sequelae of brand brutal expansion have emerged, followed by the inventory crisis caused by overcapacity.

By controlling new product orders and increasing discounts to clean up inventory, Xtep is slowly coming out of the crisis. As a domestic brand, it is not easy to rise in the crisis, combined with the sports boom to create sports demand, Xtep invested in research and development, but it can no longer get the favor of first- and second-line youth.

Nowadays, the rise of small town consumption power, with brand power and cost performance, Xtep from the city to the countryside, may have been a market choice of last resort, otherwise where can it go?