BOSIDENG's down jackets priced at tens of thousands of yuan are not selling well, and the company is changing its course. | Business Friday

Text | He Zhexin

Editor | Qiao Qian

"You definitely can't buy the genuine version of this kind of clothing outside Canada."

While speaking, the purchasing agent L took out his phone to show us the orders that had just been completed in WeChat. A customer wore the ski suit he brought back to China to go on vacation in the Greater Khingan Mountains and posted a nine-square grid. Each photo showed a large logo like a pair of scissors on the sleeve of the clothing.

This clothing is from Moose Knuckles, a Canadian outdoor brand whose literal translation is "Elk Testicles". It received a minority equity investment led by Cathay Capital in 2019. In the past two years, with the gradual rise of the outdoor style, Moose Knuckles has also been promoted and recommended on Xiaohongshu with tags such as "niche", but it has always been difficult to match the sales of its fellow Canadian brand Canada Goose.

In early October this year, Cathay Capital sought additional partners and brought in Bosideng to jointly invest in Moose Knuckles. After the transaction was completed, Bosideng became the largest shareholder of Moose Knuckles, owning more than 30% of the brand's equity. Victor Luis, the Executive Chairman of Moose Knuckles, said in a statement: "The cooperation with Bosideng will be a catalyst for our development in Asia."

Currently, Moose Knuckles has opened 36 stores in regions outside Canada.

Some fashion industry analysts disclosed to 36Kr that the motivation behind this acquisition is that the progress of the high-end positioning of Bosideng's core brand has not been smooth.

With high-end down jacket brands such as Canada Goose becoming popular in China, Bosideng started its high-end positioning strategy in 2018. Although the slogan is for the "whole year", the main battlefield of the high-end strategy is still in the winter category, and down jackets have become the core product for price increases. Zhu Gaofeng, the CFO of Bosideng, once disclosed in public that the future goal is to increase the average price of down jackets to more than 2,000 yuan.

However, in 2023, the trend of "cost performance" is becoming more and more intense. During this year's Double 11, a shiny down jacket priced at 1,599 yuan from the domestic brand Gaofan, which looks quite similar to Moncler, sold 57,000 pieces in the Douyin flagship store and became a bestseller.

Making down jackets more expensive is not as easy as Bosideng expected - in the fiscal year 2023/24, Bosideng's gross margin decreased by 1.2 percentage points to 65%.

In contrast, outdoor products are becoming more and more expensive. This Double 11, outdoor products once again became a highlight in the apparel field, especially high-end products worth tens of thousands of yuan, with the fastest growth rate.

Although down jackets have a warming function, they are actually not suitable for most outdoor scenarios. Taking skiing as an example, the outer layer of ski suits is mainly windproof and breathable, and the inner layer is synthetic cotton. The products are lightweight, convenient for movement, and can quickly wick away moisture. Down jackets are usually heavier and not waterproof. They are also inferior to ski suits in terms of breathability, and the design is not suitable for outdoor sports. Bosideng, which is determined to be high-end, naturally has also set its sights on this market.

The above-mentioned analyst told 36Kr that in the past, Bosideng had acquired many unknown small brands, but none of them developed successfully. Acquiring the mature and high-end outdoor brand Moose Knuckles may be able to turn the situation around.

According to 36Kr's understanding, traditional sports giants such as Nike and Adidas are also eyeing the high profits in the outdoor market, but their choice is still to do it themselves rather than acquire. In contrast, domestic enterprises are more ambitious when competing to acquire such brands. Recently, it was also reported that Baoxiniao will acquire the US high-end outdoor brand Woolrich, whose about 70% of sales come from products priced between 600 euros and 1,000 euros (approximately 4,583 yuan to 7,638 yuan). Previously, Baoxiniao had stated in its financial report that it will set aside 400 million yuan as acquisition funds.

If we take 2017 as the starting point, the outdoor trend has been popular for the eighth year, which seems so incredible in an era where consumers are highly fond of novelty and easily tired of the old. Essentially, it is because of the professional and technological attributes of outdoor products.

In the 1960s, the well-off middle class in Europe and the US began to get tired of the city and longed to be close to nature, thus giving birth to the functional requirements for clothing. Brands such as Arc'teryx, Patagonia, The North Face, Teva, Columbia, and Birkenstock... These brands were definitely put on the shelves because of their rigorous functionality - definitely not because of their appearance. In Japan in the 1990s, cutting-edge designers began to pursue the combination of fashion and functional attributes, and the outdoor style that we are familiar with today took shape.

"Arc'teryx, Klättermusen, and Mammut" were initially a unified nickname in the circle of niche outdoor enthusiasts. Now, the three brands have developed different trajectories - Klättermusen and Mammut entered China more than ten years ago, but they have never been very popular. This year, both brands have changed agents and returned to the starting line. And Arc'teryx has long been upgraded to the dressing code in the boss circle under the operation of industrial capital such as Anta. Since its listing, Arc'teryx's parent company Amer Sports has achieved double-digit high growth in the Greater China region for several consecutive quarters.

Achim Loeffler, the global business head of Gore, the parent company of Goretex, which is famous for producing waterproof and breathable membrane fabrics, told 36Kr not long ago that now more and more domestic clothing enterprises are becoming interested in technological fabrics like Goretex. "In the past, our customers were mostly international brands like Nike and Adidas. Now more local brands are also starting to cooperate with us, such as Bosideng and Kailas."

Waterproof and breathable membrane is the core of the fabric for mountaineering jackets. An excellent jacket can keep the body warm while promptly expelling water vapor to prevent the body from losing heat under extreme conditions. Goretex has a market share of up to 70% in the waterproof membrane market, and its ready-to-wear products are also known for their high prices. "We only focus on the high-end market," Loeffler said. He recently came to China and visited enterprises including Kailas. He told us that Chinese partners have put forward higher requirements for textile solutions: "They hope to have a shorter development cycle, a more diverse range of textile products, and even more customized services, and they pay more attention to shortening the delivery time in order to gain an advantage in the fierce market competition."

Recently, the Swedish outdoor group Fenix Outdoor AB's brand Fjällräven is also accelerating the pace of store openings under its long-term Chinese agent Yangzhou Jinquan. This brand, known for its extreme environmental protection, recently announced that it will resume cooperation with Goretex because the latter has developed a material that does not contain fluorine compounds.

Whether it is technology or environmental protection, innovation is a symbol of a vibrant market. Compared with Anta, although Bosideng and others are a step behind, the popularity of the outdoor market and consumers' pursuit of high-end functional clothing are still on the rise. It is obvious that Bosideng intends to take advantage of the brand power and craftsmanship of Moose Knuckles to make up for the "high-end" shortcoming. How to balance brand tonality and cost control and avoid brand dilution after "domestic production" will become the next problem that Bosideng must solve.

The reason why Moose Knuckles has established itself in Canada is precisely because of the scarcity and high recognition of its materials. L finally told us that the fox fur on the hat is one of the symbols of Moose Knuckles. If it is replaced with other materials, it may still be sold, but whether the sense of professionalism can be maintained, "That depends on Bosideng's fortune."