Bags / Shoes & Accessories

Not long after the "expensive shoes" controversy passed, Li Ning handed in his first quarter transcript.

In the first quarter of 2021, the retail sales of Li-Ning's point of sale (excluding Li-Ning YOUNG) on the entire platform recorded a high growth of 80%-90% year-on-year. China International Capital Corporation, Essence International, Bank of America Securities and other institutions believe that Li Ning's sales in the first quarter of 2021 are expected to increase by more than 50% over the same period in 2019, which is one of the largest growths recorded in mainland sportswear brands.

After the epidemic, the industry recovered and boosted consumer confidence and other macro factors. The Xinjiang cotton incident in mid-March catalyzed the domestic product boom, and the official announcement of Xiao Zhan on March 26 brought drainage for brand spokespersons, which was the main reason for the rapid growth of Li Ning’s performance in the first quarter. the reason.

In less than two months from early March to early May, Li Ning's stock price rose from less than 40 Hong Kong dollars at the low point to 70 Hong Kong dollars today, an increase of more than 70%. Its market value also broke through 170 billion Hong Kong dollars and hit a new high, and the distance with Anta was reduced, but the difference was still more than 200 billion Hong Kong dollars.

Although there is a halo of domestic products and the national trend label, it is not easy for Li Ning to get to the top of Nike and Adidas, which have accumulated years of technology and branding, and Anta whose revenue and market value have far surpassed his own.

"Hot search for physique"

In the past few months, Li Ning has frequently appeared on hot searches.

The Xinjiang cotton incident in mid-March caused resistance to Nike and Adidas, and the domestic sports brands ushered in the spring.

On the one hand, consumers once again focused their attention on the national tide and voted for domestic brands with their feet. Li Ning and Anta's offline stores were crowded and bustling. On the other hand, various platforms such as the media and self-media have voiced one after another, and domestic brands have obtained publicity windows, which further occupy the minds of users in terms of brand recognition and favorability.

Industry insiders generally believe that the Xinjiang cotton incident will become a major opportunity for the rise of domestic sports brands, or it will change the pattern of the sports goods industry dominated by Nike and Adidas.

Li Ning is one of the domestic sports brands with the fastest response and the most rapid force. Write Xinjiang cotton on the label, sign a new spokesperson, and launch a new product of basketball shoes. Patriotic consumers, rice circle girls, and basketball shoe collectors have all been hit.

Among them, the purchasing power of the fan circle girl should not be underestimated. On March 26, Li Ning officially announced Xiao Zhan as the global spokesperson for the sports trend brand. Less than ten minutes later, the same products of Xiao Zhan in Li Ning's official online store were all sold out. Xiao Zhan's fans "Little Pan" have also posted the same style of Xiao Zhan on Taobao, Xiaohongshu, and Weibo, further leading the panic buying frenzy in the restaurant circle.

In early April, a pair of sky-high sneakers with a price of 1499 yuan but a price tag of 48,889 yuan in the acquisition made Li Ning stand in the air of public opinion.

Prior to this, Li Ning's limited edition sneakers had always had a premium of about ten times in the second-hand market, but the increase of 33 times this time has clearly exceeded the normal premium category. Many netizens expressed dissatisfaction, "Li Ning's food is too ugly, the price is really hurting", "Who knows what role the brand plays in it."

The relevant person in charge of Li Ning Company responded: "The sky-high shoes appeared on the third-party platform, not the official website of Li Ning. We have checked that although the platform raises the price of the shoes, there is no transaction volume." The person in charge also said that from the Li Ning brand From the perspective of the company, the company does not want to have any connection with the shoe market.

However, thanks to the promotion of shoe-fried shoe dealers, Li Ning's Wade Way has replaced Nike's AJ and Adidas coconut shoes and has become the new protagonist of the shoe-fried trend.

And many consumers said that not only Li Ning's limited edition sneakers can't afford it, but now even ordinary sneakers are suspected of rising prices. "I have been paying attention to the city's lavender color scheme. Recently, it has risen from 560 yuan to 670 yuan." "Li Ning's price increase is too ridiculous. Now the price of 500 yuan shoes has doubled." "The official website price has not risen, and there are no coupons. Is it an increase?"

Some dealers revealed that after the Xinjiang Cotton Incident, Li Ning overturned all discounts and activities negotiated before Nike was boycotted.

According to Wang Binxian, brand management consultant of Guangzhou Harman Business Consulting, the premise of brand premium is that, in addition to basic physical characteristics, products also need to have cultural value and demonstrate value. At least one of the two is necessary to have a long-term premium. The premium caused by the shortage of supply boosted by the external environment is only a short-term phenomenon.

The reason why Nike's AJ series can endure in the trendy shoe circle is that it has these two values at the same time.

On the one hand, the AJ series is co-branded with NBA's top player Michael Jordan. These basketball stars are the belief and spiritual support in the hearts of sports boys who love basketball. To a certain extent, paying for their love is similar to a fan for "idol" krypton gold. On the other hand, Nike has replicated the sales path of luxury goods through various methods such as limited edition, limited edition, player edition, special edition, etc., and increased the collection value of basketball shoes.

Missing IP

Li Ning never hides his "ambition" to replace Nike and Adidas.

As early as 2010, Li Ning wanted to embark on the road of high-end, aggressively promoting the rejuvenation strategy, changing the logo, changing slogans, and raising prices. But Li Ning, who tried to please young people, failed to win the hearts of consumers. Instead, he suffered a continuous loss from 2012 to 2014. Not only did he not meet the threshold of the first and second tier markets, but also lost the position of the third and fourth tier markets.

Until 2018, Li Ning once again became popular in New York Fashion Week by walking the country. The comeback of "China Lining" has won the recognition of the new generation of consumers. This generation of young people who have grown up in an environment of national self-confidence have the characteristics of not admiring foreigners and daring to express their individuality. Their choice has made Li Ning embark on the national trend. tuyere.

Today, although Li Ning is at the forefront of the fashion trend, Nike and Adidas have already established absolute advantages in the market with technology and marketing. It is obviously not easy to "grab the food".

At the technical level, Nike and Adidas have numerous patents. Cushioning, comfort, and air permeability have reached the industry's extreme. The products are absolutely competitive, and Li Ning is slightly inferior in comparison.

In terms of marketing, Nike and Adidas occupy the world's best resources, and continue to amplify their advantages through event sponsorship and celebrity endorsements to establish brand barriers that are difficult to break through. It is reported that Nike’s budget for advertising and marketing is stable accounting for about 10% of its annual revenue. In fiscal year 2019, its investment in advertising and marketing was as high as US$3.75 billion.

According to the statistics of Founder Securities Research Institute, from the sales of NBA star signature sneakers in 2017, the top ten players with the strongest "money attracting power" are almost all under the control of Adidas and Nikedas. Li Ning only grabbed Dwyane. · Wade.

NBA star Dwyane Wade signed for Li Ning in 2012. The Wade Way series basketball shoes that were fired to a sky-high price this time are the joint models of Li Ning and Wade.

Li Ning has been tepid in the field of basketball shoes. A large part of the reason is the lack of star IP. It is difficult for a retired Wade to shake the position of Nike and Adidas.

A trendy shoe enthusiast said that even if you don't buy Nike, you won't buy Li Ning. In his opinion, buying basketball shoes is actually spending money to support their favorite sports stars. For the vast majority of people who love basketball shoes, the brand of Li Ning has no special meaning. Its Wade series can be used. Move them to spend money.

An obvious example is that after the Xinjiang Cotton Incident, there was a rumor that a good thing would be off the shelves of Nike products. Under the rumors, consumers rushed to rush, and Nike sales on the platform surged. A consumer said that this is actually a hoarding mentality, and everyone is afraid that they will never be able to buy it again.

Wang Binxian said that the new generation of consumers pay more attention to the appearance of products and the cultural significance behind them, that is, product design and cultural labels.

Although Li Ning has won the recognition of these young people by relying on the national tide, he still needs to further cultivate his internal skills if he wants to occupy a place in the trendy shoe circle and gain the love of senior trendy shoe lovers.

"Big eyes and small belly"

In Wang Binxian’s view, Nike’s moat is very deep in terms of brand value, market influence, product power, supply chain capabilities, channel networks, etc. It is difficult for other brands to catch up; while Adidas has occurred during the epidemic. After the inventory crisis, with the brand reputation and influence accumulated for a long time, it quickly recovered after the epidemic.

According to the Nike Group’s financial report, in the first three quarters of fiscal 2021 (as of February 28, 2021), revenue in Greater China, which is dominated by the main brand Nike, was US$6.357 billion, or approximately RMB 41.6 billion. Rough calculations, the Nike Group’s revenue in Greater China for 2020 is expected to exceed RMB 50 billion.

Adidas’s financial report shows that the company’s full-year sales for 2020 were 19.84 billion euros, a year-on-year decrease of 14%. Although the Greater China region had a bad start and annual sales fell by 15% year-on-year, it achieved a 7% growth in the fourth quarter.

In contrast, the two domestic brands Li Ning and Anta, which are most likely to replace Nike and Adidas, will have revenue of only 14.457 billion yuan and 35.512 billion yuan in 2020.

Li Ning's brand strategy is "single brand, multiple categories, and multiple channels." "The advantage of a single brand is that it is focused enough, but the disadvantage is that it lacks a brand matrix to grow late." Wang Binxian said.

Anta implements the strategy of "single focus, multiple brands, and omni-channel" and has grown into a brand management group with a comprehensive matrix and a wide range of positions. It owns more than 20 brands. Anta's main brand relies on channel advantages to firmly control the low-end market that values cost-effectiveness. The later introduction of FILA and Amer Sports have become the group's second and third growth curves.

From the perspective of size and brand strategy, Li Ning is still a bit "big eyes and small" if he wants to catch up, and Anta is more likely to fully attack Nike and Adidas' product positions.

But Li Ning also has an advantage that Anta does not possess, that is, its heritage in brand culture.

Nike has brought Jordan's story and feelings to the extreme. Adidas has a very profound history in the football field. Both have gone through a long period of accumulation before they have grown into a world-class brand. Li Ning has been shrouded in aura from its birth to becoming a symbol of a domestic sports brand. In this regard, it is more qualified to compare with Nike and Adidas.

However, there is still a big gap between this and the world-class brand culture, and the elements of national tide are not unique to Li Ning's family. Li Ning still has a long way to go in order to precipitate a unique and long-lasting brand culture in the minds of consumers.

Thanks

Due to space limitations, I could not attach all the content, but I would like to thank many professionals for providing very valuable views and rich cases during the writing of this article. Special thanks (in no particular order):

Shining Point Marketing founder Liu Xiang, Guangzhou Harman Business Consulting brand management consultant Wang Binxian, as well as many senior sneaker enthusiasts and sports brand consumers.