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If we say that the most significant characteristic change in the current consumer goods market is that the younger generation has shifted their consumption from "pleasing others" to "pleasing themselves" and from "looking stylish" to "being comfortable". In the succession of waves of consumption, some people have fallen behind, and some have always stood at the forefront.

As for the underwear market, according to the first quarter financial report of fiscal year 2024 released by Victoria's Secret, an American underwear retail brand, the company's net profit attributable to its parent company was -3.642 million US dollars in the 13 weeks ending May 4, 2024, a significant drop from US$725,000 in the same period of 2023. It can be seen that with the trend of decentralization of consumption scenarios in various industries, many brands that were once high and mighty are facing the dilemma of "going downhill".

However, some brands, after going through multiple market cycles, can still achieve "new branches on old trees" again and again with their keen insight into market demand. Hongdou Home is one of them. In 2023, Hongdou Home achieved a double increase in sales and profits. How did this domestic underwear brand, which has been established for 67 years and has always adhered to the principle of "born for comfort", create outstanding performance through repeated changes?

Latecomers are the first to arrive, and they are based in the e-commerce era

If we extend the timeline, Hongdou Home Furnishing has not been perfect in the market cycles. In 2008, Hongdou Home Furnishing switched from wholesale market to specialty store retail. For a time, the Hongdou logo was hung all over the streets and alleys of the country. In this era where supermarkets and channels are king, Hongdou Home Furnishing's strategy was in line with the times. "Product design, channel construction, communication and promotion, a series of combined punches also brought Hongdou Home Furnishing a round of highlights.

However, at this time, a track that many people already know but do not pay attention to is growing rapidly. In 2008, the total transaction volume of China's e-commerce exceeded 3 trillion yuan. Although this number is not small, it has not attracted enough attention from traditional channel companies. Even in 2012, Wang Jianlin made a 100 million yuan bet with Jack Ma. Wang Jianlin said, "By 2022, if e-commerce accounts for 50% of the Chinese retail market share, I will give Jack Ma 100 million. If not, he will give me 100 million."

It was also in the year when Wang Jianlin made the bet that the rapid rise of e-commerce had a huge impact on offline businesses. In particular, the lack of a unified pricing system in e-commerce caused the product positioning of many brands to be "fragmented".

Hongdou Home Furnishing is not having a good time either, with "more stores closing than opening" and "high pressure on channel performance". But even though the online price war is raging, Hongdou Home Furnishing has held its bottom line - insisting on not compromising quality due to price wars.

If this bottom line is set today, perhaps the company and brand will win recognition and respect. But in that period when many new brands and old brands were "involuted" by crazy prices, Hongdou Home's choice was obviously a bit "untimely".

In order to maintain its own brand tone, Hongdou Home upgraded its technology and launched the newly developed first-generation "Hongdou Velvet" products in 2014. It not only reduced costs, but also provided consumers with a high-quality wearing experience with high-quality fabrics and innovative leading sanding technology.

The strategy has changed, but the experience of "born for comfort" has not changed. With its low price and good quality, "Red Bean Velvet" quickly became a hot product once it was launched on the market, with orders reaching 500,000 sets that year. With a large number of orders, Red Bean Home has also greatly reduced supply chain costs and explored more market space for the brand.

The results that Hongdou Home has delivered in the e-commerce era are certainly significant enough, but this thrilling period of "coming from behind and catching up first" has also made this company look at the market more rationally and with respect.

Rapidly adjust to meet the challenge of "black swan"

By 2019, Hongdou Home Furnishing has formed a market sales structure that walks on two legs, online and offline. Thanks to the popularity of online sales, the brand awareness of Hongdou Home Furnishing has become more and more popular. Underwear, as close-fitting clothing, has higher requirements for experience, which also allows offline stores to obtain a stable source of customers.

However, changes in market cycles often come unexpectedly with changes in the external environment. Perhaps no one would have thought that an epidemic at the end of 2019 would bring about a subversive change in the domestic business landscape. Due to restrictions on people's travel and fear of the epidemic, offline channel stores have once again ushered in a huge impact.

As a classic line from the science fiction movie "The Wandering Earth" released during the Spring Festival said, "At first, no one cared about this disaster... until this disaster was closely related to everyone." The catering industry has canceled New Year's Eve dinners, and the hustle and bustle of the hotel lobby before and after the Spring Festival is long gone. Looking at the refrigerator full of ingredients, in order to reduce losses, the hotel asked the chefs to "set up stalls" at the door of the hotel with semi-finished dishes. In addition, travel and transportation, shopping malls and hotels, education and training, and cinemas, as long as they are industries that rely on offline scenes, their income has fallen off a cliff. Take watching movies during the Spring Festival as an example. On the first day of the Lunar New Year, the national box office was 1.81 million, just one thousandth of the 1.485 billion on the first day of the Lunar New Year in 2019. After this "epidemic", many offline entities are on the verge of life and death.

At this time, Hongdou Home had more than 2,000 offline stores. In order to improve store management quality and profitability, Hongdou Home quickly closed inefficient stores and introduced a store manager partnership system to give store operators a stronger sense of customer acquisition and profit motivation. By 2022, Hongdou Home's offline stores have been optimized to more than 1,500.

During the epidemic, Hongdou Home was even more acutely aware that the value of offline channels was at the "bottom", and during this period, the offline transaction rate became more real. Due to the impact of epidemic prevention and control, many people greatly increased the transaction rate in offline stores in order to reduce the number of people entering and leaving the venue. Under the guidance of professional shopping guides, the transaction rate of Hongdou Home's offline stores can mostly reach more than 80%. On the other hand, the return rate of live broadcasts of women's underwear products online is as high as 30%. Compared with Internet brands, Hongdou Home also knows that offline stores are its most stable moat. At this time, Hongdou Home also began to "bottom out" offline in a big way, and quickly stabilized its "basic plate" through store openings and store image upgrades.

It can be said that the "black swan" of the times may come at any time. How to quickly adjust the "posture" after the first wave of impact "peaks" to cope with the subsequent impact of the great changes, and even seize new opportunities. In this round of tide, Hongdou Home Furnishing once again achieved relatively satisfactory results.

Integrate into the transformation and perceive the changes of the times

The entire underwear market began to pick up after experiencing negative growth caused by the first round of the epidemic. my country's Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Finance and other relevant departments have successively issued relevant industry standards and policies to support and ensure the healthy development of the textile, clothing and underwear industries. In 2024, the scale of China's underwear market is expected to reach 243.3 billion yuan. However, this recovery is not balanced, and K-shaped recovery has become the key word. The trend of the strong getting stronger and the weak being eliminated has become more and more obvious. In the new round of industry reshuffle, new and old underwear brands will face the division of fate. Who will be eliminated and who will take the share of the eliminated? Every move and every action of the brand seems to be affecting the whole body.

From 2020 to 2024, Hongdou Home jointly held new product launches with Suzhou Museum, Suzhou Silk Museum, Hangzhou Silk Museum, Puyuan Fashion Ancient Town, etc. with the theme of "Softness Through the Millennium". Models wore baby cotton silk bras and Chinese style accessories, bringing the audience an amazing feast of Chinese fashion. The texture of the five thousand years of traditional silk culture and modern craftsmanship carries today's comfort, and also refreshes women's imagination of softness, comfort and oriental aesthetics.

In 2023, in order to make the operation of offline channels more flat and refined, Hongdou Home decided to cut the level of regional managers. The 9 sales departments of the three chain companies were divided into 27 sales departments according to the division of prefecture-level cities. This change has enabled each city to have a sales department head who is responsible for local store management. After the change is completed, a sales director only needs to manage 50 to 60 stores in the city, which is about one-third of the original number. In this way, management can be carried out more effectively and efficiency has been greatly improved.

The promotion of the store manager joint venture partnership system has further added growth momentum to the stores. At the 2023 semi-annual store manager conference, Hongdou Home Furnishing issued equity to allow outstanding store managers to become partners of the company, prompting them to complete the transformation from "doing work" to "doing business." This is not only a change of identity, but also a manifestation of "family culture." At Hongdou Home Furnishing, as long as you work hard, you will be recognized. People who can do things are never buried, their efforts are rewarded, and they fully realize their self-worth in this big family.

Product strength has always been the core competitiveness of Hongdou Home Furnishing. Hongdou Velvet is celebrating its tenth anniversary this year, with sales exceeding 170 million pieces, becoming a signature product of Hongdou Home Furnishing. This month, Hongdou Home Furnishing cooperated with the well-known hot product creation team Jincuodao to jointly establish the Hot Product 3.0 Operation Team, launching the "Hongdou Velvet Marshmallow 3.0" series of products to consumers around the 24th autumn and winter, gathering the resources of the entire company to create a core extreme single product and sprint to the single product sales target of 200 million yuan.

Seeking common ground, deepening channel reform and leading new retail

In the current new consumption scenario, consumers are increasingly accepting of quality, personalized, high-end and experiential shopping scenarios. Hongdou Home Furnishing is "seeking common ground upwards" and actively deploying and accelerating its high-potential channel strategy to accurately meet the growing needs of consumers.

In early July this year, as an industry pioneer, Hongdou Home Furnishing joined hands with the China Chain Store & Franchise Association (CCFA) to co-organize the 2024 China Shopping Center and Chain Store Development Summit. At the meeting, Hongdou Home Furnishing reached in-depth cooperation agreements with many top shopping centers and top-level outlets, including Wanda, Wuyue Plaza, SCPG, Suning, Hopson Commercial, Bailian, China Merchants Commercial Management, Yiyuan, Rainbow Department Store, and CapitaLand. While declaring the strength of the comfortable underwear brand and its influence in the industry, it has taken solid steps to expand the high-end market and deepen the channel layout, laying a solid foundation for the brand's future rapid growth.

Subsequently, Hongdou Home carefully planned and planned to launch a wave of brand upgrading and investment promotion across the country between July and August. Brand upgrading and investment promotion conferences will be held in Luoyang, Qingdao, Yichang, Shanghai, Nanjing, Shijiazhuang and other regions. At the same time, Hongdou Home's new image plan is also being carried out, and a professional image design company has been specially introduced to work together to create a new brand look. It is expected that this move will attract more attention and active participation from more partners.

So far, the high-potential channel strategy of Hongdou Home has achieved initial results, with 27 selected stores across the country successfully entering the opening or preparation stage. Among them, the six high-potential stores that have opened, such as Tongxiang MixC and Nanjing Yuhua Longhu Paradise Walk, have surpassed the brand's average single-store performance by twice in a single day with their outstanding market performance, becoming a vivid footnote to the success of Hongdou Home's high-potential channel strategy. At the same time, the entry of another 21 high-potential shopping centers and top-level outlets has been settled, including landmark projects such as Shandong Jining MixC, Changsha AEON MALL, and Wuhan MixC, further consolidating Hongdou Home's leading position in the high-end market.

Zhou Bing, general manager of Hongdou Home Furnishing, said that "working hard for 100 days, focusing on core cities, and acquiring 50 high-potential shopping centers and top-level outlet stores" has become the most exciting strategic goal of Hongdou Home Furnishing. The company is accelerating the implementation of its high-potential channel strategy with a sense of urgency, and opening a new chapter in brand development.

The business cycle fostered by the times is constantly changing, especially with the advent of the post-epidemic era, each round of change is accelerating, which not only "clears out" batches of brands that cannot keep up with the pace of change, but also allows brands that quickly perceive changes to climb to new heights. Hongdou Home, a 67-year-old domestic brand that insists on "born for comfort", has also gained a clearer positioning in the changes and is firmly on the road to becoming the number one in the underwear industry.