How Li Ning Sportswear Brand Goes Out of the Crossroads

As a domestic brand of sports shoes, Li Ning was recently pushed to the tip of the wave. Although the company has made a series of adjustment strategies, due to the unfavorable news of the decline in the amount of orders in the second quarter, Li Ning's share price plummeted. In just a few days, the market value evaporated to nearly HK$5 billion.

As early as the 1990s, when the traditional brands such as Double Star and Hui Li disappeared, Li Ning was rising in the face of foreign brands and became the boss of domestic sportswear brands. However, with the advent of the 21st century, the impact of domestic sports brands such as Anta, Xtep, 361 Degrees, and more cheap cottage products. At the same time, high-end foreign brands represented by Nike and Adidas began to move toward the middle end, and a large number of domestic brands that occupy the market in the second and third tier cities also have sufficient strength to advance from the low end to the middle end. Li Ning as a dream to the high-end domestic brands, in the early years of the 21st century, with the arrogance of the boss abandoned the competition with the low-end manufacturers, and turned to professional development, which means that Li Ning gave up more market share And it has made it easier for those latecomers to increase brand awareness so that Li Ning today is surrounded by more brands.

The local sports brands mainly implement the market strategy of encircling the cities in rural areas, and have achieved rapid growth through the mode of opening new stores in the increasingly affluent second and third tier cities. Li Ning was born in an environment with little competition. He relied on the natural growth of the market for a long time to slowly expand its scale and was fortunate to become the boss of domestic brands. Therefore, when the domestic brands such as locusts erode into the market, Li Ning, who is not a high-flying player, is unable to make a powerful counterattack, which is a price for his unstable positioning.

Especially in the context of long-term inflation in China, rising rents, labor, etc. have significantly increased the costs of terminal retail outlets, and the products themselves have risen with the rise in prices of oil, cotton, and labor. Although Li Ning’s announcement promised to help dealers cope with the pressure of rising costs, it would increase the discount rate given to dealers, but this may not be able to make up for the dramatic increase in costs and stimulate dealers to withdraw. In addition, there is a spooky channel to challenge the traditional store model, which is online shopping. Since sports shoes and other products have standard size measurements and are suitable for sale on the Internet, there are many B2C websites in China that specialize in selling shoes. Their competitive prices are also impacting the traditional store model.

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