interface news reporter | Zhu Yongling
interface news editor | Xu Yue
html On March 27, local underwear group Urban Beauty announced its 2023 performance report.In 2023, Urban Beauty achieved revenue of 2.757 billion yuan, a year-on-year decrease of 8.4%; net profit attributable to the parent company was 42.483 million yuan, a year-on-year increase of 28.6%. After
reached the peak of annual revenue of 5.1 billion yuan in 2018, Urban Beauty's performance declined sharply in the following years, and it has not yet stopped. Even the performance in 2023 is not as good as ten years ago - in 2013, Urban Beauty's revenue was 2.9 billion yuan and the net profit attributable to the parent was 280 million yuan.
However, some of the results of reforms in recent years are also reflected in the latest financial report.
Thanks to the optimization of supply chain management, improvement in product sell-out rate and discount rate, Urban Beauty's gross profit margin increased by 1.1 percentage points year-on-year to 47.5% in 2023. However, this level is still far behind the mid-to-high-end underwear companies. For example, the gross profit margin of Huijie and Aimer exceeds 60%, while the gross profit margin of Embry Holdings is above 70%.
Urban Beauty has also strengthened inventory management, including gradually switching franchisee ordering from the futures system to the spot system starting from the second half of 2022, adjusting the ordering ratio of regular products to 60%, and changing the ordering meeting from 4 times a year to 2 times a year. Second-rate. As of the end of 2023, Urban Beauty's inventory decreased by 12% from the beginning of the period to 620 million yuan, of which the inventory in 2021 and before (inventories of 2 years and above) reduced the cost by 300 million yuan compared with the beginning of the period, a decrease of 62%.
In 2023, Urban Beauty’s net cash income from operating activities increased by 65.8% to 383 million yuan from 231 million yuan in the previous year.
Image source: City Beauty
Since 2022, City Beauty’s many reform measures have been directed towards the sinking market, including launching the “Hundred Cities and Thousand Stores Campaign” in early 2022 to increase the number of stores in third- and fifth-tier cities. Starting from 2023, Urban Beauty will begin to emphasize the concept of "good but not expensive", which is also intended to highlight the cost performance and cover a wider mass market.
Interface News mentioned in previous reports that Urban Beauty’s brand image is relatively inferior in first- and second-tier cities, and it is difficult to obtain a good brand premium; and the share of first- and second-tier cities and online channels is also being divided up by many new underwear brands, and competition fierce.
In the sinking market, Urban Beauty can take advantage of its previously accumulated brand awareness, franchise-based channel network and retail system. This is an advantage that other brands will be difficult to catch up with in the short term.
At the media exchange meeting held by City Beauty on March 20, Zheng Yaonan, Chairman and CEO of City Beauty, told the media including Jiemian News that the company’s channels, brands, marketing, and products are all centered on “good and good”. The positioning of "inexpensive" makes a systematic matrix combination to "break it through and penetrate it."
Urban Beauty’s basic channel profile is that among the 4,372 stores as of the end of 2023, over eight have become franchised/associated stores, and over two-thirds are in lower-tier markets; e-commerce sales account for less than 20%. Therefore, if Urban Beauty wants to conquer the sinking market, it still relies to a large extent on the cooperation of franchisees.
As part of the "Battle of One Hundred Cities and Thousands of Stores", Urban Beauty opened 826 new franchise/affiliate stores in 2023, all distributed in county-level cities and towns, with the number of newly opened stores increasing by 71% year-on-year. Xian Shunxiang, executive director and chief operating officer of Urban Beauty, said at the aforementioned media exchange meeting that 2023 will be the year with the largest number of stores opened by Urban Beauty in the past six years, which is partly affected by the adjustment of franchise policies.
To put it simply, Urban Beauty began to encourage franchisees in county-level markets to move from single-store franchises to multi-store franchises, and further from counties to towns.
The corresponding policy is that Urban Beauty began to cultivate county-level distributors, who are called "county chiefs" within the company. The role of the "county magistrate" is to open more stores in the county to cooperate with the "1+n+special" channel layout proposed by Urban Beauty in 2022, that is, taking the business district as a unit, and simultaneously opening a flagship store to enhance the brand image. stores, a number of profit-oriented regular stores, and special discount stores used to clear inventory.
"If there is a franchisee operating in each county, no matter online or offline, retail, or membership, it belongs to him. If we give him a county, we will not let a second franchisee in unless he does not operate well. .Xian Shunxiang revealed that Urban Beauty currently has about 150 "county chiefs".
Below the county seat are counties and towns. Xian Shunxiang said that of the more than 800 new stores opened by Urban Beauty in 2023, 60% to 70% will be counties and towns. joint stores. In 2024, these county and town joint stores will be able to enjoy more discounts, including slightly lowering the product magnification ratio to adapt to the market with lower consumption levels. Customers of the county and town joint stores will also receive about 5 points. Rebate.
"There are more than 2,000 counties in China, and we still have more than 1,000 that we have not yet developed, and there are still many blank markets. Xian Shunxiang said. In 2024, City Beauty plans to open more than 1,100 stores, including about 1,000 franchise stores and 100 directly operated stores.
In addition to channels, City Beauty is also making adjustments in product and brand marketing.
In terms of products, Urban Beauty wants to "do a family business." Most of Urban Beauty's products have tag prices below 200 yuan, and the most expensive high-end products are priced at no more than 379 yuan.
Interface News reporter was in the Urban Beauty ordering exhibition hall It can be seen in the women's bra category that Urban Beauty's products cover the needs of different stages such as the development period, maturity period, pregnancy and breastfeeding period, including simple-designed wire-free bras for young people, as well as traditional lace push-up bras. In underwear, popular elements such as national style and dopamine colors are also used in product design. Homewear for the whole family is also a key category for Urban Beauty.
In terms of marketing, Urban Beauty began to leverage sports marketing to strengthen national underwear Positioning. In March 2024, City Beauty officially announced its cooperation with the Chinese National Synchronized Swimming Team at the product launch of its soft-size invisible underwear.
Picture source: City Beauty
As a veteran underwear founded in 1998, National-level brand awareness has always been an advantage that urban beauties are proud of. “Most of these underwear brands in the sinking market are white brands or small and medium-sized brands. They have not formed a systematic national brand power, operational power and product power, which is our very big advantage. "Zheng Yaonan said at the aforementioned media conference.
Urban Beauty has had a lot of vacillations about "where to go" since its sales began to shrink. The rise of local underwear brands such as neiwai, ubras, and Jiao Nei has attracted a group of "Yueji" "Independent" female consumers. In the two years when the concept of size-free underwear was most popular, urban beauties also tried to follow this trend. However, the Chinese market is too large and the value orientation is diversified. Underwear designs are accepted in first-tier cities , may not be popular in the sinking market. The increasingly divided market makes it difficult for one brand to be all-in-one, and it has to make a certain degree of trade-offs.
Obviously, Urban Beauty finally chose to delve deeper into itself through trial and error, which has an advantage. , plates are also bigger in the sinking market.
But the question is to what extent the brand power of Urban Beauty can be transmitted to consumers in the sinking market, and to what extent it affects their shopping decisions.
In a From the perspective of franchisees who have been doing clothing business in the county for a long time, "Metropolitan Beauty works hard to maintain its brand value, but ignores the most important factor in the decline in performance. "
The franchisee told Jiemian News that Urban Beauty has bid farewell to the situation of being a dominant player in the county market, and sinking underwear brands such as Luolisi and 100% Feeling have also emerged. Compared with Urban Beauty, their investment in brand marketing Very little - there are no spokespersons, no flagship store, and even the operation of the official public account is immature, but this does not prevent them from grabbing market share. Another Guangdong lingerie brand, Xiangmi Bouxiu, also focuses on the sinking market and adopts a joint venture model In just a few years, it has grown into an important opponent of Urban Beauty.
In addition to its opponents in offline channels, Urban Beauty cannot ignore the competition for the sinking market through emerging e-commerce channels such as Douyin.
"Douyin 2023 Industry Report ——Underwear Industry Trend Insights" shows that Douyin underwear market GMV has exceeded 13 billion in 2023, a year-on-year increase of 95.0%, among which live broadcast sales account for the highest proportion. And the price range of hot-selling products is concentrated between 50 yuan and 200 yuan, which is in line with urban Liren's core price bands almost overlap.
In the Douyin women's underwear sales list listed in the report from January to June 2023, the top three companies, Catman, Victoria's Secret, and Ubras, all have sales of more than 300 million yuan, and then there will be sales of more than 300 million yuan. Brands that are not well known to the mass market, such as Sundibanni, Youyiqiao, and Qingqingmao, have also achieved sales of about 200 million yuan. The urban beauty did not appear in the top twenty of the list. Even if these "shaking brands" do not have a high sales volume, due to their large number, they will eventually encroach on the sinking market occupied by urban beauties.
However, perhaps due to limited resources and the protection of the interests of franchisees, Urban Beauty still tends to regard online channels as a channel for offline traffic. In 2023, Urban Beauty will launch more than 2,000 stores on Meituan Send and JD Daojia respectively. Xian Shunxiang also said at the aforementioned exchange meeting that Urban Beauty will not consider launching a new brand dedicated to electricity suppliers for the time being.
