May 17, 2023 20:22

What is the potential of outdoor activities? Zhang Heng, founder of Sanfu Outdoor, a listed company, recently said, "At a European summit, a presenter listed the four major industries in the United States: oil, automobiles, leisure sports, and film and television. They invited everyone on site to guess which industry has the largest scale. I never expected the leisure sports industry to surpass the automobile and oil industries. Indeed, I believe that China is also developing in this direction now

In fact, there have been many outstanding domestic brands, and domestic brands also have their own advantages. In this article, we will focus on domestic outdoor sports brands and talk about the development opportunities for domestic outdoor consumers and domestic brands.

Is remote tourism recovering and outdoor tourism still strong?

During the May Day holiday this year, the cultural and tourism market grew faster than in 2019, greatly boosting industry confidence. However, at the same time, in terms of social volume, camping, which became popular due to the pandemic in 2020, showed a somewhat lackluster performance. Indeed, after the epidemic, people have become more free to travel, and they generally choose to travel to further provinces and cities instead of setting up a tent locally.

Objectively speaking, the actual growth of outdoor and camping this year is still decent. During the Tmall 38 refresh week this year, new consumption trends related to camping and camping trips continued to rise, with a 70% increase in searches for bicycles, assault suits, off-road shoes, diving suits, and other related products. Sales of camping hats increased by nearly 600%.

Taking Shanghai as an example, the sales of hiking sticks increased by 900% year-on-year from January to April this year, while the sales of other products closely related to hiking increased by 400% year-on-year.
Sun Yichao, who has been deeply involved in the camping industry for many years and is also the founder of BLACKDOG Black Dog, also said, "The customer price has decreased, but user demand, conversion rate, and total sales are all increasing. Therefore, this year the camping market will definitely see a growth of 50-100%
As a sub category of outdoor camping, although camping is the most popular, its overall market size is relatively small. In 2021, the Chinese camping market size reached 29.9 billion yuan. And domestic listed companies related to camping, such as Mu Gaodi and Sanfu Outdoor, often maintain annual revenue at the level of billions to billions.

The overall outdoor product market is relatively large, and public data shows that the size of China's outdoor sports product market has increased from 166.9 billion yuan in 2015 to 357.5 billion yuan in 2021, with an annual compound growth rate of 13.5%. Based on the average annual compound growth rate of the past seven years, it is expected that the outdoor sports equipment market will reach approximately 600 billion yuan in 2025.
In addition to camping, the largest share of outdoor clothing is likely to be outdoor clothing. Compared to fast fashion clothing, it always needs to keep up with the trend, and outdoor clothing has higher functional requirements, such as coping with extreme weather or basic moisture absorption and sweat wicking functions. Therefore, in this sense, it is more resistant to the influence of clothing trends, more stable, and more likely to expand the market.
And when we focus on a track, the bottom line we should focus on is the crowd.

Shop camping and table set

What is the reason behind the popularity of outdoor activities in China, apart from the sudden outbreak of the epidemic, and the continued popularity of outdoor activities? Why has it been popular abroad for so many years, and why is it only now that China has started to transition from niche to mass? What has happened?
I think there are three indicators that can be referenced.

Firstly, based on the pace of development in Europe, America, and Japan, China has just entered the $10000 GDP threshold, and the economic foundation for the popularization of outdoor sports has already been established.

Secondly, there are 60 to 100 million people in the Chinese market who regularly participate in running, and 30 million people participate in skiing every year, which is enough to support the development of an industry. More than 50% of the population in Nordic countries regularly participate in outdoor activities every year, while the United States also accounts for over 48%. The Chinese market will gradually develop to this point.

Thirdly, the post-80s, post-90s, and post-00s have become the main players in outdoor consumption. This group of people is the most important consumer group at present, and they are economically independent and under the pressure of starting a family and starting a business. At this time, leaving the reinforced concrete city and going camping in the wilderness has become a way for young people to relax by absorbing the energy of nature to "rejuvenate".

The main consumer group has real demand. Previously, camping brands such as Hi King Luxury Camping, ABC Camping, and Dahe Wilderness have also received financing support, and listed companies have increased their investment. These may be the underlying reasons why many capital are optimistic about Dahe Outdoor.
OEM, low gross profit margin, and the arrival of the era of domestic outdoor branding
Compared to international outdoor brands, there are indeed some gaps between domestic outdoor sports brands.
For example, international brands such as North, Archaeopteryx, Cologne, and Disant, which have survived for decades or centuries, all have clear positioning and brand value. Archaeopteryx's clothes of 5000 yuan are hard to find, and many of them have spread from the small outdoor sportswear to the public.
North is a brand that excels in street fashion and localization, Archaeopteryx is a science student who opposes fashion, Di Sante uses the Winter Olympics to bind skiing segments, and Kelong uses high-end lightweight outdoor camping. These brands are all high-end, but they all have their own distinctive features that can stand up.
But when it comes to domestic outdoor sports brands, there are more popular ones, and previously, domestic brands had relatively less outdoor layout.
Moreover, due to the relatively niche nature of outdoor sports in China before, demand did not rise, and Chinese outdoor related enterprises focused more on supply chains and going out to sea.

The main business models of outdoor camping product production enterprises in China are OEM and ODM outsourcing, and their customers are mostly well-known overseas brands and retailers.
For example, the key customers of Mugadi's OEM/ODM business are Decathlon, Go outlets, Kmart and other brands. OEM, ODM and other businesses account for more than 70% of the revenue in the long run. Yangzhou Jinquan, also specializing in tent making, mainly serves internationally renowned brands such as Coleman, The North Face, and Fjallraven.

Moreover, the gross profit margin is generally not high, for example, the gross profit margin of Mu Gaodi is only around 30%, which is average; The gross profit margin of Yangzhou Jinquan is only about 20%, lower than the industry average.
Therefore, domestic outdoor sports brands lack independent brands and need to supplement their understanding of the brand and users, as well as improve product quality.
In a sense, it is normal for the domestic outdoor sports market to experience a surge, which has also benefited international brands that have accumulated for a long time.
According to data, the penetration rate of outdoor sports in China in 2022 is about 28%. I am still skeptical whether the actual data can reach this proportion, as the average level in European and American countries is also above 50%. However, regardless, the demand for outdoor sports is real and increasing, and domestic outdoor sports brands can also grow with the demand, developing products that are more suitable for Chinese people and more suitable marketing methods.

For example, data shows that in terms of specific outdoor projects, the four projects with the highest participation rate are cycling, hiking, mountaineering, and camping, while new projects such as paddle boarding, frisbee, and land surfing have a higher growth rate due to their small base.
Some climbing facilities or hiking trails in China are not yet perfect. Nowadays, there has been a wave of outdoor demand, and supply will gradually keep up. In this process, the increase in high-quality supply will also stimulate more demand. This is the opportunity for domestic outdoor sports brands.

High end outdoor brands such as Archaeopteryx may sell a sprint suit for tens of thousands or even tens of thousands of yuan, but even so, some people are rushing to sell it, even becoming a financial product.
In fact, some domestic outdoor sports brands have also seen their prices rise, but they may not necessarily have the same "treatment". For example, the price of a charging suit from Sanfu Outdoor has already reached 6000 to 8000 yuan. The pricing of a camel product ranges from 500 yuan to 1500 yuan. Kaile Stone also has products priced at 500 yuan and several thousand yuan, while Sikaile's quick drying short sleeved pants are priced between 100 and 300 yuan.

The brands mentioned above and mentioned below in the exhibition are mainly clothing brands in the outdoor category and the most popular camping related brands in the past three years.

1. Mugaodi VS Sanfu Outdoor: One receives the dividend, while the other loses in the dividend.
There are actually commendable aspects to making a tent that can be listed on the market.
You should know that before, Mugaodi was still a company with a revenue of only a few hundred million yuan. Later, taking advantage of the camping trend, its annual revenue reached 1.436 billion yuan in 2022.
Sanfu Outdoor, founded in 1997, is constantly losing money. Until the first quarter of this year, it is said to have experienced a performance reversal and achieved positive profits, with a single quarter revenue of 188 million yuan, a year-on-year increase of 43.25%, and a net profit deduction of 6.825 million yuan, a year-on-year increase of 482.3%.

The differences in their two development directions actually have strategic reasons.
For example, Mugaodi has been making its own brand since a very early age, starting as a brand in 2000, and being divided into two brands, Damu and Xiaomu, in 2018. Moreover, it has seized the dividends of camping and made many brand promotion actions. For example, it was revealed in variety show and co branded with Line Friends, Meizu and other brands.
Moreover, according to the financial report, from 2017 to 2022, the sales expense rate of Mugao Flute fluctuated from 8.14% to 6.87%, resulting in higher revenue and a decrease in sales expenses. This data is truly impressive.

The development cycle of Sanfu Outdoor is relatively long, and it has also gone through a relatively complete cycle of outdoor sports. It has undergone many changes in channels, from specialized outdoor brand stores to online stores, to opening stores in shopping malls. Sanfu Outdoor's response is relatively slow.
According to Zhang Heng, the founder of Sanfu Outdoor, since 2013, e-commerce platforms have had sports/outdoor products. The entry of Tmall and JD.com has taken away a lot of offline customer flow. Moreover, with the rise of comprehensive shopping centers, consumers' food, drink, entertainment, and shopping have been integrated in one place, so people don't have much time to go to an independent street store to buy outdoor products. Sanfu Outdoor has also experienced loss of customer flow The situation of rising rent.
And its business is also quite diverse, with the revenue of the mask business approaching that of outdoor sales in 2020. It also has a large number of distributors and consignment businesses, and price control is also relatively difficult. In the year of the epidemic, Sanfu's outdoor investment in camping was relatively conservative. And while peers are vying to lay out online channels, Sanfu's outdoor focus is still offline.

One netizen roast, "Young people in their twenties and thirties don't know how to play outdoors, but those who played outdoors in those years have long been unable to walk."
The aging customer base, slow channel response, and diversified business have led to continuous losses for Sanfu Outdoor.
Therefore, the following Sanfu Outdoor also began to shift from channels to brands, reducing the number of domestic and foreign brands for agency distribution. Similar to Anta Group's acquisition of international brands, it also spent 78.84 million yuan to acquire the ownership of two core trademarks, "X-BIONIC" and "X-SOCKS", as well as multiple intellectual property rights within China. In 2022, X-BIONIC's revenue accounted for 25%, but it is still not a pillar brand.
2. Kaile Stone: It is known as the "light of domestic products", but its style is very similar to that of an international brand.

"When Decathlon comes out, all domestic outdoor brands have to kneel, and Kaile Stone can kneel half way."
At the same price of three thousand, you may not be able to buy a decent bird at Archaeopteryx, but you can buy more substantial products at Kaile Stone
This is a widely popular evaluation of Kaile Stone on social networks. According to public reports, Kaile Stone's revenue was 1 billion yuan in 2019.
In my opinion, the brand narrative and positioning of Kaile Stone are quite similar to international brands.
For example, Archaeopteryx has always emphasized the spirit of daring to climb; Kaile Stone has been conducting a 17 year China Peak Climbing Program, targeting climbing activities on untapped or untapped peaks, with the brand providing support to athletes.

Moreover, in this climbing plan, Kaile Stone will do one thing: develop products based on the needs of athletes, and iterate continuously through their feedback; The same goes for Archaeopteryx, for example, its headquarters is very close to an extremely cold mountain range, and it often requires athletes to wear samples for testing.
However, Archaeopteryx often holds mountain classes to promote outdoor culture and is adept at collaborating with niche brands both domestically and internationally to convey new spirit.
Kaile Stone often sponsors large-scale outdoor events both domestically and internationally, and in recent years, there have been some joint projects, such as collaborating with the Kendall International Mountain Film Festival in the UK to develop the Kaile Stone Mountain Image Development Program, and collaborating with the classic Chinese anime IP "Da Nao Tian Gong". At the same time, it has launched the Qitian Da Sheng limited edition MONT hard shell charging suit.

Shop Feistel Outdoor Product

3. Feistel Outdoor: A traditional Chinese brand that responds quickly.
Camel, on the other hand, is a traditional Chinese brand founded in 2010 in Tianjin that started with leather shoes. Its products include assault suits, hiking shoes, sun protection clothing, and camping tent lights.

Since 2013, I have been involved in outdoor activities, divided into "urban outdoor" and "professional outdoor", with corresponding products for both outdoor professionals and enthusiasts. And as an outdoor veteran, Camel has a relatively complete self owned supply chain, such as establishing production and research and development centers in Huanggang, Shaoxing, Foshan, Qingyuan, and other places to create a research, production, and sales integrated model, and can achieve lower production costs.
Moreover, Feistel Outdoor has a strong sensitivity to new channels. It is understood that it ranks first in the search and interaction of the charge clothing category on Xiaohongshu. The sales of the same type of charge clothing by Feistel  have exceeded 350000 pieces, and "Feistel Charge Clothing" has also held the top spot in the charge clothing category sales for three consecutive years.
In addition, the "Feistel Outdoor" brand has completed the online full e-commerce platform layout, including Taobao, Tmall, JD, Vipshop, Tiktok, Kwai, etc;
When domestic brands are following the path of international brands, Camel is trying to find its own way. For example, there is a Feistel Outdoor Professional Charge Coat "Everest" series that is equipped with ENFO superposition technology and priced at a thousand yuan level. Attempting to take a professional and cost-effective approach to gain market share in stormtroopers.

I believe that some domestic outdoor sports brands have found their own way. In the future, there are still many opportunities for domestic outdoor sports brands, such as the following.

Opportunity 1: Market differentiation.
Whether it's camping brands or outdoor clothing brands, there will be corresponding products and brands appearing from the low-end, mid-end to high-end. This is an inevitable thing to focus on a certain track and do it for a long time.

Opportunity 2: Become an independent brand.
Doing OEM and OEM is not a long-term solution. With such a large population and booming outdoor demand in China, independent brands are definitely a necessary path to take. Sanfu Outdoor, which has transformed into its own brand, has finally turned around losses this season, which is an example.

Opportunity 3: Seize online channel opportunities.
Some early international outdoor brands were generally sold through professional offline channels in China, so for a long time they were unknown and the construction of online channels was far from enough. Domestic outdoor sports brands are adept at utilizing internet channels to establish their own product tone and quickly understand users, which is an opportunity for domestic outdoor sports brands.

Opportunità 4: esplora i prodotti più popolari.
Sebbene si dica che l'outdoor sia proprietà esclusiva della classe media benestante e del tempo libero, e i marchi che posizionano percorsi di prodotti di fascia alta hanno spesso raggiunto la piena crescita, con la popolarità degli sport all'aria aperta, la domanda del pubblico è destinata ad aumentare. Decathlon non è l'unico marchio in grado di soddisfare le esigenze di prestazioni in termini di costi delle persone. Sono necessari più marchi in una forma più diversa per soddisfare le esigenze di persone diverse e portare anche nuovi punti di crescita all'industria dei prodotti per esterni.