Written by Duoke
Source: Bedo Finance
A few days ago, a marathon turmoil pushed Xtep to the forefront of public opinion.
In the final sprint of the 2024 Beijing Half Marathon held on April 14, several foreign runners looked back and waved their hands at He Jie after overtaking He Jie, and were finally overtaken by He Jie, and finally "guaranteed" to the championship.
He Jie is a contracted athlete of Xtep, and the three foreign athletes suspected of "releasing water" are wearing Xtep brand shoes and clothing, and Xtep is one of the partners of this year's Beijing Half Marathon.
Based on this, the discussion about "whether Xtep is rigging the competition" has swept the Internet like an overwhelming atmosphere. A group of netizens have expressed their opinions, but most of them are "soul torture" to Xtep.
At the same time, after Xtep's suspected manipulation of the game attracted social attention, it soon fermented into the secondary market of Hong Kong stocks, and quickly set off a huge wave, and the share price of Xtep International (01368) fell sharply in two consecutive days after the incident, evaporating the market value of one billion Hong Kong dollars.
1. An apology, the public does not "buy it"
Whether Xtep was wronged or did it on purpose, on the afternoon of April 19, we finally waited for the verdict of this public opinion storm.
The Beijing International Long-distance Running Festival-Beijing Half Marathon Organizing Committee issued a notice stating that the three foreign athletes were pacemakers (commonly known as "rabbits", whose role is to help the runners maintain their rhythm in order to improve their performance), but Xtep did not clearly label the pacemakers, resulting in the organizing committee mistakenly signing up the four foreign pacemakers as special invited athletes.
The results of the investigation are that the organizing committee punished the relevant units and individuals involved, cancelled the results of the competition of four people, including He Jie, Willy, Degene, and Robert, and withdrew the trophies, medals and bonuses.
At almost the same time as the notice was issued, Xtep issued an "apology statement" on social platforms, summarizing the incident as "the relevant staff made a mistake in the registration process".
But netizens obviously didn't buy it, and overwhelming doubts poured in, ridiculing that the event was a "Beijing Xtep Half Marathon Exhibition Race", and on the other hand, sighing "The marathon spirit has become like this?"
As we all know, the Beijing Half Marathon is one of the most prestigious marathons in the country, and we can't help but wonder where Xtep got the courage to "guarantee" the champion, and what prompted it to make such a risky move in front of hundreds of millions of spectators.
The answer is actually quite simple.
The deeper reason for the risky move is that in the face of increasingly fierce market competition and growth anxiety, "it has to be done".
Second, the consumer market is turbulent, what is Xtep's response to?
Of course, if we change the perspective and jump out of the incident itself, from the perspective of the development process of China's sporting goods industry, Xtep's brand strategy counterattack road is still very worthy of our in-depth study.
Dial the hour hand back, when Xtep first started, it can be described as infinitely beautiful, and the post-80s and 90s generations are even more of its unique advertising slogan "Xtep, extraordinary feeling" It is very familiar, in the millennial era when everything is getting better and full of hope, Xtep grasped the psychology of people's attention to popular stars, invited Nicholas Tse and other popular film and television stars to be endorsements, and spent money on TV commercials and title major popular variety show strategies, becoming the hot domestic sports shoes and clothing head brand at that time, and in 2005, it was among the first phalanx of China's sporting goods industry.
During this period, it was thanks to the "horse racing" operation that Xtep was also known as the fastest-growing sports brand in China 20 years ago, and it ushered in a peak and glorious period at that time.
However, the consumer market is always turbulent and uncertain. The sudden reversal of the head of the car and the sharp downward market gave Xtep a "roundabout kick".
Since 2011, the entire footwear and apparel industry has changed dramatically, after the 2008 Olympic Games, the major brands have over-expanded, resulting in inventory backlog, overcapacity problems have suddenly surfaced, the growth of the entire industry has been hindered, and even negative growth has occurred, and the mainland sports footwear and clothing market as a whole has ushered in a period of shock transformation.
According to the data released by Guosheng Securities Research Institute, the CAGR of the mainland sports footwear and apparel market reached 16% from 2007 to 2020, and fell sharply to single digits from 2011 to 2014, only 2%.
Like many domestic sports shoes and clothing brands, in order to survive the cold winter safely, Xtep faced huge inventory and operating pressure, and the first way to bear the brunt is to reduce costs and increase efficiency, reduce prices and promotions to quickly digest high inventory, and cut off all expenses. As a result, Xtep had to embark on a helpless road of discounting and selling and closing stores to save itself.
In addition to this path that friends are also taking, major domestic brands are also looking for another way, taking Anta and Li Ning as examples, which are no longer extensive "store opening" expansion, but to reform the retail side and promote transformation.
In 2018 and 2019, Li Ning achieved a growth of more than 40%. Anta, on the other hand, made a lot of money through large-scale mergers and acquisitions in various countries, and with the help of multi-brand strategy synergy and complementary operation.
Xtep is completely different from the two, and began to explore new increments in subdivided fields, betting on road running fields that were not valued by major brands at that time, and constantly matching the brand and road running genes by sponsoring related events, so as to repeatedly deepen the impression of consumers.
You must know that since 2007, Xtep began to sponsor marathon events, and with the gradual sinking of the marathon in the later stage, it is getting closer and closer to the general public, and the number of related events has grown exponentially, especially in recent years, people have a soft spot for running sports with low consumer costs and simple and feasible, and the popularity of marathons has been online.
According to public data, over the past 17 years, Xtep has sponsored more than 1,000 marathons, making it the brand that sponsors the most marathons in China.
The use of the event to amplify the volume is only the icing on the cake for brand marketing, and the core is to have excellent products.
To this end, Xtep has developed about 6 running shoe series based on the characteristics of running and the purchasing power of consumers. For example, the racing shoe series suitable for professional marathon runners, the power nest technology series with the main cushioning function, the hydrogen wind series with comfortable and easy running, and so on.
It is reported that at present, 83 Chinese athletes have won a total of 370 marathon championships wearing Xtep's 160X series.
Looking at it now, it is clear that Xtep's strategic adjustment during the crisis was forward-looking. According to iResearch's estimates, there will be nearly 300 million mass runners and 100 million core runners in China in the future.
Under a blue ocean, it also indicates that there is still a lot of room for growth in the road running market for Xtep.
3. The bottleneck of growth has emerged, how can Xtep go further?
As Dale Carnegie, the father of modern adult education in the United States, said: "It is ambition to go towards a certain goal, and it is ambition to never stop halfway through. ”
As far as the commercial market is concerned, the ultimate goal is to implement it with accurate positioning and layout, or to feed back to performance.
From this point of view, Xtep's first-mover advantage in the field of road running does not seem to be reflected at the performance level, especially the analysis of the timeline, but it seems very fragmented.
According to the financial report data, from 2019 to 2022, Xtep's revenue growth rate will be 28.19%, -0.13%, 22.53%, and 29.13% respectively, and the net profit growth rate will be 9.17%, -30.96%, 76.11%, and 2.57% respectively, of which the revenue scale in 2021 will exceed 10 billion. It can be said that although Xtep's performance in previous years has been up and down, the overall performance is quite impressive.
However, in 2023, there will be a situation of increasing profits but not increasing income, and last year's revenue was 14.346 billion yuan, a year-on-year increase of 10.9%, compared with the 29.13% growth rate in 2022, which is obviously a significant decline.
In terms of revenue, Xtep's apparel business revenue reached 5.904 billion yuan last year, a year-on-year increase of 20.6%, which was the highest growth rate among the three sectors, and the proportion of revenue increased to 41.1%, while the footwear business, which contributed the most to revenue, achieved revenue of 8.172 billion yuan, an increase of only 5.3% year-on-year, accounting for 57% of total revenue.
It can be seen that the footwear business, which Xtep has high hopes for and is also a strong responsibility, not only lags behind the clothing business in terms of revenue growth, but also does not outperform the revenue growth rate of the entire group.
In addition, for the most critical inventory data of footwear and apparel companies, Xtep's inventory and inventory turnover days are also increasing significantly. For the whole year of 2023, Xtep's turnover cycle will be 90 days, and in the first half of 2023, Xtep's average inventory turnover days will reach 115 days, the highest level in the past five years. By the first quarter of this year, the company's channel inventory turnover increased again to four and a half months.
For the industry, the increase in inventories is something to be wary of. History has proven countless times that overstocking is often the source of crises.
In 2023, Xtep's advertising and promotion expenses will be 1.962 billion yuan, a year-on-year increase of 28%, accounting for about 13.7% of total revenue, an increase of 1.8 percentage points from 2022. In this regard, Xtep directly said in the financial report that the increase in advertising and promotion expenses was mainly due to the increase in advertising activities and event sponsorship.
On the contrary, Xtep's R&D investment is far less than a fraction of the sales expenses. According to the data, its R&D expenses last year were only 398 million yuan, accounting for 2.8% of total revenue, and even less than 3.7% of 361 degrees.
In general, after experiencing the difficult transformation and exploration in those years, Xtep's brand development road still needs to be improved, but the most difficult moment can be regarded as surviving.
Time has come to the present, the market has already changed, competitors and latecomers are becoming more and more powerful, Xtep wants to catch up with the new opportunity of the consumer economy to pick up the new opportunity, and the time is also very urgent.
The low-level practice of "manipulating the event" to amplify the volume is by no means an antidote to Xtep.
Finding out the difficulties of transformation and tackling them, rethinking how to build a better brand marketing strategy and playing style, and leading the performance to the right track as soon as possible are the most important things that Xtep needs to do at present.