Wenzhou, a leather shoe production area known to the people of the whole country.
This place not only has large and small leather shoe production factories, but also several well-known leather shoe brands such as Kangnai and Aokang.
However, in recent years, consumer demand for leather shoes has declined, and the living space of these brands has been affected. According to the statistics of the China Leather Association, from 2015 to 2020, the output of leather shoe manufacturing enterprises in mainland China showed a fluctuating downward trend, and the decline was large. It is estimated that by 2026, the domestic leather shoe industry may shrink to 1.7 billion pairs.
In order to be able to "break the game", these former leather shoe giants are looking for a second growth curve, and the same is true for red dragonflies. Like many brands in their transformations, Red Dragonfly first started its core business and began to explore more new tracks based on it.
Just some time ago, Tianyancha information showed that they established a wholly-owned subsidiary, Hangzhou Red Dragonfly Light Outdoor Products Co., Ltd., with a registered capital of 10 million yuan, ready to lay out the light outdoor field.
1. Sing all the way
Qian Jinbo, the founder of Red Dragonfly, is a native of Yongjia, Wenzhou, Zhejiang. Like most Wenzhou people, he embarked on the road of doing business from south to north since he was a child, relying on this experience he accumulated experience, money and connections, so in 1995 he founded Red Dragonfly.
At the beginning of the brand's establishment, the entire leather shoe industry has begun to enter an upward stage. In order to be able to make a name for himself, the Red Dragonfly's way was different at the time. In terms of products, they specially invited Milan designers to design for the brand, the launch of a combination of Chinese and Western styles of leather shoe products; packaging, he is also willing to pay the cost, when others are using 6 Mao packaging box, Red Dragonfly chooses three times more expensive box; in addition, in advertising Red Dragonfly is also unique, at the beginning of its establishment, Red Dragonfly invested 200,000 yuan and Wenzhou TV co-organized "Red Dragonfly Journey" The column spreads the brand, and also advertises on major TV stations, and under the promotion of such marketing, the turnover has exceeded 10 million in just one year.
Around 2000, the offline retail channel was in a dividend period, and the rise of Red Dragonfly was inseparable from the multiple channel plans they created. In 1998, Red Dragonfly created the "Green Grass Plan", that is, to accelerate its expansion through low cost and spread its distribution outlets across the country. A year later, in 1999, the "Sunshine Project" was launched, transforming all distribution outlets into specialty stores, and Red Dragonfly was under the control of Red Dragonfly. It is under this channel layout, the formation of franchise stores, directly operated stores supplemented by the channel model, by 2000, the red dragonfly stores in the country has exceeded 2,000, the annual sales reached 700 million yuan.
At the same time of brand development, Red Dragonfly not only builds its own culture, but also contributes to the construction of domestic shoe culture. In 1999, it spent 30 million yuan to build China's first shoe culture museum, and also set up the country's first shoe culture research center, published the country's first "Chinese footwear culture dictionary", and issued the country's first set of shoe culture stamps.
Under the dual construction of culture and channels, Red Dragonfly has expanded rapidly across the country, with a maximum of 4,300 stores. By June 2015, Red Dragonfly landed on the Shenzhen Stock Exchange, with a market value of nearly 9 billion yuan.
2. Transformation and change
Although the listing was successful, Red Dragonfly's revenue did not improve significantly. According to the company's financial report, during the period from 2015 to 2022, 2017 achieved the best results, with revenue and profit not only achieving double growth, but also reaching the peak after the brand was listed, with 3.245 billion yuan and 382 million yuan respectively. But other than that, all other years have been double-dropped.
On the one hand, consumers' demand for leather shoes has changed. On the other hand, the traditional leather shoe industry is facing the impact of channel reconstruction. Traditional brands have relied on offline franchise stores to rise, and now they are also trapped in franchise stores. With the rapid rise of e-commerce platforms, the customer flow of offline stores has been seriously affected. Failing to keep up with the trend of e-commerce, Belle, once China's largest women's shoe retailer, was delisted in 2017. By the end of 2022, Red Dragonfly will have reduced its offline stores to 2,988, including 460 directly-operated stores.
In the face of the decline of the leather shoe market, brands are actively transforming and seeking vitality. So Qian Jinbo's son began to serve as the president of Red Dragonfly in December 2020, and he previously said in an interview with the "Qianjiang Evening News" that Red Dragonfly is positioned as a group of young people between the ages of 25 and 35.
As early as 2016, in order to meet the needs of young consumers, Red Dragonfly launched two new young fashion brands, D.NEST and D.VALLY, D.NEST is positioned in personalized buyer stores, and D.VALLY is positioned in full-category lifestyle integrated stores; In 2018, in order to get closer to young people with more consumption power, it signed a contract with Yang Ying to try to transform towards youth; on March 8, 2020, 56-year-old Qian Jinbo was named "Bobo Adult" at the China Shoe Culture Museum. 's nickname began to try live streaming, and the sales volume of this 2-hour live broadcast exceeded 500,000 yuan.
Thanks to the global marketing layout of online and offline channels, the GMV of the brand exceeded 800 million during the Double 11 in 2022, a year-on-year increase of 111%, the sales volume on the Tmall platform increased by 145% year-on-year, and the overall sales ranking entered the top three of Tmall fashion shoes, of which the unit price of Martin boots increased by 130% year-on-year, and the sales volume increased by 300%. The proportion of online channel sales increased from 23.7% in 2019 to 30.8% in 2020.
Whether it is signing a celebrity or engaging in e-commerce live broadcast, Red Dragonfly has indeed made some breakthroughs, but it is difficult to say that it allows this brand to win the favor of the current young generation of consumers, and if you want to regain the market, you still need to find a way to really impress this group of people.
3. Find the second growth curve
In addition to channels, with the upgrading of consumption and the change of lifestyle, traditional leather shoes are increasingly unable to meet the needs of consumers, and brands urgently need to find a second curve of growth.
Most brands will actively diversify when their development is in full swing. For example, the former A-share sports brand No. 1 Guirenniao entered many tracks such as event operation, sports services, and sports training from 2014 to 2017, and even changed the company's securities name to "all-round sports" at one time. As early as 2001, it set foot in the real estate industry and established Shanghai Red Dragonfly Real Estate Co., Ltd. In 2018, it jointly funded the establishment of Zhongxin Securities with OP Asia Securities and Dingliyuan Investment. In 2020, the MCN agency Bumblebee was established. In addition to this, it is also involved in advertising, education, and other fields.
Although the industrial layout is diversified, it has not caused too much splash. This led them to finally choose to return to the category of shoes and increase their weight in non-leather footwear.
In the 2022 financial report, Red Dragonfly said that it will tilt more resources into the research and development and design of non-traditional leather shoe products to create "business card-level" products. One of the results was the launch of the casual shoe brand GONGJI in 2022.
At the performance briefing held by Red Dragonfly in September this year, the official said that in the future, the light sports, light outdoor, and casual fashion footwear of non-leather footwear will become the company's development point. Qian Fan also said that young consumers' demand for traditional leather shoes with strong constraints has continued to weaken, and the domestic environment in the past three years has further strengthened this trend. "As a veteran footwear brand with a history of nearly 30 years, the most important thing that Red Dragonfly needs to break through is the recognition of the brand by young consumer groups. ”
In fact, it is not difficult to understand the establishment of a light outdoor subsidiary this time, and the popularity of outdoor sports this year is self-evident, as can be seen from the layout of various brands in the jacket track. According to the development plan released this year by seven departments including the General Administration of Sports of China, the total output value of China's outdoor sports industry is expected to exceed 3 trillion yuan by 2025, and by the end of 2021, the number of people participating in outdoor sports in the country has exceeded 400 million.
Outdoor is a trend, but whether the red dragonfly can catch it depends on the product and later operation. A former executive of Red Dragonfly, who did not want to be named, told Lazy Bear Sports that he was afraid of "catching hot spots and catching another empty one in the end." ”
On October 28, Red Dragonfly released its performance report for the first three quarters of 2023, which showed that the revenue in the first three quarters was 1.869 billion yuan, a year-on-year increase of 12.45%, and the net profit was 47.9692 million yuan, a year-on-year increase of 119.58%. The performance has increased significantly, but there is still a big gap with the pre-epidemic period.
How the red dragonfly flies out of their own curve again, is not its own proposition, it is also the common challenge of Wenzhou leather shoe factories - the transformation of an industry is not easy, who can first go out of a successful transformation road, maybe in order to have a new demonstration effect.