The slogan "Men should visit Heilan House twice a year" made me long for this men's clothing brand that was popular all over the country at that time. Now, when I actually walked in, I found that there were very few people at Hailan House.

In addition to the dazzling variety of earthy men's clothing, the lackluster business in the store shows that this national brand has long lost its popularity.

However, no company will give up the struggle.

Recently, Heilan House Brand Management Co., Ltd. applied for two trademarks, "Heilan Yuanshi" and "Heilan Yuanshi", which are internationally classified as "Category 25 - Clothing, Shoes and Hats". The trademark status is "Trademark Application Pending".

In fact, this is not the first time that Heilan House has "taken advantage of" the hot spots of the virtual economy. As early as 2018, it launched a cross-border cooperation with Tencent's mobile game "PUBG: Stimulating the Battlefield" with the theme of "Passing through Hailan's House, Stimulating Chicken Eating".

Behind this deliberate pursuit of innovation is the difficult situation of Heilan House’s inventory accumulation, large and small debts, and difficult offline development. Although the brand layout of Heilan House is no longer limited to men's wardrobes, in the overall younger clothing market, middle-aged Heilan House has been silent for a long time. The "go to Heilan House twice a year" joke seems to be just a joke.

Through offline store visits and analysis of brand pain points, this article will help you understand the following three questions:

1. Heilan House, known as the "man's wardrobe", now Is anyone else going?

2. Why is Heilan House so busy trying to get into the hot spots of the Metaverse?

3. After the consumption wave, how can old brands like Heilan House break out of the circle?

“Men visit Heilan House twice a year”, “Men’s Wardrobe, Heilan Home". With two catchy slogans, Heilan House has really become the first choice in many men's wardrobes.

Of course, from today’s perspective, Heilan House obviously “lied”. With the launch of multiple brands one after another, Heilan House's ambitions are no longer limited to male consumer groups. As early as 2011, Heilan established the women's clothing brand "Aiju Rabbit", breaking its exclusive focus on men's clothing brands. .

In addition, brands such as Sancano, a high-end customized suit and shirt brand established in 2014, OVV, a high-end women's clothing brand established in 2017, Heilan Select, a lifestyle home brand, and Black Whale, a trendy brand for young people and children, , boys and girls, these brands are all attempts by Heilan House to expand its business territory.

Qiu Pai Watchmaking

Why does Heilan House rapidly expand its brand categories? Is the once proud men's clothing brand no longer able to support the backbone of Hailan House?

According to the Amap map, there are currently 52 Heilan Home stores in Wuhan, most of which are concentrated in non-first-tier business districts such as Wuchang and Hankou. There are places with huge traffic such as Optics Valley where Wuhan college students are entrenched, and there are also old Wuhan market sites like Xiasimenkou of Yellow Crane Tower.

I came to Heilan Home located in Optics Valley Pedestrian Street at 6pm on a Thursday on weekdays. Although it is not as popular as on weekends, many students from surrounding schools and other consumers gathered on the pedestrian street in the evening. .

This Heilan Home is located in the middle of the pedestrian street. From a geographical point of view, it is not the best choice for traffic. This is mainly determined by the traffic flow of Optics Valley Pedestrian Street gradually decreasing from the outside to the inside.

Scene in the Heilan Home store, shot by Odd Couple

Although I was mentally prepared, I was quite surprised by the deserted popularity when I walked into the store.

There are only about two to three pairs of customers shopping in the approximately 150-square-meter store. After explaining my intention to buy a down jacket, the clerk recommended to me the brand’s best-selling model, which sells for about 700 yuan.

It is observed that the placement of goods in the entire store is relatively traditional, basically showing a side-by-side structure. The price of down jackets ranges from 300 to 1,600 yuan, and the price of casual pants ranges from 168 to 598 yuan. The average selling price of sweaters with the highest sales is about 300 yuan.

According to the clerk, about 30 sweaters can be sold a week. The sales of coats and down jackets are poor, and the sales of leather shoes and belt shirts are even worse.

On the other hand, in response to online concerns about the inventory issue of Heilan Home, we did not see the location of the store's warehouse in this store. There are about 400 products in the customer's field of vision. Compared with Compared with other clothing brands, the in-store activity space is slightly crowded.

After half an hour of in-store experience, overall, Heilan House has achieved its original brand slogan of "men's wardrobe".

From bottom to top, Heilan House’s men’s clothing categories are very complete, meeting the one-stop shopping needs of the majority of men. However, compared with UNIQLO and Heilan Home when they were first born, today’s Heilan Home has a higher frequency of follow-up and recommendation by store staff. For customers like me who prefer free-style shopping, it may bring poor results. shopping experience.

Subsequently, another search through Amap found that OVV, a newly established high-end women's clothing brand by Heilan House, has only opened 3 stores in Wuhan, one of which is located in the high-end K11 not far from Optics Valley Pedestrian Street. In the business district, by observing the store layout, we can also find that in sharp contrast with the Heilan House men's clothing brand, the store's clothing layout is loose and the space for activities is larger.

After joining the OVV shopping recommendation group through the guidance of a shopping guide, I found that the overall brand sales price of OVV is around 1,000 yuan, the average price of down jackets is around 2,000 yuan, and the fabrics are all made of white goose down. The overall tone of the brand is high-end, which is consistent with the store's positioning in Wuhan's high-end business district, K11.

Of course, from the overall layout, Heilan Home’s categories involve both mid-range and high-end products, so it is slightly biased to directly compare OVV with it. However, the offline experience can still reflect many clues and problems in Heilan House's business, including the most criticized inventory accumulation.

According to the latest financial report, Heilan House’s revenue in the third quarter of 2021 was 14.16 billion yuan, a year-on-year increase of 20.2%; net profit was 2.01 billion yuan, a year-on-year increase of 58.7%.

As of the end of September 2021, Heilan Home had 7,537 stores nationwide, a net increase of 156 stores compared with the beginning of the period.

In addition to the main brand of Heilan House, Sancano contributed the most revenue. In the first three quarters, Sancano contributed approximately 1.48 billion yuan in revenue to Heilan House, while other brands combined Contribution is approximately 1.29 billion yuan.

It can be seen that compared with the main brand with a deeper brand heritage, the revenue-generating ability of other newly expanded brands is still weak. Coupled with the recent rumors of Heilan House entering the Yuanverse, people can’t help but become more curious about this giant company. The next strategic plan for the men's clothing empire brand.

Why is Heilan House so anxious to seize the Yuanverse clothing market? Everything begins with the story of the brand’s birth 19 years ago.

Back in September 2002, the first Heilan Home was officially opened on Zhongshan North Road, Nanjing. The popular, mass-selling, and self-selected sales model made the brand created by Zhou Jianping as popular as Uniqlo in Japan, and it was as popular in China at the time.

After more than ten years of exploration and expansion of the chain business model, and the replacement of spokespersons one after another, Heilan House has established a brand tone that favors "local flavor".

In terms of expansion speed, Heilan House is not as good as Metersbonwe back then; in terms of brand nationality, Heilan House is not as deep as Youngor. What really helped Heilan House build its reputation was the “light asset model” formulated by the company. This "outsourcing" and "franchising" model, which seems so common today, was used very cleverly by Zhou Jianping back then.

At the upstream end of the supply chain, most of the production links are sold to suppliers by Heilan House in the form of outsourcing. At the same time, Heilan House takes advantage of the strong position of its own products in the supply chain to help Heilan House. Two purchase modes, returnable and non-returnable, have been formed between manufacturers and suppliers, which greatly reduces inventory depreciation and inventory management risks.

At the downstream end of the supply chain, Heilan Home has the actual operating rights over most of its stores. Franchisees play more of a capital contribution role and share sales revenue with the company. While diversifying financial risks, it also ensures that Heilan Home stores across the country have an almost consistent store operation style.

"Heilan Model" Illustrated Odd and Even Pie Chart

On April 11, 2014, Heilan House officially landed on the A-share market; on December 29, 2015, according to Standard & Poor's According to released statistics, the market value of Heilan Home Co., Ltd. has exceeded 60 billion yuan. This is not only the success of the asset-light model, but also the success of the company’s choice of Yin Xiaotian as the spokesperson to leave a deep brand impression of “visiting Heilan House twice a year”.

The good times did not last long, and the asset-light model of Heilan House relying on supply chain credit rights quickly began to decline.

In the five years from 2015 to 2020, Heilan House’s revenue was 15.83 billion yuan, 17 billion yuan, 18.2 billion yuan, 19.09 billion yuan, 21.97 billion yuan, and 17.96 billion yuan respectively. Generally speaking, the upward trend can be maintained, but the growth rate is very slow.

This includes the uncertain impact of the epidemic, but the accumulation of inventory over time has led to the continuous weakening of core competitiveness under the light operation model, which may be the culprit of Heilan House's limited growth.

According to the annual report of Heilan House, the closing inventory balances of Heilan House from 2015 to 2018 were 9.58 billion, 8.63 billion, 8.49 billion, and 9.47 billion respectively, accounting for 60.5, 50.7, and 46.6 of the revenue respectively. ,49.6. Throughout 2018, Heilan House’s inventory reached 9.47 billion yuan, and asset impairment losses reached 380 million yuan, a year-on-year increase of more than 200%.

Odd Couple Drawing

In the increasingly online clothing market, high inventory has basically blocked the way for Heilan House to maintain high revenue growth and sustained profitability. In 2018, data from the official website of Heilan Group showed that the revenue of Heilan House, the apparel industry as its core industry, only accounted for 16% of the group's total revenue of 120 billion yuan.

To make matters worse, Heilan Home’s inventory turnover days were as high as 286 days that year, which was much higher than direct competitors such as Metersbonwe and Semir.

The OEM label under the light-asset model, coupled with the contempt for R&D and design investment, makes Heilan House can only place more hopes on the brand’s marketing capabilities.

In 2017, Heilan House began to include the disclosure of R&D expenses in its annual report. The figure for that year was 25.043 million yuan, accounting for only 0.14% of total revenue, which was also far less than Metersbonwe and Semir. Wait for your opponent.

Although by 2020, Heilan House’s investment in research and development has increased to 83.364 million yuan, an increase of 233% compared with 2017, it has still been criticized by many people about “clothing product design is too Tucao.

In sharp contrast, Yin Xiaotian, Du Chun, Lin Gengxin, Jay Chou and talk show actress Yang Li and "The Great Challenge", "Running Brothers", "The Masked Singer" , the growing list of celebrity endorsements and variety show sponsorships has made Heilan House’s marketing expenditures increase by leaps and bounds.

In 2020, Heilan House’s sales expenses were as high as 2.4 billion, which was far greater than the R&D expenses of 83 million yuan in the same year. It’s no wonder that many people joke that “90% of Heilan’s revenue growth is due to marketing promotions.”

Faced with performance pressure and doubts from not only small shareholders, Zhou Jianping finally broke out. Hence the speech at the 2019 Heilan House Annual Shareholders' Meeting: "If you are good enough, you will be the chairman."

At the end of November 2020, Zhou Jianping, the founder of Heilan House, officially resigned from all positions in the company, and Zhou Lichen, who was only 32 years old, took over from his father.

Now that the banner has been handed over to his younger son, I wonder if Zhou Lichen has figured out how to fulfill the expectations of his father and the outside world, and lead Heilan House, which is still in the "midlife crisis", out of the quagmire.

Entering the Metaverse has become Zhou Lichen’s most eye-catching move since he took office.

When he first joined Heilan Group, Zhou Lichen spent some time in the advertising department. Therefore, he also regarded changing the brand image as a very important strategic change. He signed Jay Chou as the new spokesperson and preempted Yuan Universe, etc. A series of actions are all moving in this direction.

At the end of October this year, in order to promote Heilan House’s new Aurora series of goose down jackets, the company joined hands with AYAYI, the country’s first hyper-realistic digital human, to conduct a wave of cross-border cooperation. However, judging from the results, in the latest Double 12 pre-sale, the monthly sales volume of the Space Creation series sweatshirts was only 100, which can be said to be a big deal but not a drop of rain.

When the news came out on November 26 that Heilan House had applied for the Yuanverse trademark, the company’s stock price did not rise significantly like other companies. Heilan Home closed at 6.35 yuan per share that day, down 1.24.

Despite this, relevant people from Heilan House said that there will be more possibilities between the company and the Metaverse in the future. The Yuan Universe has been recognized by many companies since it was proposed, including many clothing brands.

Luxury brand Gucci’s centenary exhibition "Gucci Originals", an online virtual exhibition held on the Roblox online game creation platform, was very popular. A limited edition Gucci virtual bag has players I even paid $4,115 to buy it.

The two major clothing giants are not willing to be left alone. Nike also submitted 7 trademark applications for virtual goods this year for the technical team to develop a series of virtual products. At the same time, it announced in November that it would cooperate with the Metaverse platform Roblox cooperates to jointly develop the virtual world Nikeland, which will provide digital Nike products for users' virtual images. Adidas has reached cooperation with multiple gaming platforms with the intention of establishing the "adiVerse" brand in the metaverse.

Why do clothing brands also love the concept of the metaverse? The rise of blockchain technology has brought artificial intelligence into rapid development, and industrial digitalization has become the only way to transform the clothing market that is no longer rigidly defined as a traditional industry.

According to incomplete statistics, the digital fashion and virtual clothing market will reach 95.8 billion yuan in 2022.

From the perspective of Heilan House, the fit between the clothing industry and the concept of the metaverse makes defensive trademark registration relatively reasonable. This year, many well-known brand-related trademarks, including "NetEase Cloud Yuanverse" and "Huawei Yuanverse", have been registered by other companies.

Various signs make investors and brands themselves feel that embracing the metaverse is infinitely wonderful, but the reality is far crueler than the ideal. Online business has never been the strong point of Heilan House.

As early as 2011, Heilan House began to deploy online business, which was initially positioned only to expand and supplement offline business. This also led to the fact that 8 years later, Heilan Home’s e-commerce business revenue accounted for only 6% of total revenue, which was far lower than the online revenue proportion of other competitors at that time.

It was not until the emergence of inventory problems that the Zhous and sons realized the importance of private domain traffic in optimizing the sales model.

The emergence of activities such as full discounts and discounts has also made online business gradually grow into an important business component of Heilan House. In the first three quarters of 2020, the online business revenue of Heilan House increased by 16.70, 40.22 and 111.27 respectively from the previous quarter. Zhou Lichen even appeared in the live broadcast room in person to bring goods.

In 2020, Heilan House’s investment in sales expenses reached 2.4 billion yuan. It is not difficult to guess that celebrity endorsement fees and e-commerce promotion expenses accounted for most of it. However, after paying the price of "investment in exchange for growth", Heilan House's online business accounted for only 11.6% in 2020.

During the Double Eleven that just passed, the highest-selling product of Heilan House, which has tens of millions of fans, turned out to be men's underwear, which made people laugh and cry.

Although it has invested huge amounts of money, it still has not been able to understand the "people and goods market" model in the new consumption era. At this stage, Heilan House seems to be facing the same problem as La Chapelle and Metersbonwe. Regarding the transformation issue, if you are not careful, you will suffer heavy losses.

Of course, the increasing consumption power of men has also injected new vitality into the once sluggish men's clothing market. It is not in line with the logic of market development to blindly badmouth Heilan House.

The growth rate of the men's clothing market, whose dividends disappeared after 2011, has been sluggish. It has maintained a slow growth rate of single digits for ten years, which is in sharp contrast to the high growth rate of women's clothing and children's clothing. .

According to statistics from Industrial Securities Research Report, affected by the epidemic in 2020, the size of the men's clothing market shrank significantly to 510.8 billion yuan, a year-on-year decrease of 12%.

However, starting from the first half of this year, the men's clothing market suddenly showed a strong recovery trend. This is due to the weakening of the negative impact of the epidemic and the rise of the "other economy".

In the past, it has been common knowledge in the market that men’s consumption power is weak, and some people once jokingly called “women, children, elderly, pets, men” the most authentic consumption power ranking.

In the first quarter of 2021, the size of the men’s clothing category on the e-commerce platform reached 20.2 billion yuan, a year-on-year increase of 30.5%. According to statistics from the Industrial Securities Research Report, the top three brands with market share in 2020 are Heilan House, Adidas and Uniqlo, with 5.0, 2.4 and 2.1 respectively.

Since 2013, the industry’s CR5 has increased by 6%, and CR10 has increased by 7%. The improvement of leading brands is even more obvious, among which Heilan House’s improvement rate is 2.9%.

This is enough to show that Heilan House can still keep pace with the industry level in terms of growth rate, although its own revenue growth rate has continued to decline in recent years.

On the other hand, according to dataway statistics, in the first quarter of 2021, men’s clothing products in the price range of 350 yuan to 400 yuan have the fastest growth rate on e-commerce platforms, reaching 46.7%. This happens to be in line with the current growth rate of Heilan House. The prices of mainstream products are corresponding.

As of now, the total number of Heilan Home stores has reached 7,255, an increase of 10 times compared with 655 stores in 2009. In contrast, in the five years from 2015 to 2020, the revenue of China's clothing companies above designated size shrank from 2.2 trillion to 1.37 trillion, a shrinkage of 38%.

The old domestic men’s clothing brands are no longer competitive. Uniqlo, ZARA, and Hamp; M have gradually begun to occupy the sales share of the online market, seizing the returning male consumers.

After UNIQLO publicly announced that it would enter the sinking market, the layout of second- and third-tier cities where Heilan House has the largest presence is no longer stable. I wonder if Zhou Jianping, who once claimed to build China's first "national brand", can continue to trust Heilan House under the command of his son.

This is a work of art that can only be understood by looking at the smallest details.

Judging from the status of offline stores and its own financial analysis, the inventory problem has been a pain in the mind of Heilan House for many years. This leading men's clothing brand that relies on the light asset model has been in the past few years. No effective solution has been found to deal with it.

Taking a step into the metaverse is also like a risky move by Heilan House to solve the inventory problem in disguise. Taking advantage of the popularity of the online economy and the high potential of the virtual economy in the new consumption era to complete the rejuvenation of the brand and increase sales is indeed the best blueprint that Zhou Lichen can draw after taking over from his father.

The trade-off is that seizing the metaverse and solving the most difficult inventory problem today seem to be mutually exclusive, but in fact they have become each other’s answers.

Right now it is more important to stay down to earth than to look up at the stars. After all, the simple "painting" of the metaverse obviously cannot retain disappointed consumers.

As for the future, let men handle men's affairs, leave clothing matters to women, and leave the universe to Yuan Fang.

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