what would you think of when you mentioned MnSO. Us? Is it Japanese simple store style or cheap and people-friendly product price?
When talking about famous creative products, founder Ye Guofu said: "happiness is the secret of famous creative products. Everyone will feel very happy when shopping in our store. It seems that their value has increased by 10 times or 100 times. If they want to buy it, they can buy it.". Of course, this kind of "consumption happiness" not only serves Chinese consumers, but also the concept of famous and innovative products has gradually spread to the world.
Red Star capital Bureau noted that on December 18, 2021, the world's 5000th store of famous creative products opened in Boston, Massachusetts, USA. At present, famous creative products have stores in 100 countries and regions around the world. It is not too much to say that Chinese enterprises have successfully gone international.
On the other hand, in the capital market, mingchuang premium products were listed on the New York Stock Exchange on October 15, 2020, with an issue price of US $20 / share; On February 9, 2021, the high point rose to US $35.21/share, and then its share price fell into a situation of "falling endlessly". In less than a year, as of the closing on December 31, 2021, the closing price of famous creative products was US $10.34/share, and the total market value had evaporated US $7.62 billion (about RMB 48.6 billion) compared with the high point, more than two-thirds.
In addition, a number of media reported last week that the famous and high-quality products of "the best Shiyuan store" may consider returning to Hong Kong for listing in 2022; However, in this regard, the relevant person in charge of mingchuang premium products said that "no relevant news has been received".
on the one hand, there are continuously expanding global stores, and on the other hand, there are ruthless "no votes" in the capital market. What is the business status of the "best ten yuan store"? Does the future development of famous creative products have imagination space?
(I)
famous and high-quality products: what is the confidence to open stores around the world?
In July 2013, mingchuang premium brand was officially established; Founder Ye Guofu has previously launched a similar 10 yuan brand store "ah ah", which is mainly aimed at female consumer groups. According to public data, high light moment "ah ah" has opened more than 3000 stores nationwide.
The rapid expansion of "ah ah" mainly depends on the franchise mode, but with the rise of e-commerce, "ah ah ah" jewelry stores soon lost their competitiveness and were gradually eliminated by the market. During Ye Guofu's trip to Japan in 2013, he met the famous Japanese designer Shunya Miyake. They hit it off and jointly founded famous creative products.
therefore, in a sense, mingchuang premium products are ye Guofu's upgraded version of the "ah ah" idea, which has made innovations in product positioning, product marketing and so on.
1. The total number of stores increased, but the number of Direct stores continued to decrease
By the end of the third quarter of 2021, the number of global stores of famous creative products had reached 4871, including 3035 stores in China and 1836 stores overseas. Overseas, famous and innovative products have been distributed in overseas countries since 2015, and have successively entered Southeast Asia, America and Europe.
Source: company financial report, red star capital Bureau
However, whether in China or overseas, famous and innovative high-quality products are mainly based on franchising to realize the rapid expansion of light assets.
It is worth mentioning that while the total number of stores is increasing in China and overseas, the number of Direct stores of famous creative products is decreasing.
by the end of 2019, among the 2543 stores of famous creative products in China, the number of Direct stores was 8. By the end of the third quarter of 2021, the total number of stores in China had increased to 3031, leaving only 4 Direct stores.
In foreign countries, the intention of shortening Direct stores is more obvious. At the end of 2019, the number of Direct stores in 1668 overseas stores was 126, while in the third quarter of 2021, the total number of overseas stores increased to 1836 and the number of self operated stores has decreased to 108.
Source: company financial report, red star capital Bureau
In other words, the expanding stores are mainly franchise stores, while the relatively few direct stores are still decreasing.
The biggest difference between direct marketing and franchise is that for the headquarters, the entry of franchisees can not only make the enterprise not bear heavy costs such as store rent and employee salary, but also obtain more "income" in the "hands" of franchisees; In addition, it can quickly expand the market share in front of franchisees and increase the market share.
Red Star capital Bureau analysis found that the founder Ye Guofu really played this "joining logic" very "thoroughly.
2. The essence of business model, franchisees open the way for famous and high-quality products
The franchise mode itself is easy to understand, but the specific "playing methods" are different from each enterprise.
According to public information, joining in famous and innovative products probably needs to pay three fees: a franchise fee of 80000 yuan, a goods deposit of 750000 yuan, and a decoration advance payment of 560000 yuan.
Only the first two items are included. For each new franchise store, famous creative products have a lot of income.
For franchisees, if they want to normally open a famous and high-quality product store, plus the store rent and labor cost, the total investment is about 2 million yuan.
After the store is opened, 38% of the sales revenue obtained belongs to the franchisee (33% for food), and the rest belongs to the headquarters of mingchuang premium products.
For example, if the total monthly revenue of the franchisee's famous creative premium store is 1 million yuan, the franchisee will get 380000 Yuan, and the 380000 Yuan franchisee also needs to pay various expenses such as store operation, and finally get net income; For the headquarters, the purchase cost is less than 620000 yuan, which is the income of the famous creative high-quality products headquarters.
it can be said that franchisees bear almost all business risks. Naturally, famous creative products also hope that the more franchisees, the better.
It is worth mentioning that before listing, ye Guofu, the founder of mingchuang premium products, once served as a legal person called fenlibao company.
The company called fenlibao can provide loan services for franchisees who lack funds. It turns around and finds that the franchisees' money eventually flows to one place. Under the water of famous creative products, there may be a huge financial system.
In the later stage of , perhaps for the purpose of "successful listing", famous creative products have been stripped of fenlibao before listing.
Generally speaking, through the product design of "touch porcelain" and cheap product price, famous and excellent products have attracted the attention of consumers; At the same time, by attracting franchisees and "helping" franchisees, there are more and more famous and high-quality product stores, gradually forming today's "behemoth".
(II)
"cheap + franchise" strategy is gradually failing?
1. Financial report: revenue growth slowed significantly
In 2020, covid-19 epidemic spread all over the world, which is undoubtedly a huge disaster for famous and innovative products in main offline stores. In 2021, the epidemic has been controlled in many parts of the world, but according to the latest financial report, the revenue performance of famous and innovative products does not seem to be ideal.
Source: company financial report, red star capital Bureau
According to the corporate financial report, in the third quarter of 2021, the revenue growth of famous creative products further slowed down, which were 37%, 59% and 28% respectively in the first three quarters. In the financial report, about the expectation of the next quarter, mingchuang premium products only gave a growth range of 8.8% - 17.5%, which is also lower than 28% in the third quarter.
By business, in the third quarter of 2021, the Chinese business of famous creative products achieved a revenue of 2.03 billion yuan, a year-on-year increase of 17.9%, accounting for 76.53% of the revenue. At present, the Chinese market is still the main source of revenue. However, the actual performance of China's performance is not ideal. According to the financial report, its Chinese revenue in the first three quarters of 2021 was 1.79 billion yuan, 1.95 billion yuan and 2.03 billion yuan respectively, with a year-on-year growth rate of 74.8%, 43.0% and 17.9% respectively. The tightening of revenue is more obvious.
In addition, besides the "going to sea" business, the number of overseas stores of famous creative products has accounted for as high as 37% of the total number of stores. However, due to its wide geographical distribution, foreign expansion has not formed a scale advantage. In addition, although the number of Direct stores of famous creative products has decreased significantly, compared with China, the proportion of Direct stores is relatively high, and enterprises also bear more risks such as rent and rent.
Finally, as far as the global control of the epidemic is concerned, foreign markets are greatly affected, and the "road to sea" of famous and innovative products is also uncertain.
2. Product quality or encirclement and suppression by opponents, what's the problem?
According to the enterprise prospectus, mingchuang premium products has more than 8000 core SKUs (inventory units), the average number of SKUs in stores is about 3000, and the average number of new SKUs per month is more than 600. Our products cover 11 categories, including home furnishing, electronics, textiles, bags accessories, beauty tools, toy series, make-up, skin care, leisure food, perfume, stationery and gifts.
As the main products basically adopt the OEM mode, the "low price" of famous and excellent products makes some OEM factories have to "shoddy" to save costs, while famous and excellent products face no small challenges in quality control. It is worth noting that famous and excellent products have repeatedly reported negative news such as quality problems and plagiarism.
For example, before and after listing in the United States, Shanghai Drug Administration issued the first issue of cosmetic supervision and sampling quality announcement in 2020. A nail coated nail polish was found to be 589.449. μ G / g, quickly boarded the microblog hot search, causing hot public opinion.
For another example, in May 2021, Guangzhou market supervision administration announced the results of random inspection of Guangzhou protective mask product quality supervision in 2020. In the supervision and random inspection in the fourth quarter of 2020, two batches of "miniso (nominal)" disposable masks (production date / batch number: 2020-09-15 / 197128501; 2020-09-15 / 197128503) produced by nominal famous and innovative products were found to be unqualified in the item of breaking strength of mask belt and the connection between mask belt and mask body.
Meanwhile, mingchuang premium products are also deeply involved in legal disputes such as plagiarism and infringement. As of December 29, 2021, there were 679 valid complaints about famous and innovative products complained by black cat. Feedback problems include quality problems, service problems, return problems, etc.
In addition, judging from the current market competition of famous and innovative products, the product threshold of famous and innovative products is not high, and there are more capital to compete for the new retail cake.
There are many competitors in China. For example, KK group, which has provided the prospectus to the HKEx, has many similarities with famous creative products. It has four brands: KKV, the colorist toner, X11 and KK hall. Its product portfolio covers a number of product categories, including beauty, fashion, food and drinks, household products and stationery.
According to the prospectus, the earnings in 2018, 2019, 2020 and the first half of 2021 were RMB 155 million, RMB 463 million, RMB 1646 million, RMB 502 million and RMB 1683 million respectively. KK group, whose product positioning and core user groups are highly similar to famous creative products, is undoubtedly a strong competitor of famous creative products in recent years.
Of course, overseas, although there are differences in different regions, there are also many competitors. For example, in the United States, famous and high-quality products face competitors such as low-cost retail giant dollar tree.
(III)
eager to seek the second growth curve, but the imagination space of trendy business may be limited
In December 2020, mingchuang premium products launched toptoy, a trendy game brand, which is positioned as the "Asian trendy game gathering point". The first store opened in Zhengjia square, Guangzhou on December 18, 2020, covering an area of more than 400 square meters, with more than 4000 SKUs, bringing together IP and trendy game brands such as Hello Kitty, marvel, Disney, DC and fire shadow forbearance.
It can be seen that mingchuang premium products have focused on the tide play market, which has been "favored" by capital and consumers in recent years. From the latest financial report data, the tide play business of mingchuang premium products has indeed made little achievements.
According to the company's financial report, as of September 30, 2021, the number of toptoy stores had accumulated 72, with a net increase of 39 in a single quarter. In the third quarter of 2021, toptoy achieved a revenue of 109 million yuan, exceeding 100 million yuan for the first time, an increase of 64% month on month. Can tide playing track become the second growth curve of enterprises? In the view of Red Star capital Bureau, it may still not be easy.
As far as the tide play market is concerned, the competition is IP. At present, top toy is still dominated by tide play with outsourced and cooperative IP, and the ratio of brand outsourcing to original products is about 7:3, that is to say, toptoy's own IP has become a weakness. The weakness of its own IP means that it is difficult for the brand to build its own core moat. After all, IP such as Hello Kitty, marvel and Disney are difficult to enjoy alone, Competitors are constantly fighting here.
On the other hand, even the bubble Mart (09992. HK), which has a large number of its own IP, is known as the first share of the blind box. Today, it seems that life is difficult, and the market value has shrunk seriously.
This is a challenge for famous creative products that entered the game late and mainly rely on several core IP platforms and lack their own stories. It is conceivable that they want to realize their second growth curve by relying on tide play.
summary
From "ah ah" to famous and excellent products, ye Guofu really played a very beautiful combination of small profit and quick turnover and franchise expansion.
At the annual meeting of famous creative products in early 2018, ye Guofu also proposed that famous creative products should achieve the goal of "hundreds of millions of stores in hundreds of countries" by 2022.
However, nowadays, famous creative products have suffered setbacks in the capital market, and their business performance is lower than expected, and the goal of "hundreds of countries, hundreds of millions of stores" of famous creative products may not be achieved as scheduled.
(Red Star capital Bureau)
