After the apparel industry entered the price increase era

In recent years, domestic apparel prices have risen significantly and have become increasingly expensive. Historical experience with the United States, Japan, and South Korea shows that continuous price increase is a common feature of specific stages of industry development. Domestic clothing CPI, national key large-scale retail enterprises, and branded major listed company data show that clothing prices have increased significantly since 2010. The comparison between China and the United States from the perspectives of absolute price difference, price share of income, and consumer cognition shows that domestic clothing prices have become "expensive."

The comparison between China and the United States reveals that the reason for the rising and high domestic clothing prices is that the US clothing sales price index rose only 5.8% from 2005 to 2012. Large-scale purchases ensure that the low import prices, efficient circulation and low taxation mean that clothing sales prices will not increase. The main reason is that at the same time, the price of commercial real estate is fluctuating during the long-term lease period, and the output of single-store clerk increases and the unit labor cost is reduced. Based on the increase in labor costs in China and the strength of centralized procurement, it is difficult to go further. Judging that there may be a possible increase in the price of US local apparel in the future, it is expected to open the ceiling of Chinese clothing prices.

Redundancy in circulation and channel youth are the essential reasons for the continuous rise in domestic clothing prices and high prices (multi-agent model under the clothing distribution link redundancy, rapid extension of the expansion of new stores, the stability of the poor, in the impact of rising costs can only increase the tag The price guarantees the profit of each circulation subject and reduces the risk; the rise of raw material, channel cost (rent, labor cost) is an external catalyst; the taxation system (value-added tax is embodied in the tag price) and high taxation play a role in fueling this.

Judging the Decreasing Strength of Apparel Price Increase, the Industry Entering the “Post-price-raising Era”

The comparison between China and the United States reveals that the proportion of service consumption will continue to rise, and the proportion of clothing consumer spending may slowly decline; foreign brands are gradually transforming in China, and domestic brands channels are showing a trend of “increased direct sales and flattening of franchise channels”, and circulation efficiency It will gradually improve; rents will benefit from the improvement of store supply, labor costs will benefit from the increase in output of unit clerk, and short-term cost increases will be weakened. These aspects all indicate that the domestic apparel price increase tends to weaken, the price increase is limited, and the industry has entered the “post price increase era”.

However, if there is a qualitative change at the industry level, it is still possible to enter the next price increase cycle. To a certain brand, the average price increase beyond the industry can still be obtained through brand upgrading.

“Increase in Price” Industry Growth Drives and Investment Recommendations In the past few years, price increase and outreach expansion have driven the rapid growth of the industry. Price increases have contributed significantly to revenue, while improving gross profit margins and corporate profitability. In the post-price-raising era, due to the weakening of price increase power, the growth drivers will mainly depend on the expansion and increase of the scale.

In view of the weakening marginal effect of the extension of expansion and the higher requirements and relatively slower improvement of the internal management of the incremental expansion, the short-term industry must continue to maintain the pressure of previous rapid growth, but industry profitability (gross margin) benefits from the channel structure adjustment. The pressure is relatively small.

Looks at two types of companies: 1) The segmented industry is still at the front end of its life cycle. Currently, the store has a small volume and there is still much room for expansion in the future. Such enterprises can still achieve high growth through outreach; 2) Start early. Companies with obvious advantages in management, brand operation ability and product features, such companies' short-term performance can hardly maintain the high growth rate in the past, but the improvement of management capability is expected to win the long-term competition, and it is expected to have the potential to grow into a great company earlier. .