With more and more post-1995 generation entering the workplace, young people represented by Generation Z have gradually become the main force of social consumption.

Generation Z grew up in the period of China's rapid economic take-off and the rapid development of the Internet, and TA have more knowledge and personality than their parents when they were young, so they become more "insatiable". But if they can grasp the consumption habits of TA, they have a better chance of winning China's consumer market in the next decade.

Following this logic, it is not difficult to see the emergence of many new brands that are popular with young people in recent years. Although it is not known who will win out among these tens of thousands of new consumer brands, their common rigid demand is that, in addition to traditional online e-commerce, they can find a new offline channel that can effectively reach emerging consumer groups. KK Group, which delivered its form to the Hong Kong Stock Exchange yesterday, may be the first choice for this role.

Link new people and new brands, fashion retail tuyere has arrived

In the current consumer market, the iteration of the main force of young consumption, the pursuit of personalized lifestyle, the development of new channels, the increasing influence of social media and key opinion leaders, and so on, continue to promote the competitive logic of China's consumer market to change quietly, thus opening up a "trend retail" track with young people as the core.

Trendy retailIt refers to the new retail model characterized by the unique concept and style of the product, creative and fashionable entertainment function in design and immersive shopping experience. Fashion retail makes use of the characteristics of fashion and a variety of personalized shopping experience in shopping choices, mainly targeting young customers. Innovative decoration and ingenious presentation provide customers with an adventurous sensory experience, naturally extend their stay in the store, and enrich their shopping experience. In addition, through its unique theme and brand characteristics, trend retail can better establish a differentiated image, expand its customer base and enhance consumer loyalty.

According to Frost Sullivan, according to GMV, the trend retail market will grow at a compound annual growth rate of 10.7% to 195.2 billion yuan from 2016 to 2020, and 19.5% to 475 billion yuan from 2020 to 2025. Among them, boutique collection and make-up retail are larger divisions, and the market share in 2025 is expected to be 43.3% and 36.7% respectively.

Referring to past data, the total volume of retail sales of consumer goods has returned to normal since 2016 (excluding the epidemic), with a relatively stable growth rate of about 10%, while showing a certain downward trend.In contrast, the growth of trend retail, especially in the future, is significantly faster, so it can be predicted that the proportion of trend retail in the entire retail market is also expected to gradually increase.

On the supply side, the continuous emergence of new brands and technologies and the improvement of operational efficiency promote the rapid development of the whole value chain. Over the past few years, Chinese consumers have seen a surge in interest in domestic brands and goods that embody elements of traditional Chinese culture with stylish designs and cool styles. Domestic collection stores emerge as the times require due to the surge of consumer interest in Chinese traditional cultural elements and the rise of imported cutting-edge brands. These new brands have obvious demand for entering the new offline channels of young people, but the traditional supermarkets and retail stores are not ready to meet these new brands, so trend retailers such as KK Group have a rare golden development opportunity.

According to the prospectus, trend retailers are located in the middle of the value chain of trend retail, undertaking the needs of downstream customers' immersive and offline shopping experience, as well as purchasing goods from upstream suppliers. In terms of market pattern, according to Frost Sullivan, according to GMV, the total market size of the top five participants in 2020 is 30.5 billion yuan, accounting for about 15.6% of China's trendy retail market GMV, which is relatively scattered.KK Group is one of the three major trend retailers in China and the fastest growing trend retailer. According to the prospectus, the GMV of KK Group from 2018 to 2020 is 188 million yuan, 652 million yuan and 2.254 billion yuan respectively, with a compound annual growth rate of 246.2 percent from 2018 to 2020. The GMV in the first half of 2021 has reached 2.213 billion yuan, which is similar to the level for the whole of 2020.

"Aesthetics as the table and science and technology as the foundation" to create the core competitiveness of fashion retail

Further attributed, the rapid growth is closely related to the business model of KK Group, which will be one of the important yardsticks to measure its future development space. KK Group operates in DTC mode, and forms a differentiation advantage through the two key words "aesthetics, science and technology".

On the surface, KK Group improves the appearance of stores through space, design, color, display and other dimensions, and creative features such as Peugeot candy columns, make-up egg walls, rainbow stationery towers and other creative features make people can't help but take pictures and clock in, thus detonating social networks. This is also the result of KK Group's deep grasp of the psychology of young consumers. For the new generation of consumers whose appearance is justice, beautiful things will let TA act as "tap water" and spontaneously help them share and spread.

From this point of view, KK Group has given the "aesthetic" feature to the original traditional offline retail venues, reattracting the attention of young consumers who have lost interest in boring offline retail venues. In order to constantly create such freshness and surprise, the company will set up a team to be responsible for the design of in-store products and scenes, and to maintain the frequency of update iterations. And then continue to attract consumers who love "freshness". In addition, store size and space design are also constantly upgraded. according to media reports, on May 1 this year, KK Group's new beauty collection brand THE COLORIST toner launched the first master store with a floor area of 2000 square meters. On the same day, the global trend play collection brand X11 opened three global flagship stores of more than 2000 square meters in three places at the same time. On July 21, KKV's first second-generation travel-themed store settled in South China. These are upgrades that the operation team continues to create surprises for consumers. It can be said that what KK Group sells is not isolated goods, but the experience of a good life.

"Aesthetics" can bring traffic, but the final transformation still requires the product to speak, and selection has become an important part of promoting high transformation. The company uses Internet thinking to iterate constantly, that is, through the buyer team to conduct a comprehensive investigation according to the market trend, consumer demand and other dimensions, after voting to select some products for trial sale in the store, only the products that reach a certain standard can be finally retained, otherwise eliminated.

In this process, companies will rely more on technology-driven rather than manpower-driven decision-making, through the product screening system to deal with a large number of raw and scattered market data, real-time store inventory and social media platform information, and then get more fair and objective results. With "technology" as the underlying support, KK Group ensures the continued attractiveness of its products, and extends this driving force to store management, supply chain, internal collaboration and other aspects to improve the overall operational efficiency of the company.

The revenue of the main engine KKV continues to soar, and multi-brands release their performance vitality and establish high growth.

Mapping to financial performanceThe income of KK Group continued to explode, growing from 155 million yuan in 2018 to 464 million yuan in 2019, and further to 1.646 billion yuan in 2020, with year-on-year growth rates of about 198.59% and 254.92%, respectively.. Correspondingly, the gross profit of KK Group has also doubled, reaching 50 million yuan, 126 million yuan and 500 million yuan respectively from 2018 to 2020.

Enter 2021The performance of KK Group continues to run wild, with income in the first half of the year reaching 1.683 billion yuan, an increase of 3.35 times over the same period last year, and has reached the annual income of 2020.At this rate of normal operation, it may not be difficult for KK Group to double its annual income in 2021.

From the perspective of the income composition of the split KK GroupKKV is a profit-based business. In less than two years from its establishment in 2019 to 2020, its revenue has soared more than tenfold to 835 million yuan.It accounted for 50.7% of the total income, and the income in the first half of 2021 further increased to 1.049 billion yuan, an increase of 4.72 times over the same period last year. At the same time, based on the ability to incubate innovation, other brands such as THE COLORIST also maintained ultra-high growth, with revenue of 440 million yuan in 2020, an increase of nearly 21 times over the same period last year, and 461 million yuan in the first half of 2021, an increase of 4.74 times over the same period last year. Although the share of the new global fashion game collection brand X11 launched in 2020 is relatively low, it is worth noting that it only accounts for 1.8% of the group's 12 stores, that is, it has achieved 2.7% of the group's revenue, and the profitability of individual stores is more outstanding. If its stores can grow rapidly, the future performance is worth looking forward to.

On one level, the strong rise of KKV provides further resources and experience support for the multi-brand development of KK Group; on the other hand, KK Group forms a multi-brand matrix of different and coordinated development, and each brand continues to grow, which provides a stronger driving force for KKV and the whole, and further establishes the high growth and sustainability of business performance, which is one of the "potential stocks" for the current consumer sector.

Conclusion

At a time when the traditional offline retail is gradually declining, KK Group relies on innovative methods to attract the attention of young consumers and achieve great-leap-forward development. With the further expansion of the trendy retail market, more capital and higher awareness after listing will help KK Group's multi-brand matrix to strengthen the resonance and form more growth curves, and future performance can be expected.