Smith Barney: Quick and easy to mix and match

Many “light asset” companies in the industry encountered Waterloo last year. Although Smith Barney stated that “it is still sticking to the light asset line”, its business model is undergoing changes from its many actions in 2009.

The Smithsonian model: It is different from the pure “light asset” operation mode, and at the same time it integrates the “mashup” mode of “fast fashion” operation of ZARA, H&M and other brands.

When Zhou Chengjian established Meters Bonwe in 1995, he did not know the concept of “virtual management” proposed by Roger Nagel, a well-known American scholar. However, with the intuition of an entrepreneur, he has been using it well. This "virtual management" concept.

From the very beginning of its creation, Zhou Chengjian outsourced the production-related heavy asset business of the Smith Barney's production chain to various types of processing companies. At the same time, he handed over the product sales to the chain operation channels in various places, and he focused on resources and energy for the products themselves. Design R&D and brand marketing circumvent risks in production and sales.

In 2008, Smithsonian’s listing on the Shenzhen Stock Exchange marked its great success as a “light asset strategy.” The Zhou Chengjian family also became the richest man with “17 million yuan in assets” in the “Hurun Garment Rich List”. However, in the same year, the “light asset model” also met with “Waterloo” dramatically. Both ITAT and PPG, which have been known as “light asset”, have encountered Waterloo.

Although he said that he still insists on taking the asset-light path, the assets of the company are slowly becoming "heavily" in light of the many actions of the company in 2009. Perhaps, a "mix and match" model that is different from pure light assets and incorporates ZARA, H&M, and other "fast-fashion" brands is slowly taking shape.

Strengthen self-operated shop

A very compelling change in the past few years in Smith Barney is that it has quickly accelerated the pace of opening stores. According to its 2008 financial report, it intends to invest a large amount of funds raised from the listing into the store-opening plan, and even released a talent plan for the recruitment of 5,000 employees when the market is down.

Since May 2009, Meters Bonwe has opened three flagship stores throughout the country at an area of ​​about 5,000 square meters, which greatly exceeds the size of most of the flagship stores below 2000 square meters. Zhou Chengjian, the founder and chairman of Smith Barney, said that Smith Barney will also open 50-100 flagship stores in China. Coincidentally, Me & City, a mid-to-high-end clothing brand owned by the company, has opened the first flagship store in Shanghai with a floor area of ​​3,000 square meters in 2008. It also opened 25-50 stores of similar size in 2009. prelude. In addition, Smith Barney also made it clear that at least 85% of the 1.4 billion yuan raised from the listing will be used to purchase and hold commercial property rights in major cities across the country. The specific plan is to build 68 houses of 1,400 square meters or more. Flagship store and image store.

At the same time, Smith Barney’s model of being dominated by franchise stores has become self-operated. From the data point of view, from 2001 to 2007, the compound annual growth rate of Smith Barney's direct sales stores was 33.44%, which was significantly faster than the compound annual growth rate of franchise stores of 29.95%.

Regardless of whether it is a “grab dealer’s job” on the channel or directly owning entities in the store, this series of actions obviously does not conform to the strategy that has always been upheld by Mebon, and its assets seem to be slowly becoming “heavy”.

"Local Heavy Assets"

In fact, in recent years, the "light asset" growth model of the channel link has become less and less available to the powerful corporate groups.

On the one hand, franchising is only a low-cost start-up market for many small and medium-sized entrepreneurial enterprises, and it tries to realize the expediency of “channel financing” through the “investment promotion” form. For garment enterprises operating with light assets, chain operations are almost “you have, I have, and all have”, and the differential advantage disappears, and competition is becoming increasingly fierce. Taking Smith Barney as an example, of the sales of 3.157 billion yuan in 2007, the franchise system with franchise weighted as high as 87.16% contributed only 62.2%. Obviously, the management of franchised chain channels is not as good as direct chain channels.

On the other hand, for the direct chain, with the booming commercial real estate industry, the rental of domestic shops has continued to grow, while the industry has opened more big stores, flagship stores or image stores, and the large stores have invested heavily in decoration and operating period. Long, relying on leasing business risks. With the development of enterprises and growing financial strength, the company's resources and business focus will inevitably shift to the “heavy assets” growth model. The powerful companies will adopt the method of purchasing property rights to obtain stable store resources. Such as ZARA and other large-scale foreign clothing companies, generally direct sales stores as the main sales model, and in order to obtain a stable store resources.

However, it needs to be pointed out that what Smith Barron took is really just a way of "partially re-assessing assets." From the point of view of the entire production process, Smith Barney still adhering to the "light asset" strategic model, just through advanced information technology, the entire supply chain has been better integrated. According to incomplete statistics, the development and construction cost of information platform and management system software used by the company during the past few years is no less than 100 million yuan, which mainly covers the manufacturer's resource management system (MBFAC-ERP) and the group's internal resource management system (MB-ERP). And Agent Resource Management System (MBAGT-ERP). Among these, the manufacturer's resource management system is a system that accounts for a very large proportion.

Zhou Chengjian said, "When everyone is doing a virtual business model, I will start to change and demand an industry upgrade. The future of the apparel industry will compete with the entire supply chain."

However, on the basis of "industrial upgrading", the essence of "outsourcing" has not changed. At present, in the aspect of fabrics, accessories and production and garments, Smith Barney still adopts the method of outsourcing OEM, with a total of 96 fabric suppliers, 84 accessories suppliers and more than 300 garment manufacturers, mainly concentrated in the Yangtze River Delta region and Guangdong Province. At the same time, Smithsonian has not changed the nature of its outsourcing in logistics.

"Change" and "invariable" complement each other, bringing with it a "remixed" path of partial heavy asset survival.

"Forcing" out of "fast fashion"

The new brand "Me&City" under Smith Barney has been booming for the past two years. The French designer led the design, with more than 3,000 styles each year. It takes about 70 days to complete the design, test fitting, finalization, prototype production, volume statistics, large cargo production, and logistics and distribution. All these qualities are undoubtedly put. "Me&City" has pushed to the fast-fashion market in recent days.

“Actually, doing fast fashion is not the company’s intention. Me&City originally wanted to make a high-end brand that entered the high-end market at a low price, but in the end it succumbed to the market demand to create a fast fashion.” Insider at Memphis revealed that Me&City “ "Fast fashion" style is "forced" out.

However, as the brand promoted by Meibang right now, Me&City contains both fast fashion and elements of heavy assets and light assets throughout the entire operation process, which is a typical example of the "Mix and Match" model of Smith Barney.

On the one hand, based on the degree of information integration, the efficiency of the Smithsonian outsourcing supply chain has been greatly improved, which undoubtedly made the foundation of fast fashion. On the other hand, during the promotion process, Me&City pursued the idea of ​​“first direct operation and then joining”. In the first eight months of 2009, the buyers of Smith Barney have purchased nearly six provinces including Zhejiang and Fujian. The 30000 square meters of 6 commercial real estates, each with an average construction area of ​​nearly 5,000 square meters, involving a total of 785 million yuan of funds.

However, Me&City's immediate fashion model is obviously not very mature. After all, the fast fashion model is not just simple to modify the production catalog and introduce fashion, but also requires a complete set of service and production supply chains. Each step in this systematic move requires more time, money, and stronger management skills. It is not merely the problem that Smithland can solve in the short term by merely putting its own apparel design for about 70 days into the listing turnaround time and moving closer to the turnaround time of the Zara brand's 1-3 week supply chain.

In addition, when Smith Barnum was learning H&M began opening flagship stores and recruiting more fashion designers, H&M has been moving forward, collaborating with Japan's national treasure designer Chuan Jiu Baoling and putting himself at the top of “fast fashion”. . Perhaps these are the problems and challenges faced by Smith Barney in strengthening its "mashup" line.