Ordos Moves Into Fast Fashion And Seeks "Reverse Growth"

With middle-aged and old consumers as regular customers

mogul

I intend to tease young people, but I just want to go with the tide.

Courage is not bad.

Aiming at fast fashion

On the morning of July 19th, a pair of well-dressed elderly couples were choosing clothes in an Ordos store in Tianjin.

"I would like to take advantage of the summer to see if there is any winter cashmere sweater that is off season," Ms. Qiu told reporters.

Ms. Qiu claims to be an old customer in Ordos. As long as she buys cashmere wool products, she only chooses and trusting Ordos.

But she found, "many years ago, Erdos sold cashmere sweaters and sweater products, but in recent years it seems that there are more things to do, and I think there are new clothes that are more fashionable."

In fact, this is just some of the slight changes that Ms. Qiu sees. Erdos will have a bigger move in the future.

In July 14th, Ordos announced a fixed increase plan. The company proposed to raise 2 billion 900 million yuan and increase the main business of cashmere clothing, of which 2 billion 600 million yuan was used for marketing channel expansion and brand upgrading project.

The content of brand upgrading is to make the existing brands more detailed. "Ordos 1980" is still targeted at traditional mature customers. "ERDOS" is a lightweight luxury cashmere fashion brand that hopes to attract "the middle class quality crowd representing China". "BLUE ERDOS" is the brand of urban youth customers aged 25 to 40 years old, providing them with high cost performance fashion cashmere.

In the announcement, there is such a saying: "whether we can quickly respond to consumers' demands and timely develop new products and develop marketable products on the premise of ensuring product quality is one of the important criteria for testing whether fashion clothing enterprises have core competitiveness."

Ms. Qiu is puzzled about the so-called fast fashion. "High-grade cashmere is already a label. Now young people will like it. It's too messy."

Active or forced?

Erdos was founded in 1981, and it can definitely be called the originator of cashmere clothing products in China. Most consumers know that cashmere may start with the slogan "Ordos cashmere sweater, which warms the whole world".

In most of the elderly, Ordos has become a synonym for high-quality cashmere.

However, Ordos does not seem to satisfy the status of the cashmere boss. It is known that it has been influenced by the fast fashion consumption concept in recent years, and the trend of popularity is changing faster. If we can not timely launch the trend products, we will have a negative impact on the company's brand and sales performance.

Ordos marching into fast fashion is intended to "fill the gap in the market and enhance the profitability of the company".

From this perspective, Ordos marching into fast fashion is an initiative to deal with market changes.

But from a practical point of view, this is probably what Ordos has to do, not to enhance profitability, but to save the declining performance.

In 2014, the Ordos annual report showed that the company achieved a total revenue of 15 billion 568 million yuan, and its net profit attributable to shareholders of listed companies was 422 million yuan, down 43.18% from the same period last year.

Among them, the cashmere plate business income of 2 billion 360 million yuan, down 16.03%.

At that time, Erdos pointed out that "in 2014, the company encountered great difficulties in its operation". It is estimated that Ordos will face a severe test in 2015 and even in the next two to three years.

By 2015, the decline was still unchanged.

In 2015, Ordos achieved a revenue of 15 billion 200 million yuan, down 2.11% from the same period last year, and net profit of 241 million yuan, down 42.75% from the same period last year.

Cashmere plate revenue was 2 billion 290 million yuan, down 2.94% from last year, gross margin was 41.29%, a decrease of 2.24 percentage points over the previous year.

Obviously, over the past few years, under the background of consumption upgrading and internationalization, eating the old books has made Ordos feel a crisis.

Facing challenges

Erdos, who always takes the middle-aged and old consumers as the main group, can think of a new way to make a new attempt.

But there are many challenges ahead.

Cheng Weixiong, a senior observer in the clothing industry and general manager of Shanghai Liang Qi Brand Management Co., Ltd., seems to be puzzled by the behavior of Erdos.

He thinks that cashmere is a very high-end product, and the concept of fast fashion in the West means imitation, basic and parity. "Ordos can expand and expand in the field of cashmere, do research and development, processing, marketing, brand packaging and so on."

He told the new financial observer.

In fact, Ordos early 2011 launched the "BLUE ERDOS" brand, then positioned as a city fashion women's clothing.

But this brand has been in operation for five years, and its recognition in the women's clothing market is still very low.

Fashion women are not as fast as fashion in terms of fashion or reaction speed. Ordos has not even made fashionable women's clothing. Now it's going to be fast fashion, and its supply chain and design will face bigger problems.

An Erdos agent told the new financial observer.

To say the least, even if "BLUE ERDOS" can provide the most fashionable products with the fastest reaction speed in the future, its products will be cashmere fashion. This will obviously be affected by the season. Compared with the fast fashion brands that can keep up with the trend all year round, the "BLUE ERDOS" will lose one season or even two quarters in time, and the brand influence will be greatly reduced.

And from the external situation as a whole, it is not optimistic.

Sales figures for the first three quarters of the Japanese fast fashion firm fast selling group, which was recently announced at the end of May, showed a sharp fall of 46.4% to $617 million in pre tax profits and 23% to $1 billion 270 million in operating profits.

In the first half of the Swedish H&M group, pre tax net profit fell by 22%, while the decline of GAP Group continued for a longer time.

Compared with the scenery that has entered the Chinese market more than ten years ago, nowadays, all international fast fashion brands are experiencing declining performance, closing stores or slowing down shop opening speed.

The industry believes that Ordos, which has no fast fashion experience, will enter the fast fashion downturn, and it will take time to answer if it can be done well.

The reporter interviewed Erdos on the "BLUE ERDOS" related issues, and did not receive a reply as of press release.