Dr. Martens, the originator of Martin boots, fell into the storm of store withdrawal. On July 9, the business editor visited the site and found that Dr. Martens Beijing Sanlitun, Beijing Raffles City, Beijing Lufthansa Outlet and other stores have now withdrawn, and the stores that are still open have also started a 5% discount. Dr.Martens' financial report shows that Dr.Martens' cooperative distribution agreement in the Chinese market will expire in the first half of 2023, when the parent company will withdraw the operating rights and gradually switch to direct operation. Industry insiders pointed out that even if it switches to direct sales, Dr. Martens will not have obvious breakthroughs in the future, although it has accumulated a lot of loyal consumers in the past few years, but as a fashion consumer brand, it lacks in the research and development innovation of single products, the richness of SKUs, etc.
5% off the whole venue Countdown to store withdrawal
Perhaps because of the withdrawal of the store, Dr. Martens, which originally cost more than 1,000 yuan, can now be bought at half the price. On July 9, Xiaobian visited Dr. Martens stores such as Chaoyang Joy City and APM Shopping Center and found that the promotional signs of "5% off in the whole venue" in the store were particularly eye-catching, but according to the staff of Dr.Martens Chaoyang Joy City stores, the current code break situation is very serious, "there has not been such a big activity before, and the popular styles are basically broken and will not be replenished."
The same is true for multiple other stores. Dr. Martens apm shopping center clerk also bluntly told Xiaobian that the store will be closed on the 20th of this month, "The stores here in Beijing are all agent stores, and the contract will be withdrawn when it expires, so the clearance special."
The lowest discount for a single product in Dr.Martens Spray outlet store can even reach 199 yuan a pair, "The store is going to be closed recently, so there is such a discount." The clerk of the Spray outlet store said. In addition, Xiaohongshu's account titled "Link Zhongguancun Martin Store in Beijing" recently posted a number of posts about the upcoming withdrawal of stores and 5% off promotions, and the relevant person in charge of Link also confirmed to the editor that Dr. Martens is about to withdraw the store.
Dr.Martens official website information shows that the brand still has 14 stores in Beijing, but Xiaobian visited the field and found that Beijing Sanlitun store, Beijing Changyang Tianjie, Beijing Raffles City, Beijing Lufthansa outlet store these four stores have been withdrawn, according to incomplete statistics, Dr. Martens still has about 10 stores in Beijing.
Not only Beijing, but also other cities have seen the news of Dr. Martens withdrawing stores. According to a report by Urban Express Orange Persimmon Interactive, Dr. Martens has closed many stores in Hangzhou Wulin Yintai and Kerry Centre, and there are large discounts before closing. Relevant information released by netizens and Martin's clerks in Xiaohongshu shows that Dr.Martens is promoting the withdrawal of cabinets in Shanghai, Liaoning, Chongqing, Jiangsu and other cities.
At the time of the large-scale offline store withdrawal, Dr. Martens' Tmall flagship store, Jingdong flagship store and other online channels are operating normally, and the operators are Shanghai Elva Trading Co., Ltd., which is Dr. Martens. Martens brand owner is 100% controlled and directly operated by the brand side, so it does not provide the same discount as offline stores, and most goods are sold at the original price.
Regarding the reasons for the large-scale withdrawal of stores and the future planning of the Chinese market, the editor sent an interview outline to the Dr. Martens brand, but did not respond as of press time.
The distribution agreement expires and the franchise is changed to direct operation
The withdrawal of Martin's boots originator is actually a clue. Dr. Martens' FY2022 results report pointed out that Dr. Martens' cooperative distribution agreement in the Chinese market expires in the first half of 2023, when the parent company will withdraw the operating rights and gradually switch to direct operation. During the reporting period, Dr. Martens opened two directly-operated stores in Shanghai, China for the first time, which means that in addition to these two stores, the rest of the Chinese market stores will enter the countdown to store withdrawal, which is also consistent with the statement of the previous store staff.
It is understood that Dr. Martens has a number of agents in China, including Shanghai Felt Trading Co., Ltd., CPU (Cool Planet Unity), etc., among which the relevant person in charge of Shanghai Felt Trading Co., Ltd. told Xiaobian that it is no longer Dr. Martens. Martens' agents, other agents have not yet responded.
Dr. who has been in the Chinese market for 11 years Martens, too, has experienced highlight moments. The brand's masterpiece "1460 eight-hole boots" is the first pair of boots produced on its production line and is the origin of Martin boots. In 2012, Dr. Martens officially entered the Chinese market, in addition to laying out offline channels, it also opened online channels such as Vipshop, Tmall, JD.com, and WeChat mini programs.
In the 2019 financial year ended 31 March 2020, Dr. Martens' sales increased by 48% to £672.2 million, with revenue in Asia Pacific increasing by 35% to £132.1 million. According to Dr. Martens reported fiscal 2020 (ended March 31, 2021) that Dr. Martens' operating income in the Chinese market increased by 46%.
However, the rapid growth has not continued, and the financial report for the first half of fiscal 2023 shows that compared with the previous double-digit growth, the revenue in the Asia-Pacific market increased by only 9%, and the revenue from China accounted for only 1% of the global market; In the latest fiscal 2023 financial report, Dr. Martens pointed out that in the first quarter of fiscal 2023, the revenue in the Chinese market was zero.
However, it is not difficult to find from Dr.Martens' financial report that increasing the proportion of direct sales is one of the reasons that promote Dr.Martens' revenue growth. According to the financial report for fiscal year 2022, the UK and Italy in the EMEA (Europe, Middle East and Africa) region performed strongly, and a number of distribution businesses in Italy successfully transformed into direct operations, with revenue growth of 62% at constant exchange rates; According to the brand's performance report for the first half of fiscal 2023, sales in direct channels increased by 21%, and by market, revenue in EMEA (Europe, Middle East and Africa) increased by 9%, mainly driven by direct channels. The brand also pointed out in its FY2023 annual report that it will build brand equity and promote profit expansion by increasing the number of self-operated stores and developing e-commerce.
Brand boundaries are blurred and highly substitutable
Although the direct sales model has begun to bear fruit in markets such as Europe, Dr. Martens has to make more than that. "Switching to direct sales is more beneficial from the perspective of brand control and brand image, but from the perspective of opening up the market and being familiar with local resources, the agency model is more advantageous." As far as Dr. Martens is concerned, taking it back now for direct management is not the optimal solution. Zhang Peiying, an expert in the field of fashion, believes.
He further pointed out that how to integrate local resources and direct management model after ending the agency relationship will be a challenge for brands. And even if it is transferred to direct management, Dr. Martens will not have much breakthrough. Because although this brand has accumulated a lot of loyal consumers for decades, as a fashion consumer brand, whether it is from the research and development and innovation of single products, or from the fullness of the horizontal industry, including the number of SKUs, product extension, etc., there are actually deficiencies.
Dr. Martens store product information shows that the current 5 main shoe models were all born in the sixties and seventies of the 20th century. After decades, the top sales shoes of Dr.Martens Tmall flagship store are still the main shoe types "1460 eight-hole boots" and "1461 three-hole shoes", although the summer brand has also launched sandal styles, but the monthly sales are not more than 100.
In addition, Zhang Peiying also pointed out that another reason for Dr.Martens' poor development is that it is known as a shoe shape, not a brand-specific LOGO, "which leads to the brand's boundary is not very obvious, and the substitution is strong." When Martin boots became a trend, Dr. Martens was unable to turn the trend into his own brand advantage."
UTAbrand Yang Dajun pointed out, "The fashion and consumer goods market is cyclical, and whether a company can be sustainable depends on whether it can adapt to the times and meet the demand, and in the current Chinese consumer market, sports footwear products occupy the 'C position', in contrast, leather shoes-based companies have not performed well in recent years, and the leather shoe market is also shrinking." Dr. Martens' current products are only leather shoes, which is naturally difficult to match the current consumer demand." According to a survey by Huajing Industry Research Institute, the production of leather shoes in mainland China fell from 4.618 billion pairs to 3.524 billion pairs from 2016 to 2021. According to data from the Prospective Industry Research Institute, it is expected that by 2026, the domestic leather shoe industry will shrink to 1.7 billion pairs.
For Dr. Martens' future development in the Chinese market, Zhang Peiying believes that "innovation is its key." Including product research and development, not only footwear products, but also other clothing products. Through decades of accumulation, the brand itself also has this flashpoint and influence, and can also be quickly deployed through mergers and acquisitions."
Lin Yuwei/Wen and photo
Part of the image source: brand official micro