Founded 20 years ago, with annual revenue of 3 billion, but little known, why does he want to become the Chinese version of "LVMH"?

A brand has been deeply involved in the market segment for many years and has rich experience. Under this background, how can it move towards diversified group operations? This article analyzes how B.L.F., as an old clothing brand, has established itself perfectly in the market. Let's read it together.

What kind of brand can make money for 10 or 20 years in the red ocean of China's clothing market? In the past decade, China's footwear and clothing market has experienced an industry inventory crisis caused by blindly following the trend and the market has been shaken. In this industry-wide market earthquake, many once popular brands disappeared, and most of the brands that survived have made various transformation attempts. As the industry gradually recovers, some big brands in the past traditional industry period have achieved a counterattack, and some relatively less well-known brands have also taken advantage of the trend. Many up-and-coming brands are also rising rapidly, and market competition has also been brought into a new stage.

Whether it is an old brand that has made a comeback or a new brand that has emerged, they have one thing in common, which is also the key to their ability to gain a foothold in the new market stage: choosing the right market segment. Demand segmentation is a core feature of the new consumer group in the new era and a manifestation of consumption upgrading. Grasping these characteristics and manifestations of consumers means that a brand has taken a big step towards success.

Are there any brands that have focused on niche areas in the past? Of course there are. But most of them have suffered heavy losses in the past decade and have fallen into a trough.

Instead, some brands that were less well-known and received little attention in the past have become winners in their respective segments.

Recently, there has been a hot topic about a clothing brand that focuses on golf. The company, Biyinlefen, was founded in 2003, and it has been 20 years since then. It went public in 2016 and became the "No. 1 Golf Clothing Stock in China." Since then, its stock price has been rising all the way. Today, its total market value exceeds 18 billion yuan, and it is also known as the "Moutai of Clothing" in the capital market.

Image source: Biyinlefen official Weibo

Although this brand has not received much attention in the past, it now seems to be a very typical success case in a niche market. From the timeline, it was not born in the new consumption era, but it has extremely high reference value.

1. Fake foreign brands that don’t even take their names seriously

Biemlfdlkk, whose English name is Biemlfdlkk, is a brand name that makes people feel that it is not very thoughtful. It is not easy to remember and it is difficult to pronounce.

In fact, many people have never even heard of the brand Biyinlefen, but people who are associated with this brand are not unfamiliar with it. For example, its brand spokesperson is Wu Zun. Evergrande Group Chairman Xu Jiayin has worn Biyinlefen to attend events. Actors Yang Shuo, Wang Yaoqing, Liu Ye, Hu Jun, Duan Yihong and others have also cooperated with Biyinlefen. Its products start from thousands of yuan.

Some people may think that this is an international brand, but it is not. It just has some "fake foreign brand" flavor to it.

In 2000, Xie Bingzheng, who had many years of experience in acting as an agent for imported high-end menswear for well-known foreign brands such as Valentino and Yves Saint Laurent, bought B.I.L.F., which was originally positioned as a business casual brand, and founded B.I.L.F. in Guangzhou in 2003.

At that time, the domestic clothing industry was dominated by the business trend. Xie Bingzheng positioned the brand in the golf segment through investigations in the Japanese and Korean markets, with the target consumer groups being golf enthusiasts and consumers who identify with golf culture and have a middle-class income or above, in order to create differentiation. In short, B&L has been targeting China's high-net-worth individuals from the beginning.

Thanks to its differentiated positioning and accurate user portrait, B.L.F. became a dark horse among sports brands, opening 20 stores nationwide in the first year and more than 30 stores in the second year, with a very rapid expansion. With such a development momentum, B.L.F. has been continuously increasing its investment in the market, and once almost put itself on the edge of a cliff.

In 2005, when the company was not yet profitable, it added 10 million yuan in investment. In 2008, driven by the Beijing Olympics, the whole nation started a fitness trend, and domestic sports brands increased investment and accelerated expansion. So Biyinlefen also joined in and opened large stores of more than 300 square meters in Beijing and Anshan. However, the performance in all aspects did not meet expectations, and it stopped losses after half a year of operation, without blindly advancing.

On the one hand, Biyinlefen was not well-known enough at that time, and on the other hand, Biyinlefen’s product structure was not sufficient to support large stores, and it was impossible to achieve a planned path of rapid replication.

The changes in China's footwear and apparel market since then have proved that it is correct to treat the Olympic traffic rationally and stop losses in time.

Since 2012, domestic footwear and apparel brands have been caught in a wave of store closures. Whether it is Li Ning, Anta, Xtep, or Metersbonwe, Jeanswest, Semir, 361 Degrees and other brands, the scale of store closures is calculated in the thousands.

What no one expected was that in this round of widespread closure of traditional offline stores, B.L.F. has maintained steady expansion, with the number of stores reaching 480 in 2015, and B.L.F. became the brand with the largest comprehensive market share in the same product market that year; in 2016, the number of stores was 550, in 2017 it was 610, and in 2018 the number of stores reached 764. Today, B.L.F. has more than 1,100 stores nationwide.

On December 23, 2016, Biyinlefen was listed on the main board of the Shenzhen Stock Exchange, becoming the "first Chinese golf apparel stock". The company's performance has also been growing steadily. In the overall downward environment of the market economy, its revenue in 2022 is close to 3 billion yuan, and its revenue and net profit have increased for the 12th consecutive year. Thanks to such stable profitability, the company's stock price has also been rising steadily. No wonder the capital market calls it the "Moutai of clothing".

2. After 20 years of deep cultivation in the niche market, what did he do right?

Choosing the right track and sticking to it must be the most correct thing that Biyinlefen has done.

When Biyinlefen entered the market, golf was booming in the Chinese market. It was only after the 21st century that golf entered the development track in the Chinese market, and its growth rate was amazing. Initially, there were only a few hundred thousand golfers in China. After the famous golfer "Tiger" Woods came to China to participate in the Challenge Tournament in 2001, the number of golfers in China increased to 500,000. In 2003, the number reached 1 million, and in 2009 it exceeded 3 million.

Data from research reports show that by 2022, the number of golf courses in my country will have reached approximately 445, and at its peak the number reached nearly 700.

And one thing is very important, the market potential of golf is being released, it is not only the patent of middle-aged people, now more and more people born in the 2000s and 2010s are appearing on the golf course. According to the data of the China Golf Association, there were only more than 400 registered young golfers in China in 2013, but by 2022, this number has exceeded 100,000, and the number of young golf events has also increased from more than 30 to more than 800 now.

And with the change of people's consumption concepts, golf, the so-called "aristocratic sport", has been accepted by more and more Chinese people, and the potential consumer population in the entire market has exceeded 50 million.

If we say that B.L.F.'s success over the years has a component of luck, the overall steady growth of the market and the huge potential it contains have provided fertile soil for B.L.F.'s growth. The increase in both revenue and net profit for the 12th consecutive year is not just due to luck, but the real money spent by consumers.

1. Products, professional products + innovation

As a high-end brand, how does B.L.F. increase the added value of its products through professionalism?

(1) Product creation

From public information, we can see that because golf itself has a certain high threshold attribute and is positioned very professionally, B&L attaches great importance to product research and development. For example, the company's design department was initially set up directly in Seoul, South Korea, and Korean designers were hired to be responsible for R&D creativity. Later, in order to more accurately grasp the trend and consumer preferences, well-known designers from China, the United Kingdom and South Korea were hired to form a product development team, and the Burberry golf design director was invited to serve as a research and development creative consultant. In February 2013, it also cooperated with the Beijing Institute of Fashion Technology to establish the first "Golf Clothing Human Engineering Research Center" in China.

As for suppliers, Japan's Itochu Corporation, Japan's Toray Group, Italy's Concolini, the United States' Gore, the United States' POLARTEC, OUTLAST, etc. are all internationally renowned fabric suppliers. They also attach great importance to independent research and development and have hundreds of independent research and development patents.

When it comes to details, more attention is paid to the quality of the fabric selection. For example, generally only 50% of long-staple cotton is needed to make the fabric, but Biyinlefen insists on using 100% long-staple cotton as the fabric; imported high-performance C-type yarn is used, and high-needle dense weaving technology is used to ensure that the product is not easy to fade or deform; it also achieves UPF50+ high-efficiency sun protection to reduce outdoor ultraviolet damage.

(2) Innovation

This can be viewed from the following two aspects:

One is the innovative application of technology.

The main purpose of technological innovation is to improve product functions and performance. For example, through fiber blending technology, Outlast's phase change temperature-regulating fiber is directly blended into the fabric to improve the temperature regulation function of the product; through research on fibers, yarns, fabrics, finishing and other technologies, according to different materials, combined with yarns with pH adjustment function, Anti-Bacterial antibacterial fiber fabrics are created, so that the fabric can neutralize the pH value increased or decreased by sweat, and play an antibacterial role; etc. As a brand specializing in golf sportswear, the improvement of these product functions and performance will further highlight the professionalism of the brand for users.

The second is design innovation.

The style of golf sportswear is actually a fusion of sports, business, leisure, fashion and other styles, but the overall design is still relatively simple. Biyinlefen has also made an attempt at "national tide", incorporating Chinese elements into this clothing style originating from the West. In 2019, when the Forbidden City was about to be completed for 600 years, Biyinlefen reached a cooperation with the Palace Museum and launched a series of joint products of palace culture. Later in 2021, it cooperated with Zhang Xue, the inheritor of the intangible cultural heritage of Suzhou embroidery, to create joint products of the Forbidden City through traditional Suzhou embroidery techniques. For consumers, the resonance at the cultural level has undoubtedly enhanced their favorability and identity with the brand. At the same time, for younger consumers, this is also a good reason to buy.

2. Marketing

With the advent of the mobile Internet era, various marketing methods and forms have emerged one after another, and with the emergence of a large number of new consumer brands, marketing is very competitive no matter which industry it is.

Collaboration is actually a marketing tool, but for a large category like golf sportswear, which has always had a relatively single design style, design innovation actually has greater significance.

Although the brand’s public awareness cannot be compared with that of mass consumer goods, B.L.F.’s actions in brand marketing in recent years are considerable, continuously accumulating potential energy for the brand.

In 2009, golf was included in the 2016 and 2020 Olympic Games by the International Olympic Committee. B&L eventually became a partner of the Chinese National Golf Team in 2013 and became the supplier of professional competition and training uniforms for the national team. In 2020, it renewed its contract with the National Golf Team for another 8 years and created the Five-Star Jersey II for the National Golf Team for the Tokyo Olympics in 2021. With the help of omni-channel Olympic marketing, its brand influence has been further amplified.

In 2013, B&L Golf reached a cooperation agreement with the Chinese National Golf Team

In 2022, in line with its product category strategy, it created the first "T-shirt Festival" and launched the slogan "T-shirt Expert".

Spokespersons are also indispensable. In 2018, Yang Shuo and Jiang Yiyan, known as Mr. Bao, were signed as brand spokespersons. In January 2023, Wu Zun was signed as the new brand spokesperson.

In 2020, it also signed a contract with CCTV's "Great Power Brand" and was awarded a plaque.

3. Channels: Offline sales are growing steadily, while online sales are increasing

In terms of channels, in order to ensure that the brand value and high-end positioning are not diluted, Biyinlefen has always insisted on relying mainly on offline channels, with stores covering more than 30 provinces, municipalities and autonomous regions across the country, and the locations are mainly airports, high-speed railways, golf courses, shopping centers and outlets.

Especially airports, as a transportation scene where business people frequently appear, this channel allows BILEFEN to gain higher exposure at a lower marketing cost. At the same time, the traffic in transportation scenes will not be affected by the decline in traffic in physical formats, and the consumer groups it faces are more precise. Offline channels are also the most direct way for brands to get close to consumers.

As of December 31, 2022, BILEFEN's marketing network covers core business districts, high-end department stores, airports, and well-known golf clubs in 31 provinces, autonomous regions, and municipalities across the country, with a total of 1,191 terminal sales outlets, including 579 directly-operated stores and 612 franchise stores. In the future, high-end communities in first- and second-tier cities and rapidly developing third- and fourth-tier cities are also potential markets that it will focus on developing.

In order to adapt to new consumption trends, Biyinlefen officially began to expand its e-commerce channels in 2019, and fully entered traditional e-commerce platforms and emerging channels such as JD.com, Tmall, Douyin, Xiaohongshu, and Vipshop.

Overall, the sales of B.L.F.'s traditional channels have grown steadily, and the new retail channels have grown rapidly, which can serve as its incremental channels. At present, more than 90% of B.L.F.'s revenue comes from physical store channels, and the revenue from e-commerce channels accounts for about 6%. Although the proportion of online revenue is not high at present, its growth rate has been at the forefront of the industry in recent years.

Based on these actions, Biyinlefen has built a solid moat for itself.

3. Planning the operation of a luxury goods group, want to become the LVMH of China?

After 20 years of operation, with steady growth in performance and continuous expansion in scale, B&L can be called the hidden champion among sports brands and one of the few Chinese brands in the high-end brand market. In June this year, B&L held its 20th anniversary celebration. At that time, Xie Bingzheng, the founder of the company, mentioned the company's development goals for the next ten years, including a tenfold increase in revenue, a revenue scale of 50 billion, and most importantly, a multi-brand strategic layout to truly become a Chinese luxury group. Some people think that B&L is going to become the Chinese version of LVMH.

To become a luxury goods group, it is far from enough to rely solely on professional and innovative products, channel growth, and marketing efforts. This process will test the system capabilities of the corporate organization and its overall layout capabilities.

Luxury goods are naturally paradoxical with rapid growth, but one thing is that they can largely resist the fluctuations of economic cycles. Although B&L cannot be defined as a luxury brand, its growth over the past 20 years has well proved this point.

As for the next strategic layout, Biyinlefen has actually begun to lay the foundation in recent years.

In 2014, Biyinlefen segmented its product strategy and divided its product series into three different styles: golf, life, and fashion. It began to diversify from the professional field to the mass life market. This move enabled it to safely survive the low period of the golf market in those years.

It also started with T-shirts and carried out in-depth cultivation of subdivided categories vertically. According to the latest results of the national key large-scale retail enterprise commodity sales survey statistics released by the China General Chamber of Commerce and the China National Commercial Information Center, Biyinlefen's T-shirt category products have won the first place in comprehensive market share for five consecutive years (2018-2022).

In 2022, B.L.F. established B.L.F. Golf and independently operated stores, distinguishing between professional and fashion lines, in order to further meet the increasingly refined sports scene needs of the elite population.

Moreover, in order to build a multi-brand matrix and realize group operation, as early as 2013, B.L.F. began to enrich its brands through acquisitions. It first acquired CARNAVAL DE VENISE (Venice Carnival), a leading Italian men's clothing brand in the 1990s, and repositioned the brand as a holiday travel clothing brand in 2018. Later, in 2023, through its subsidiary Houdezaiwu, it invested 57 million euros and 38 million euros in Kairuite and Yingfengzerun respectively, indirectly acquiring the global trademark ownership of Italian luxury brand CERRUTI 1881 and British brand KENT&CURWEN. At the same time, B.L.F. also holds a stake in fast luxury fashion brand UR.

CARNAVAL DE VENISE

Image source: Biyinlefen official website

Judging from the 20 years of development of B.L.F., it has the operational capabilities of a luxury brand. In addition, China is the world's largest luxury consumption market. Consumption upgrades and increased national cultural confidence have created unique conditions for the birth of local luxury brands and luxury groups.

LVMH, the world's largest luxury group, is the best example of a luxury group that became one through diversified acquisitions, but for Chinese companies, this is indeed a brand new attempt. B&L has been deeply involved in the market segment for many years and has rich experience. To move towards diversified group operations and become a Chinese luxury group, it will face the challenge of an organizational system based on long-termism.

The pictures in this article are only used for picture introduction and are not for any commercial purpose.

Author: Yangyang, Editor: Xiaoli

Source: WeChat public account "New Consumption Think Tank"