Behind the heated discussion of "domestic down jackets sell for 7,000 yuan": the high-end of domestic brands is difficult
(Text/Xia Fenglin Editor/Xu Zhe) Recently, "domestic down jackets sold for 7,000 yuan" rushed to the hot search, causing attention and discussion on social platforms. Prior to that, industry leader Bosideng (03998. HK) has also been in the spotlight for its high pricing. The Observer Network Company Channel noticed that in recent years, the topic of down jacket price increases has continued, and "sky-high" down jackets of more than thousands of yuan are also commonplace.
A number of interviewees told the observer network that the price increase of domestic down jackets is related to the cost of raw materials, production costs and other factors. It seems that there is a reason for it, but in front of the down jacket assassin, most consumers don't buy it. In this regard, industry insiders further told the Observer Network company channel: "Consumers' awareness and trust in domestic brands are relatively low, and the consumption concept of 'imported goods = high quality' has been formed for a long time, which makes domestic brands face competitive pressure in the high-end market." ”
It should be pointed out that consumer brands taking the mid-to-high-end route is the direction of the industry to seek breakthroughs, which has almost become an industry consensus. However, it is not easy to hit the high-end market, which is strictly guarded by foreign luxury brands. Even Bosideng, which took the lead in sounding the clarion call for high-end, has revealed its intention to increase the layout of inclusive down jackets after many years of bold high-end transformation.
In this regard, Fu Yifu, a senior researcher at the Xingtu Financial Research Institute, told the Observer Network Company Channel that domestic brands take the mid-to-high-end route, which is not only reflected in the high price, but also in the higher requirements for product quality, brand, design and other aspects.
The price of domestic down jackets is rising
Recently, Skypeople, a cutting-edge domestic down jacket brand, has attracted attention for its down jackets priced at nearly 7,000 yuan.
According to public information, Skypeople was born in 2022, and the founding team was born out of a technology company, mainly for urban business elites. Its products are divided into multiple series, among which the price of down jackets is mostly between 2800-6800 yuan, and the selling points that support the high price are mainly the insightful design, the application of cutting-edge scientific and technological materials and exquisite craftsmanship claimed by the brand, and the professionalism and comfort of down jacket products are enhanced by science and technology.
Compared with Skypeople's emphasis on technology, professionalism and comfort, its pricing is higher than the industry average, which has attracted more attention from consumers. Before Skypeople, Bosideng, an industry leader, had also attracted market attention for its high pricing. In 2019, it launched a series of climbing products with a maximum price of 11,800 yuan, which once appeared on the hot search.
According to the Observer's inquiry at Bosideng's Tmall flagship store, the most expensive down jacket in Bosideng is the professional protective goose down jacket of the Dengfeng series, with a retail price of 7,800 yuan, followed by the down jacket of the ski series and the down jacket of the windbreaker with a price of more than 6,000 yuan. As a classic product of Bosideng, the "Extreme Cold Series" is currently priced at 1999-4599 yuan.
In recent years, with the blessing of the high-end strategy, the price of Bosideng down jackets has gradually jumped. According to public data, the average price of Bosideng's tags in 2017 was around 1,000 yuan, which rose to 1,600 yuan in 2020 and 1,800 yuan in 2021. The company said that it will reach more than 2,000 yuan in the future.
The price of Gaofan after the brand upgrade is not "close to the people". In terms of products, Gao Fan directly cut off non-goose down products, not low-end lines, and the current price of adult down jackets is mainly between 1,000 yuan and 5,000 yuan. Gaofan's products are no exception, focusing on the sense of technology and functionality, and emphasizing its "luxury" quality in the propaganda language.
In addition, down jacket brands such as Snow Fly, Yalu, and Gaofan are all marching into the mid-to-high-end market, and down jackets of more than 1,000 yuan have become the norm. Observer.com checked the online shopping platform and found that the price of the flying goose down obsidian series and the fox fur collar series down jacket exceeded 3,000 yuan before the coupon. Even Yaya, which has risen for the second time by relying on social e-commerce in recent years, has also launched a co-branded model with a listing price of nearly 6,000 yuan.
According to the data of the China National Commercial Information Center, in recent years, the average unit price of down jackets in mainland China has been rising, from 432 yuan in 2015 to 656 yuan in 2020, with a price increase of nearly 52% in five years, and the average price is concentrated between 500-1000 yuan;
Raw material costs and marketing expenses push up terminal prices
The price of down jackets is getting higher and higher, what is the cost?
A number of interviewees told the observer that the main reason for the continuous rise in the price of down jackets is that with the implementation of industry standards, it is more difficult to obtain down resources, the main raw material of down jackets, and the price has been rising in recent years, which directly leads to the increase in the production cost of down jackets, thereby promoting the rise in the price of down jackets.
According to the Huajing Industry Research Institute, the cost of down jacket raw materials accounts for about 75% of the total cost, mainly including goose down/duck down (45%), fabrics (25%), and accessories (5%). Previously, Netease Yanxuan official had responded that the cost price of a down jacket priced at more than 1,000 yuan was more than 900 yuan, and it took 12 geese to make a down jacket.
It is worth mentioning that on April 1 last year, the down garment industry implemented a new industry standard and revised the standard of "down content" of down jackets to "down content". This means that there are higher requirements for the quality of down jacket filling, which in turn pushes up the cost of raw materials for manufacturers.
The down content of down jackets on the market today is 90%, 80% and 50%. Taking 90% goose down as an example, down gold network data shows that recently, the price of 90% white goose down has exceeded 800 yuan/kg, an increase of 25% in the past one year, and the price of 90% gray goose down has increased by 31.25%. The prices of 90% white duck down and 90% gray duck down have also risen to varying degrees.
Yaya, which is positioned at national parity, began to launch 1,000 yuan products last year. Yaya officially explained that it was not a simple price increase, but the filling of the product was changed from duck down to goose down, and the cost increased by 50%.
Fu Yifu told the observer network that not only the cost of raw materials, but also the rising labor costs in the midstream, as well as publicity and promotion costs, logistics costs, inventory costs and other factors will be reflected in the terminal, which in turn will raise the price of down jackets.
Bosideng's financial report shows that from the 2018/19 fiscal year to the 2022/23 fiscal year, Bosideng's distribution expenses (including advertising expenses, etc.) increased by more than 78%. And since the 2019/2020 fiscal year, distribution expenses have remained above 35% of revenue.
In addition, Yang Yu, a senior retail analyst and founder of One View Commerce, also said that intensified market competition and brand premiums may also be factors that lead to the rise in down jacket prices. Some high-end brands use brand premiums to achieve higher profits.
The high-end of domestic down jackets faces multiple challenges
Whether it is the newly established cutting-edge brand Skypeople or the veteran Bosideng with a history of nearly 50 years, behind the heated discussion of its high-priced products by consumers, it exposes its ambition to nugget the high-end market.
Judging from the data, there are not many consumers who are willing to pay for high-priced domestic down jackets. Observer.com noticed that on an e-commerce platform, there were only 2 sales of goose down jackets priced at 7,800 yuan, and the total sales of two technology down jackets priced at 6,800 yuan exceeded 10 orders. This may reflect that it is not easy for domestic down jacket brands to "test the waters" in the high-end market.
In this regard, Pan Jun, director of global commodity strategy of Bain & Company, said in an interview with the observer.com that consumers' awareness and trust in domestic brands are relatively low, and they have doubts about high-priced domestic brands; secondly, domestic consumers have long formed the consumption concept of "imported goods = high quality", which makes domestic brands face competitive pressure in the high-price field; thirdly, there is a certain gap between domestic brands in product design, brand marketing and system management, and it is difficult to meet the needs of some consumers.
Observer.com noted that for a long time, the high-end down market in mainland China has been occupied by foreign brands. The two major down luxury brands, Canada Goose and Moncler, both have more than 70 years of brand history, and have built a solid high-end image early after entering the Chinese market.
Moncler single-brand revenue in the first half of 2023 increased by 29% year-on-year to 935 million euros (about 7.3 billion yuan), of which revenue in Asia increased by 39%. Excluding the impact of the low base in 2022, retail sales from Chinese consumers still recorded a 50% increase compared to the same period in 2021. Remo Ruffini, the new CEO of Moncler Group, has told the media that the Chinese market accounts for 25% of the group's annual sales and is an important driving force for business growth.
Canada Goose's performance report for the first quarter of fiscal year 2024 shows that in the three months ended July 2, 2023, Canada Goose's total revenue increased by 21% year-on-year to 84.8 million Canadian dollars (about 460 million yuan), and the revenue of the Asia-Pacific region to which China belongs increased by 52%, continuing the strong growth of 65% in the previous quarter.
And before the arrival of this winter, another Canadian high-end down jacket brand, Nobis, has also entered the Chinese market. Its parent company, Nobis Inc., signed a cooperation agreement with Chinese fashion group Golith (603808.SH) at the end of May, under which the two parties will each invest 40 million yuan in intellectual property and currency, each holding 50% of the shares, to set up a joint venture in Shenzhen to develop and operate the business of the Nobis brand in China.
In the process of high-end, domestic down jacket brands not only have to face the hunting of foreign high-end brands, but also face the impact of other clothing categories. In September this year, the market share of jackets increased by 8.2 percentage points compared with the same period last year, while down jackets decreased by 3.1 percentage points. JD.com data shows that jackets have become the new favorite of young people, and the turnover has increased by 165% year-on-year since the beginning of this year. During this year's Double 11, the turnover of jackets from October 20 to 25 increased by 200% year-on-year. In the case of the continuous increase in the price of down jackets, many consumers have turned to the jacket and made the jacket a big bargain in vain.
In addition, there are many young consumer groups who have found a "high-end replacement" in the foundry. Cai Cai (pseudonym), a native of Tongling, told the Observer that the price of clothing in the mall was too outrageous, and she bought a suitable goose down jacket at half the price of the sign at a brand foundry. However, she also said that the styles in the foundry are not outstanding, and the number is relatively small.
In this context, even an industry leader like Bosideng, after plunging into the high-end road for many years, may also realize that this road is not as easy to follow as imagined, and recently announced that it will increase the layout of Pratt & Whitney down jackets. In this regard, Pan Jun believes that this may be an adjustment of Bosideng's market strategy. In the next decade, there will be a general trend of Chinese consumers turning to "M-shaped communities", and the Bosideng brand positioning is in the middle and high price segments, and the positioning of Snow in the Fly is weak in the cost-effective field, which can form a multi-level brand matrix of high, medium and low levels.
However, it is impossible to argue whether this is a trend or a forced adjustment. It is worth mentioning that the observer has noticed that in recent years, the revenue growth rate of Bosideng's high-end line has slowed down.
According to the financial data of previous years, in the 2020/21 fiscal year, the revenue of the Bosideng brand under the Bosideng brand down apparel business increased by 18.9% year-on-year, respectively, and in the 2021/2022 fiscal year, the value decreased slightly to 16.3%. In the 2022/23 financial year, it plummeted to 1.2%. However, in the latest performance report, Bosideng's brand revenue has achieved more than double-digit year-on-year growth. But even so, Bosideng still said that it would increase the layout of Pratt & Whitney down jackets and functional categories.
It should be pointed out that for today's Bosideng, high-end is still the only way for the brand to leap forward. Fu Yifu pointed out to the observer that any consumer brand taking the mid-to-high-end route is the direction of the industry to seek breakthroughs, which has almost become the consensus of the industry. Therefore, it is reasonable for domestic down jacket brands to lay out the mid-to-high-end. Some domestic down jacket brands take the route of mid-to-high-end differentiation, which actually caters to the current demand of some residents for consumption upgrading. However, taking the mid-to-high-end route is not only expensive, but also the brand power and product power of the product to support the high selling price, break the stereotype of consumers on domestic brands, and let consumers identify with them from the heart.
This article is an exclusive manuscript of Observer.com and may not be reproduced without authorization.