Li Ning and other companies adopt price increase strategies to increase rising costs

September 2 hearing, for many consumers, this year's apparel seems to be particularly expensive, in other words, this year's gains make consumers feel, "This year's increase is indeed a bit large, but there is no way, Caused by the pressure, and the entire market is like this." Mr. Ma, a sales manager of a brand clothing company in the city, introduced this year's clothing sales, price increases have become the last word. It has been observed that the prices of the terminal sales outlets of several brand clothing companies in Shishi have all increased in varying degrees.

Recently, a number of brand companies including Li Ning, Anta and Peak have issued interim results reports. The report shows that in order to cope with the pressure of rising production costs, these companies generally adopt price escalation strategies, shifting the rising costs to dealers or consumers. If the Peak with the smallest increase, the average unit price of apparel products increased by 2.1%, from 42.5 yuan in the first half of 2009 to 43.4 yuan in the same period of this year, and the price of ANTA apparel products increased by 7.1% to 49.6 yuan. As for the price increase of Xtep On a larger scale, the average selling price increased by 13.9% to 52.5 yuan. “We now increase the purchase price of products for dealers by 18% compared to the same period of last year.” Mr. Ma said that according to its understanding, the sales of autumn and winter products of some branded lions in Shishi. The price increase ranged from 15% to 25%. "There is no way to increase the price. Only if we increase the price, we can have more profits to open flagship stores and expand terminal sales outlets." Mr. Ma introduced this year, the company Personnel costs and raw material costs increased by 30% and 25% respectively over the same period of last year. In the financial report of Jinjiang brand companies, Mr. Ma's statement was confirmed. Such expenses as Peak Group's “salary, wages, and other benefits” rose from 675 million yuan in 2009 to 1,017 million yuan this year, and the cost of employees at Anta rose from 237 million yuan to 305 million yuan. Xtep’s employees The cost rose from 810 million in 2009 to 950 million this year.

In addition to staff costs, another factor contributing to the “unusual increase” in apparel sales prices this year is that cotton prices have remained high, and the prices of raw materials such as cotton yarn and cotton cloth that are most closely linked to clothing have skyrocketed. According to the China Cotton Price Index, the standard cotton price has increased from the average price of 12,831 yuan/ton in 2009 to 18,165 yuan/ton in July this year. As of June 30 this year, the domestic 328 cotton spot index was 18,309 yuan/ton, which was 42.6% higher than the same period of last year. The prices of textile raw materials such as cotton and chemical fiber also rose.

“Only price increases can break through,” Mr. Fang, an industry insider, believes that today’s clothing market has become a trend for many brands. To be successful, there must be sufficient profits, and when the production costs increase and they cannot digest themselves, the burden will be transferred. Consumers are the wisest choice, which is why Li Ning’s sales are much higher than Xtep’s, but the net profit of the latter is nearly RMB 140 million more than the former. “For Shishi’s brand apparel companies, Price is a door-to-door knowledge, and it is necessary to maintain a degree between first-tier and second-tier brands, otherwise the effect will be counterproductive."