【英文】招银国际报告：China sportswear：1H19E preview，growing at full speed（32P）

英文研究报告 2019年07月28日 08:57 管理员

Rising competitiveness on speed, innovation and trendiness made the difference. Other than macro factors such as: 1) rising sports participation, 2) wider use of sportswear over formal and casual wear. Overall competitiveness of sportswear brands (both international and domestic), improved dramatically in the recent years, in terms of 1) speed, 2) innovations and 3) trendiness. Take Nike as an example. At the time of a major slowdown back in 3Q17, where China sales growth was only 12%, trended down from 27% in 1Q16, it introduced a new strategy called “Triple Double”. The growth since then started to pick up, rose to 31% in 4Q18 and remained fast at 22% in 2Q19. The “Triple Double” strategy can be broken down into three parts “2X Speed, 2X Innovation and 2X Direct”. 2X Speed means be 2X faster in design, manufacture, store display and replenish. To be more relevant to the fast changing customers tastes nowadays, to make the supply chain more reactive, hence reducing production lead time and selling more hot items. 2X Innovation means providing 2X more upgrades in product’s functionality.

To have greater improvements on the shoes platform, fabric and material, as well as, in order to increase both comfortability and performance. 2X Direct means being more direct to the customers. To have more self-owned channel like the online flagship stores and self-operate stores, to gather more data and then providing better products and services.  We believe boost in trendiness was the most important drive for domestic brands. All three major brands (Anta, Li Ning and Xtep) have all been catching up in speed and technology, but the biggest improvement lately, in our view, is on the trendiness, ranging from 1) store format upgrades, to 2) product design and 3) brand building. For the stores revamped into the newest generation (both Anta and Xtep), many of them can all achieve 20%+ YoY growth in sales per store. This a proven way to attract more traffic and induce a higher ASP and more items per ticket sales. Moreover, many pop-up stores opened by China Li Ning were in fact very crowded and fans queuing up outside are now very common. Products designed by domestic brands nowadays can be very trendy and highly competitive vs international brand. Hot selling items such as the wu dao 悟道/ Shoes by China Li Ning actually recorded a major price premium in the second hand market. In terms of brand building, domestic brands are actually highly sophisticated, where crossovers (e.g. Anta X NASA, Anta X Coca Cola, China Li Ning BAD FIVE X X-LARGE, etc.) and collaboration with TV programs (e.g. Xtep X The Rap of China/中国新说唱, China Li Ning X Slam Feat/篮球大唱片) are all now very common.