Retail Channel Management

XTEP views its retail network as an integrated omni-channel network, capable of capturing sales offline, online and mobile, domestic and overseas. Flattening of the distribution channel and detailed management down to store level have contributed to significant improvements in overall operational efficiency and profitability. As at 30 June 2017, the Group’s inventory turnover days remained low at 67 days, with increases in raw materials in preparation for future growth and decreases in finished good. The amount of XTEP products available in retail channels was maintained at a healthy 4 to 5 months level, and retail discounts narrowed.

The Group carries out detailed weekly monitoring on the operational efficiency of all XTEP retail stores through the Group’s DRP-system. The system covered over 95% of XTEP retail stores as at 30 June 2017. The Group opened more flagship stores in the first half of 2017 to give consumers enhanced shopping experience. As at 30 June 2017, the total number of XTEP retail stores was approximately 6,500. The Group continued to execute the universal retail store image upgrade to the “6Sth generation”. Upgrading of store image has helped increase sales per store.

Retail channel comparison before and after flattening of distribution channels:

XTEP was the first among sportswear companies in China to start using the O2O (Online-to-Offline) model with distributors. In 2017, e-commerce business transformed into a new “branding + retail” model (“品牌+零售”新模式) with the increased function of brand communication and event marketing. The integration of platform resources has helped multiply the impact of offline branding efforts to increase sales overall for the Group. XTEP has captured top sales volume positions in the sports footwear product category on both Tmall.com and JD.com, and continues to generate high sales growth.