La Chapelle, which used to be the No. 1 domestic Hanfu brand, has now only returned to the public eye by going bankrupt, picking up leaks, and discounting.
When the topic "La Chapelle was filed for bankruptcy liquidation" became a hot search topic, more than 210,000 viewers flocked to La Chapelle's e-commerce flagship store to watch the live broadcast and pick up discounted goods. The number of views of many previous live broadcasts was less than 100,000.
Live broadcast of La Chapelle e-commerce flagship store on October 24. /Live broadcast screenshot
Many consumers in the live broadcast room asked about La Chapelle’s current situation. The comment area of related topics on Weibo was full of regrets, “A brand I used to like to wear more” and “It’s so miserable, it’s a memory of youth. "Ah!"...
The news that "La Chapelle was filed for bankruptcy" did not come suddenly. Since the beginning of 2020, La Chapelle has issued 17 delisting risk warning announcements.
La Chapelle, known as the "Chinese version of ZARA", was once the leading domestic clothing brand with annual revenue of 10.2 billion yuan at its peak, but now it has been delisted.
Is La Chapelle not working, or is the "ZARA model" simply not working in China?
On average, 11 stores are closed per day
Clothes really can’t be sold
On November 23, La Chapelle issued an announcement stating that the company had been filed for bankruptcy liquidation by multiple creditors. In the application, creditors stated that La Chapelle "is no longer able to pay off its due debts, and its assets are insufficient to pay off all debts or it is obvious that it lacks solvency."
A simple summary is that the creditors believe that La Chapelle's situation has met the relevant conditions for bankruptcy.
Although La Chapelle believes that according to relevant regulations, the creditor's application does not comply with relevant legal procedures, it is true that "the company still faces a large debt burden and pressure at this stage."
Finally, an official document officially announced that La Chapelle’s era was over.
In 1988, Xing Jiaxing, a native of Fujian, who was still working as a sales agent for a Taiwan-funded clothing company, felt that the Taiwan-funded company's pace of updating clothes was slow. Therefore, Xing Jiaxing roped in two designers and several sales staff to officially establish La Chapelle.
La Chapelle’s revenue and net profit from 2011 to 2020. /Cartography: Author
Where is the money lost? LaChapelle knew it very well.
In the "2020 Pre-performance Loss Announcement", La Chapelle attributed the pre-performance loss to four points: declining revenue from offline stores, operating losses from closed stores, backlog of goods, and losses from sub-brands. The most fatal thing is that each loss is not a small amount, reaching a scale of 200 million yuan.
Under the huge losses, La Chapelle began to urgently save itself: selling goods, closing stores, and selling non-main businesses.
Since the first half of 2019, no piece of clothing can "walk out" of La Chapelle's store at a regular price.
Many clothes that cost thousands of yuan are now only three to four hundred yuan after discounts. If you put together 3 pieces, you can save more than 100 yuan on top of the 10% discount. Even with such a heavy discount, La Chapelle still had a backlog of goods worth 760 million yuan at the end of 2020.
La Chapelle is clearing out the backlog of clothes. /CCTV News
In 2019 and 2020, La Chapelle closed 4,391 and 3,919 stores respectively, with an average of 11 stores closed every day. As of the end of 2020, La Chapelle has only 959 branches left, which is 1/10 of its peak.
All of its wholly-owned subsidiaries such as Rasha Leisure have also been "cleared out." But the falling stock price and market value show that these efforts of La Chapelle are in vain. Today, La Chapelle's stock price is 2.22 yuan per share, and its market value is only 1.2 billion yuan. It has evaporated nearly 10 billion yuan since its peak.
What did ZARA teach La Chapelle?
La Chapelle has always advertised itself as the "Chinese version of ZARA". To a certain extent, La Chapelle's former glory is indeed due to its "teacher" ZARA. Teach well.
ZARA is regarded as a benchmark in the clothing industry. The world's largest clothing brand entered China in 2006. In less than 10 years, it has nearly 700 stores in China, second only to its headquarters in Spain. .
Fast fashion benchmark ZARA. /Visual China
“Not opening new stores means going backwards.” Xing Jiaxing believes this deeply.
Financial report data shows that before 2011, there were only 1,841 La Chapelle stores. In 2012, this number soared to 3,340. Subsequently, La Chapelle began to add more than 1,000 stores every year.
As the number of stores increases, La Chapelle’s turnover increases year by year. It soared from 1.864 billion yuan in 2011 to 10.176 billion yuan in 2018, ranking among the domestic Hanfu listed companies with the highest revenue.
Following the multi-brand strategy of Inditex Group, the parent company of ZARA, La Chapelle has expanded from the original three main Hanfu brands to five Hanfu brands, three men's clothing brands, and children's clothing brands.
Indeed, La Chapelle once benefited from the multi-brand strategy. In 2013, one of its sports Hanfu brands, La Chapelle Sport, brought revenue of 2 billion yuan to La Chapelle. For a long time, the main brand La Chapelle and the young fashion brand Puella have been the main sources of performance of La Chapelle.
Yang Zi wore puella clothes to participate in a fashion magazine shoot. /@Mo道 Purple Love
ZARA taught La Chapelle not only these, but also the "fast" of fast fashion.
ZARA has created a new speed that is difficult to match among its peers: it launches more than 12,000 products a year, five times as many as its peers; it replenishes the shelves twice a week; it launches a full range of products every three weeks Replace old ones with new ones, and all stores around the world can update them simultaneously within two weeks.
In 2016, La Chapelle’s product launch speed has been shortened to 7 to 15 days. Xing Jiaxing once said, "If there is a fashion show in Paris, relevant information will appear in our mailbox the next day."
As Zhihu netizen "Gray Black Moth" said, "Five years ago, I was a die-hard fan of La Chapelle. The color was right, the style was beautiful, the tailoring and workmanship were good, and the price was not too high. Expensive."
With the help of her "teacher", La Chapelle became the fashion benchmark of the Hanfu brand at that time.
Students trapped in "ZARA mode"
Re-apprenticeship
Now it seems that this is a story of business expansion driven by the dividends of the times.
In that era when brand shopping and e-commerce channels were still emerging, La Chapelle could only seize offline channels. In order to build brand influence, La Chapelle must open stores on a large scale and expand offline channels.
Metersbonwe and Semir Apparel, which emerged at the same time, are also determined to create a "Chinese version of ZARA". Semir founder Qiu Jianqiang once threatened to make the brand a Chinese ZARA and "spread the Semir brand." to every corner of the world and in the hearts of consumers."
ZARA’s “Chinese students” used to work together to open a store, but now they are trapped togetherIn "ZARA mode".
Chenfan co-founder Qian Yufan once said that Chenfan has more than 1,000 cooperative factories in the supply chain, and the fields are extremely segmented. From order placement to shipment, the entire production cycle is very short. For categories like T-shirts, it may only take 4 to 7 days. Categories involving special fabrics (such as double-sided woolen coats, etc.) will take longer.
Inventory turnover days are the lifeline of the apparel industry. It represents the average time it takes for a company to purchase raw materials and complete the production of goods for sale. The longer it takes, it proves that the company's inventory burden is too heavy.
Data show that Chenfan Hanfu’s average inventory turnover days is only 53 days. But for La Chapelle, even at its peak, the average inventory turnover days were as high as 203.4 days.
Viya and Li Jiaqi’s live broadcast room turnover totaled 19 billion on the first day of Double Eleven pre-sales/Visual China
Catalyzed by the internet celebrity economy, new retail channels such as e-commerce platforms have completely overturned “ZARA” The definition of "fast" in "Mode".
When they turned around to embrace more efficient e-commerce channels, ZARA’s “Chinese students” discovered that due to many years of huge direct sales or franchised offline sales channels, the main focus was on low-priced products. E-commerce channels cannot satisfy the interests of all links, and the business vision of “driving traffic from offline physical stores to online platforms” can only come to an end.
The most famous case is Youfan APP, a subsidiary of Meibang, which sponsored "Qi Pa Shuo" for two consecutive seasons. In the first two years of its launch, the revenue of Meibang Internet business, represented by Youfan, grew as high as 123% and 72% year-on-year. In the third year, Youfan APP announced that it would cease operations.
Youfan APP titled "Qi Pa Shuo" / iQiyi
"Kuai" can no longer compete. ZARA's "Chinese students" must learn how to tell young people's stories, hoping to rely on A younger brand positioning brings it closer to mainstream consumer groups.
Here, Semir invited Korean celebrities Kim Soo-hyun, Lee Jong-suk, and Kim Woo-bin, and later invited top domestic entertainment star Yang Yang to be its spokesperson; over there, Smith Barney showed no signs of weakness, including Li Yifeng, Angelababy, Huang Minghao and other traffic niches are in the pocket. But it has had little effect. What people remember is the spokesperson Jay Chou when he was a child, and his phrase "Don't take the ordinary path."
Wanting to capitalize on the national trend, Semir’s Shaolin Kung Fu co-branded national trend series products were deeply involved in infringement. Meibang launched a series of work-style clothing with the theme of "Chinese young people don't pretend to be fake", which also did not cause any splash. Sales data from a well-known e-commerce platform shows that the number of payers with the highest sales volume of Meibang Apparel's national trend-related products is 500+ per month, and the number of payers for most products is less than a hundred.
La Chapelle, the best student at the time, was still struggling on the edge of bankruptcy.
Reference materials
[1] Chairman La Chapelle resigned. He once opened nearly 10,000 stores, but now he is struggling to survive with an annual loss of more than 1.6 billion | AI Finance and Economics
[2] The collective fall of ZARA’s “students” | LADYMAX
[3] ZARA’s defeat in China, what should we reflect on? | New Eyes
[4] ZARA is still there, but no one wants to learn from it | Huxiu
