Maybe it's time to take a fresh look at menswear leadership.

In 2023, the growth rate of the garment industry was more flexible, and retail sales of clothing, shoes, hats, and knitted textiles increased by 12.9% year-on-year. In the industry segment, the menswear boom is leading, and the performance of most listed menswear companies is picking up. As for 2024, some industry insiders believe that menswear leaders may usher in a leading inflection point.

Furthermore, with economic development, male consumption attitudes are gradually changing, and men's spending power is also increasing year by year, gradually breaking out of the “bottom of the chain of contempt.” For example, during the 2023 Double 11 period, among men, road bike sales increased 3 times, while e-sports products and jackets increased by 114% and 90%, respectively. Also, according to the “2023 Male Consumption Watch Report”, men account for 57.2% of users who spend more than 1,000 online products. At the same time, the menswear category is highly functional and versatile, and consumers are often more inclined to choose leaders with strong brands; leading menswear players are also actively promoting brand upgrading and laying out the future.

This means that the current increase in the size and concentration of the menswear market has strong underlying support.

Among men's clothing leaders, Musang Group is definitely one worth observing. GXG, the main brand of Musang Group, is known as “one of the fashion brands that knows the most about young people”, and in May 2023, it innovated and occupied the “commuter menswear” position. It quickly achieved results and gradually became a trend of menswear brand upgrading.

Faster, more qualitative growth

On March 28, Musang Group released its 2023 financial report, which is the first financial report since becoming a “commuter menswear”. This financial report shows that Musang Group's profit flexibility has been released and the overall quality of operations has been improved.

In 2023, Musang Group achieved revenue of 2,329 billion yuan, a slight increase over the previous year, while net profit was 37.2 million yuan, up 295.7% year on year; gross margin was 52.0%, up about 3.1 percentage points year on year, up 3.7 percentage points from the same period in 2019.

Among them, the main brand GXG performed well, with revenue up 7.2% year on year to 2,017 billion yuan; gross margin increased 3.5 percentage points year on year to 54.1% year on year, the highest level since 2019. The gross margins of GXG Jeans and Mode Commuter also increased, rising to 44.5% and 51.4% respectively.

At the same time, from a channel perspective, the efficiency of Musang Group's offline channels, especially its own channels, has improved markedly, and has become the core engine driving overall performance.

In 2023, Musang Group's revenue share from offline channels increased to about 63.7%. Self-operated store revenue increased 26.1% year over year to 927 million yuan; dealership revenue increased 7.9% year over year to 424 million yuan. On the profit side, self-operated stores also performed well, and gross margin increased 1.8 percentage points year over year to 70.1%.

Furthermore, it can be seen that Musang Group has further promoted channel reform. The total number of offline stores decreased by 100 over the same period last year, the number of self-operated stores decreased by 13, and the number of dealerships decreased by 42 over the same period last year. This means that behind the improvement in the efficiency of its offline channels is not a simple expansion logic, but rather the optimization of the single-store model and the increase in same-store sales.

Exactly what kind of concept is this? Take self-operated stores as an example. In 2022, the annual revenue of a self-operated store under the Musang Group was about 1,924 million yuan, and gross profit was about 1,268 million yuan, while in 2023 it was about 2.441 million yuan and 1.712 million yuan respectively, corresponding year-on-year increases of 26.9% and 35.0%, respectively. In response, some industry insiders said that Musang Group's same-store growth is at the forefront of the industry.

In addition, Musang Group's inventory was further reduced to 567 million yuan. Roughly calculated, its inventory turnover fell to about 201 days. In contrast, Musang Group's inventory turnover level is also at the top of the industry. The number of inventory turnover days is lower than that of some comparable brands, such as Sanfu Outdoor, Hailan House, Announce Bird, and Jiumuwang.

This also means that the Musang Group in 2024 will be able to “go to battle lightly.”

“Lock in” the main upgrade direction ahead of time

Analyzing from the source, it is actually no surprise that Musang Group was able to achieve this kind of performance; there are two key points.

1. Key capabilities that are “replicable”

First, we need to understand why menswear brands are looking to upgrade.

At this stage, many domestic menswear brands have not removed their “old” and “outdated” labels, and their presence among young people is low. At the same time, many domestic menswear brands do not have a clear target market or consumer group. The categories behind them are becoming more and more vague, or are gradually aging, and are unable to truly impress consumers.

From a product perspective, these brands also often use outdated versions, fabrics, and colors.

Today, young people have become the main force in the apparel consumer market, and young men are gradually rebuilding their aesthetic values, such as focusing on fashion and personalization in clothing style. In this context, there is a certain mismatch between the brand and consumer needs, such as the steady and mature design style advocated by traditional business menswear that does not match individual needs.

In addition, omnichannel layout plays an increasingly important role in brand development. Some established menswear brands are developing online channels late, and this aspect still needs to be explored.

Briefly, the main upgrading directions of menswear brands include brand rejuvenation, seizing category opportunities, improving product strength, and improving omnichannel layout.

Looking back at Musang Group, GXG has the advantage of youth. For example, as mentioned above, it is known as “one of the fashion brands that knows the most about young people”. At the same time, it also has strong e-commerce genes. The early layout of online and offline integration is equivalent to achieving a leading layout in terms of brand rejuvenation, product enhancement, and improvement of the omnichannel layout. It already has the key ability to be “replicated”.

As GXG established a new brand strategy, which is to occupy a position in the “commuter menswear” category, it officially made up for “shortcomings” and is fully in line with the upgrade direction described above.

2. Category tracks with high potential

Also, thanks to its key ability to be “replicated,” GXG has plenty of room for business restructuring, following the trend of “commuter menswear”, a high-potential category circuit to seize the opportunity.

According to big data forecasts from various sources, by 2035, the overall consumption of Gen Z will quadruple to 16 trillion dollars; in the next 10 years, 73% of Gen Z will become newcomers to the workplace; according to data from the National Bureau of Statistics, the proportion of men in Gen Z in China will reach 53.4%, higher than that of women. This huge demand for “commuter menswear” has established the strong growth and plasticity of related brands to a certain extent.

At the same time, as consumer demand iterates, commuter clothing has also undergone drastic changes: in the past, commuter clothing was often associated with labels such as “serious,” “formal,” and “exquisite,” but now, commuter wear shows a casual and stylish attitude.

Combined with the above, many domestic menswear brands have a low presence among young people, and there is definitely a mismatch with consumer demand. Currently, there are almost no mature competitors on the commuter circuit. GXG, on the other hand, followed the trend and had a better chance of seizing the opportunities.

Improve competitiveness through break-the-circle exploration

In terms of tactics, GXG also has another characteristic: exploring in a broken circle. This is reflected in various aspects such as brands and products, giving them sufficient youth and differentiation to enhance brand competitiveness.

On the brand side, GXG proposed a new slogan, “It's just right to wear GXG at work,” to create a stronger brand symbol, and carried out a series of groundbreaking explorations around this, such as cooperating with mass media to ignite Chinese offices and youth-dominated communities, launch a catwalk in office buildings, and play new tricks on cross-border marketing.

In September 2023, the GXG Zero Pressure Commuter Autumn and Winter New Product Launch Conference was held in Shanghai. The catwalk combined the form of stage mime and turned the daily commuting process that consumers are very familiar with into a catwalk stage. The models, on the other hand, portray different types and personalities of young people in the workplace, showing the values of young people in the workplace: they must not only be professional, reliable, and easy to navigate, but also be independent and confident, and show their own aesthetics and individuality.

This year, GXG and Yaduo Hotel reached a cross-border cooperation to launch a “zero pressure clothing rental station” to jointly create a “morning G night A” workplace spirit.

Zero-pressure clothing rental stations start from the mental pain points of young consumers and target scenarios such as “the clothes are wrinkled when arriving at the hotel”, “the clothes are not enough when traveling for too long”, and “the clothes for newcomers to the workplace are inadequate.” Guests can rent GXG zero pressure suits at selected hotels. There are three styles to choose from.

These brand activities enabled GXG to accelerate the establishment of a new image, truly promote brand upgrading at the consumer mentality level, and reach more potential consumers.

In terms of products, GXG boldly innovates, dares to “take a different approach”, and at the same time takes into account the physical and mental needs of young people in design to improve the high quality and cost ratio.

Zero-pressure coats are a good example.

At a time when a large number of luxury, professional brands, and white brands were raging on the down jacket circuit last year, GXG fully invigorated the coat category and launched GXG zero-pressure coats. It uses a novel double-sided velvet fabric to reduce weight on the basis of warmth, reduce the burden of urban life, and bring refinement and decency to consumers. Compared to conventional double-sided woolen fabrics, the suede of this fabric is fuller and more delicate. For example, the total weight of the same warm coat is only about 0.75 times that of the former.

Meanwhile, after zero pressure coats became popular, GXG followed the trend and launched zero pressure suits this year, continuing to reduce the burden on workers. It specially uses different functional yarns such as SCRONA fiber and SOLOTEX soft fiber, and superimposes multi-layer technology such as anti-wrinkle technology, waterproof and stain repellent, etc., to bring consumers a more comfortable, relaxed, and easy-to-maintain experience.

Along with that, GXG's “commuter menswear” product matrix has gradually been enriched, achieving accurate matching between products and brands, and gradually becoming its own in the menswear industry.

epilogue

Generally speaking, leading men's clothing companies are facing a new development window in the context of iterative consumer demand and brand upgrades. At this critical moment, whoever can keenly grasp changes in the market and quickly complete the transformation can usher in a bright future.

Today, Musang Group's brand upgrade has made phased progress. In particular, it has shown a “light priority” attitude, such as leveraging greater performance flexibility with fewer stores and leveraging consumer mentality, which is an important brand asset — consumer mentality — with zero-pressure products, and opening up a new development situation. The results also confirm the correctness of the methodology. I believe Musang Group will be able to unleash more potential and achieve results in the future.

In this sense, the Musang Group is indeed gradually reaching the top of the trend.