Wang Quan of Junzhi Strategic Consulting: From the changes and consistencies of Bosideng, to see how enterprises make strategic choices | WISE2024 Future Consumption Conference

On November 29th, the WISE2024 Future Consumption Conference was officially held in Beijing. This conference is hosted by 36Kr Future Consumption with the theme of "Always with You", focusing on hot topics in the consumer industry. It invites more than 20 investment institutions, platform sides, brand sides, and service provider executives to jointly explore new trends and opportunities in the consumer industry.

Wang Quan, the General Manager of the Industry Department of Junzhi Strategic Consulting, proposed that the key for enterprises to achieve strategic results lies in strategic trade-offs. This conclusion comes from his years of strategic consulting service practice. At Junzhi Strategic Consulting where he is located, more than 50% of the client service years exceed 5 years, and the annual client renewal rate in 2024 even reaches 100%. In the keynote speech of this conference, he took Bosideng, a client that Junzhi has served for 7 years, as an example to deeply interpret how enterprises make strategic trade-offs from the perspective of a strategic consultant.

He pointed out that through customer research, the Junzhi team found that Bosideng is equivalent to down jackets in the hearts of consumers. This may seem like a limitation, but in fact, it is a huge advantage for the brand. Different from the "four-season" route proposed by multinational consulting companies, Junzhi chose an "unusual" path and suggested that Bosideng "return to the main channel of down jackets". Under the guidance of this strategic direction, Bosideng further upgraded its products, channels, and marketing, continuously consolidated its business barriers, and alleviated the operational constraints in the off-season by developing sun-protective clothing and achieving related diversification.

After experiencing industry fluctuations, the epidemic, and warm winters, Bosideng still maintains a strong revenue growth. In the 2023/2024 fiscal year, Bosideng's revenue exceeded 20 billion, and it has achieved double growth in revenue and profit for 7 consecutive years. The successful transformation of Bosideng is not only based on strategic choices but also lies in the enterprise's focus and value creation in the core field, adhering to the strategic axis and creating customer value.

The following is the speech record of Mr. Wang Quan, edited and organized by 36Kr:

Hello everyone! The theme of today's conference is "Always with You", and I am deeply touched by this theme. Since the establishment of Junzhi, the way we serve enterprises is to always be with them. Among the enterprises that Junzhi serves, more than 50% of the clients have a cooperation period of more than 5 years, and some clients even have a cooperation period of up to 8 or 9 years. This year, the number of clients served by Junzhi has reached a new high, and the client renewal rate in 2024 has reached 100%.

In the process of serving enterprises, we deeply feel the difficulty for enterprises to obtain strategic results through strategic decisions. The most critical issue is strategic trade-offs. Currently, there are many concepts, trends, and fads in the market, as well as successful and failed cases. When making strategic choices, how can enterprises distinguish which choices need to be adhered to and which choices require flexibility?

Today, I will share with you the "Changes and Constants in Operating an Enterprise" through a case. This enterprise has achieved earth-shattering changes in seven years. From products, channels, customer experience, internal organizational structure to cognitive indicators and business indicators, great changes have taken place. This enterprise is Bosideng. And the reason for its current changes, in the final analysis, cannot be separated from the huge turning point in 2017, when the enterprise made a key strategic trade-off.

Junzhi Strategic Consulting Wang Quan

The Key Turning Point of Bosideng: Four Seasons or Down Jackets

In 2017, when Junzhi began to serve Bosideng, two internationally renowned consulting companies were already serving it, but the effect was not as expected. Through research, we found the following core reasons:

First, Industry: Collective Decline. In the past, the impression of down jackets was bloated and unfashionable, so few enterprises were willing to invest resources to create down jackets. Domestic down jackets did not occupy the mainstream in the communication end, product end, and channel end.

Second, Cognition: Traditional Old Brand. Customers' perception of Bosideng as a traditional old brand is deeply rooted. In the interviews, customers would mercilessly say, "This is a brand that parents wear, and I will not buy it." This inherent cognition led to the situation that no matter what actions Bosideng took at that time, it was difficult to effectively enhance the brand premium.

Third, Operation: Years of Bottleneck. The above two problems led to Bosideng's long-term entrapment in a fluctuating state in terms of revenue and profit, and the fluctuation amplitude was even greater when encountering a warm winter occasionally. Bosideng has been unable to find an effective way to break through the bottleneck and difficult to achieve sustainable growth and breakthrough development.

Fourth, Operation: Single Product in a Single Season. Bosideng's single-product and single-season model has caused it to face huge constraints in operation because down jackets can only be sold in winter. Then, how to deal with the off-season? In the past during the off-season, Bosideng had to close or sublet many street stores, or sell down jackets in the off-season. In addition, a large number of shopping guides would be lost in the off-season, and they needed to be recruited again in the peak season. If the shopping guides were retained at a cost in the off-season, the overall operating cost would increase significantly; and if temporary shopping guides were recruited again in the peak season, it would be difficult to ensure their professionalism. Affected by these factors, mainstream supermarkets are often unwilling to provide Bosideng with the opportunity to enter, and even if they do, it is difficult to obtain a good location. Because down jackets as seasonal goods, even if the sales volume is considerable, it still belongs to off-season sales.

Therefore, Bosideng was confused about its core business at that time. During this period, Bosideng also faced the choice of "change" and "unchange", where the "change" is whether to transform to the four-season model or continue to focus on down jackets.

At that time, other consulting companies proposed a four-season development suggestion to Bosideng. The reason is that Bosideng's single-season and single-product sales can reach 5 to 6 billion. If it can achieve 1 billion in each of the other three seasons, then Bosideng will have at least 3 billion of growth space. In response, Bosideng also conducted a large number of market research and customer interviews, and chose to make some categories four-season. However, this decision led Bosideng into a huge strategic confusion. It lost confidence in its main business and began to think about whether to make a transformation.

After Junzhi took over the Bosideng project, it conducted in-depth market research but came to a different answer from the previous ones. Doing things with the mindset of solving problems often fails to see the bright spots. In the process of market research, we obtained many key bright spots, which greatly increased our confidence.

First, Bosideng = Down Jackets. Whether they are 8 years old or 80 years old, whether they buy Bosideng or not, customers know the brand Bosideng and also know that its main business is down jackets. This may seem like a business constraint for Bosideng, and many people think that its business scope is too narrow, but for us, it is a huge bright spot. You should know that many enterprises spend many years and a lot of money, but it is difficult to be equated with customer cognition. As a rigid demand, down jackets have a very clear value. It is the core category for keeping warm in the right season and has a history of thousands of years. The category itself has a long-term and stable market demand and can form a very stable link with customer value.

Second, Big Brand, Good Quality. Even if customers complain that Bosideng is a brand that parents wear, they still know that Bosideng is a big brand with good quality and a relatively high price. This shows that customers have a relatively high brand recognition and price positioning for Bosideng. Later, we deeply explored the reasons behind this contradictory psychology and found a very interesting phenomenon. In the era of these young people's parents, Bosideng was extremely popular and in high demand. Their parents had bought Bosideng. At that time, Bosideng was already sold for one thousand yuan, which was a very expensive brand for customers at that time. At that time, there were no supermarkets, and department stores were the mainstream channels, among which there was a dedicated floor for down jackets. These early impressions have imperceptibly formed the brand cognition in the hearts of customers. From this, we found that the core problem of Bosideng is actually brand aging, rather than low-end and marginalization, which also means that the brand has the possibility of being activated. Therefore, we found the core problem and separated other problems.

Finally, There is a Vacancy in the Mainstream Choice. We classified various down jacket brands by sense of value, and the sense of value is not completely equivalent to the price. The following figure intuitively reflects customers' perception of the value of different brands in 2017. The bottom part is the domestic professional down jacket brand represented by Bosideng at that time, the top part is the international down jacket brand, which leads the light luxury and even luxury down jacket brands above 8,000 yuan, and the middle part is other more fashionable four-season clothing brands.

When we asked customers, "If you don't choose Bosideng, which brand of down jacket will you choose?" The customers' answers were very clear. They divided down jacket brands into two categories. One category is traditional down jacket brands such as Bosideng, Yaya, and Yalu, and customers said they usually would not choose these brands; the other category is four-season clothing brands, and customers tend to go shopping in supermarkets and will buy when they encounter a style they like.

We found two opportunities here.

First, we found that a data of Bosideng was "wrong" before. Bosideng provided a data showing that its market share in the down jacket field reached more than 40%. Looking at its own market share in its own track is not wrong, but why is this industry paradigm practice of Bosideng wrong? The answer is related to customer choices. For example, if you ask a customer when buying sportswear, if they don't choose Adidas or Nike, what brand will they choose? They will quickly answer that it is Anta, Li-Ning, etc., all are sportswear categories. So if the customer's choice is consistent with the industry paradigm, it is no problem to look at its own market share in its own industry, but it is a problem for Bosideng because the customer's choice has changed.

At that time, a key point proposed by Junzhi is that Bosideng's competitors are not other professional down jacket brands, but all four-season clothing brands that are selling down jackets. This view can be said to be an epiphany for Bosideng. Up to this stage, we have seen the results and think it is reasonable, but for the industry at that time, it was like uncovering a layer of fog covering the industry, allowing people to see the real market competition pattern.

Secondly, in the process of customer interaction, one answer is very important. Customers said, "I won't choose you. I will go to the supermarket to shop, and I will buy when I see a suitable style", but they did not mention any brand. Therefore, although the demand for down jackets is entrusted to four-season clothing, customers have not yet formed a clear consumption preference, which is an opportunity for Bosideng. At that time in the market, brands with a price between 800 and 1,000 yuan occupied the lower layer, while high-end brands above 8,000 yuan were in the upper layer. However, there is no effective connection of professional down jacket brands in the middle price range.

After experiencing these, Bosideng made a very critical choice, that is, "Return to the main channel, return to the main brand". During the period of facing fourfold pressures, Bosideng once lost its direction and even considered giving up or adjusting the down jacket business.

So, the first point I want to express is that there are opportunities in crises, and even in customer complaints, bright spots can be seen. Choices can bring about a turning point, and every strategic choice is very important.

Adhering to the Strategic Axis, the "Changes" and "Constants" of Bosideng

Bosideng's turning point in 2017 is only the first step. How to achieve long-term success and how to cross the cycle is more important.

First, let's look at the changes. Junzhi has served Bosideng for seven years, and during this period, many changes have occurred. During this period, the total retail sales of consumer goods fluctuated rapidly, and the clothing industry fluctuated even more. Especially after experiencing the three-year epidemic. Although the epidemic has affected all industries equally, there are also three warm winters, which is a challenge for Bosideng. However, under these challenges, both Bosideng's revenue and profit are increasing linearly. Its revenue has broken through from 8.881 billion in the 2017/2018 fiscal year to 23.214 billion in the 2023/2024 fiscal year, and its profit has also quadrupled and a half. Although the external environment has undergone huge changes, Bosideng's performance shows a strong performance that is not completely consistent with it.

Bosideng's products are also changing. From extremely cold down jackets, trench coat down jackets, the new generation of lightweight down jackets, to the current sun-protective clothing, Bosideng is constantly changing. However, these changes are often interpreted as "Is Bosideng going to be high-end?" or "Is Bosideng going to be four-season?". Only Junzhi and Bosideng know that this series of changes is centered around an unchanged strategy. Bosideng has always been focused on the track of being a down jacket expert, and this value has never changed.

In the past seven years, Junzhi and Bosideng have experienced five stages together.

The first stage is to clarify the business strategy. Bosideng is confident in the down jacket business and can see the market space, which is the most important. So in the first stage, we must first determine what the core business, core competition, core opportunity, and core challenge are, and separate the strategic issues from the tactical issues.

The second stage is to resolve brand aging. If the old brand perception is not resolved, Bosideng will never be able to enhance the brand premium, never be able to impress the mainstream crowd, and the operational actions will be inefficient. Only by solving the strategic problem can the operation be more efficient. Therefore, Bosideng resolves brand aging through product upgrading, channel upgrading, and marketing upgrading.

The third stage is to build business barriers. Bosideng always adheres