Erdos Tries To "Enter" The Fast Fashion Clothing Market Through Cashmere Fashion

For young people Fast fashion clothing The market competition is becoming increasingly fierce, and the old brand clothing brands erdos Try to "enter" the Red Sea with cashmere fashion as a cut.

On July 14, Ordos, a listed company, disclosed a fixed increase plan. The company proposed to raise 2.9 billion yuan to increase the main business of cashmere clothing, of which 2.6 billion yuan was used for marketing channel expansion and brand upgrading construction projects.

As a traditional cashmere clothing brand, Ordos now hopes to "divide one brand into three", including the new brand "BLUE ERDOS”， It will be specifically targeted at young customer groups. In terms of brand transformation and separation, Ordos seems to have changed its image and "preferred" the young market. However, the cashmere fashion aimed at young people directly from cashmere clothing is tantamount to "hand to hand combat" with fast fashion products. Ordos also admitted in the announcement that cashmere fashion, as a fashion product, has been affected by the fast fashion consumption concept in recent years, and the change of fashion trend has accelerated. If the fashion product cannot be launched in time, the company's brand and sales performance will be adversely affected.

The fashion market for young people is already a "red sea" of full competition. What's the consideration of the company when it chooses this opportunity to separate cashmere brands for young people? "Going against the tide" will open more than 300 physical stores in the next three years, will it face potential risks? The reporter has contacted Ordos for many times, but no reply has been received as of press release.

In the opinion of Ma Gang, an independent clothing analyst, the young brand of cashmere is an attempt. The problem of Ordos brand positioning being too broad may be solved.

Split brands into 3

As a traditional cashmere clothing brand, Ordos believes that the previous brand positioning customer base is too broad, the terminal image in the country is quite different, and the influence among young people needs to be improved.

Ordos said in the above fixed increase plan that it hopes to split the brand into "ERDOS", "Ordos 1980" and "BLUE ERDOS ". After the split, "Erdos 1980" is still aimed at the traditional mature customer groups. "ERDOS" hopes to attract the emerging middle class, while the new brand "BLUE" ERDOS”， It is a brand for young urban customers.

According to the introduction of the fixed growth plan, the "BLUE" split for young people ERDOS "brand, the consumer groups are concentrated in 25-40 years old, and the products of the brand are intended to meet the simple, decent and comfortable dress requirements of this consumer group.

It is also considered as an attempt to increase the size of traditional cashmere clothing for young people in the industry, because cashmere sweaters for young people tend to be somewhat out of touch with fashion trends.

In addition to showing favor for the cashmere clothing market of young people, Ordos also announced its "expensive" store opening plan in this fixed increase plan. Against the background of many clothing brands cutting physical stores and adding e-commerce, Ordos said this time that one of the purposes of the funds to be raised is to build new stores. The construction period is three years. It plans to open 298 new stores in China and 26 overseas stores, which will cost 2.29 billion yuan.

At the same time, the construction of e-commerce in Ordos is also under planning. The specific operation mode is to open official flagship stores on several mainstream e-commerce platforms in China after the completion of brand splitting. According to the plan of fixed increase, the budget for this will be up to 100 million yuan. In addition, brand promotion will also cost about 130 million yuan.

"Close battle" with fast fashion

After the brand split, the cashmere fashion business for young people means that Ordos will "fight hand to hand" with fast fashion brands in the future.

Ordos also admitted in the announcement that cashmere fashion, as a fashion product, has been influenced by the fast fashion consumption concept in recent years, and the change of fashion trend has accelerated. Therefore, if we cannot launch trendy products in time, our brand and sales performance will be adversely affected.

New cashmere brand "BLUE" for young people ERDOS”， It means that Ordos actively participates in the battle of young people's fashion, which is already the "Red Sea" of full competition. In addition to meeting young people's tastes as soon as possible, fierce market competition also challenges Ordos's young brands.

The decline of performance and the decline of gross profit margin are not unrelated to Ordos's decision to split the brand now. According to the 2015 annual report, the revenue of Ordos cashmere sector was 2.29 billion yuan, 2.94% lower than that of the previous year, and the gross profit margin was 41.29%, 2.24 percentage points lower than that of the previous year; The gross profit rate of cashmere products such as cashmere sweaters was 42.77%, a decrease of 3.18 percentage points over the previous year. The average asset liability ratio of the company in recent three years exceeded 68%, leading to higher financial expenses, which is one of the reasons for this fixed increase.

The situation of fast fashion brands in the first half of this year is not very optimistic. H&M Group's pre tax net profit fell by 22%, GAP Group's net sales fell by 6%, and Uniqlo's parent company Fast Retailing Group's net profit also fell.

In the opinion of Ma Gang, an independent clothing analyst, "it is difficult for Ordos to exert its advantages if it is engaged in pan fashion, but the cashmere category of young groups can learn from their own experience in cashmere business, so it is an attempt."

However, to what extent will young consumers accept cashmere fashion? This still needs to be answered by the market.