Beyond: April 17

Here is what you'll gonna learn in the next 10 minutes or less!

1. Get the List of 439+ Leadership Podcast to Get Featured On
2. How did 99 cent stores lost $2.1 Billion Revenue?
3. Biggest fraud in Chinese history? How Evergrande Burned $65 Billion?
4. How did GymShark make a $1.1 Billion Startup after 6 failed attempts?

Here are this Week's Giveaways!

List of 439+ Leadership Podcast to Get Featured On

How did 99 cent stores lost $2.1 Billion Revenue?

Did you know that The first 13 customers who walked into “99 Cents Only” at its Grand Opening in 1982 got televisions worth 99 cents, as part of its promotions !!

99 Cents was founded in 1982 by Dave Gold, with the vision of providing consumers with a wide selection of everyday items at a single, low price point.

He identified a gap in the market for a discount retail concept that offered convenience, affordability, and value to budget-conscious shoppers.

What was so special about these stores?

• Fixed Pricing: 99 Cents differentiated itself by adopting a fixed pricing strategy, offering all items in-store at a price of 99 cents or less.
• Wide Product Range: The company stocked a diverse range of products, including household essentials, groceries, toys, and seasonal items, catering to a broad customer base.

Did you know that Dave Gold decided to first run a test by selling bottles of wine at a fixed price-point of 99 cents. He did this in the liquor shop that he inherited from his father in downtown LA.

99 Cents rapidly expanded its store footprint, opening new locations in high-traffic areas and densely populated neighbourhoods.

The brand employed 3 strategies to effectively scale with growing business operations.

1. Community Engagement: 99 Cents actively engaged with local communities through charitable initiatives, sponsorships, and partnerships, fostering goodwill and loyalty among customers.
2. Supply Chain Efficiency: The company optimised its supply chain and logistics operations to ensure a steady flow of inventory and minimise out-of-stock situations, enabling it to meet customer demand effectively.
3. Innovation: 99 Cents continuously innovated its product offerings and store layouts to remain relevant in a competitive market, introducing new categories and seasonal promotions to drive sales.

With over 370 stores in four states and two distribution centers in California and Texas, 99 Cents Only Stores became the leading extreme value retail chain in the Western United States. Despite the low price point, the company offered a wide range of items to meet customers' everyday needs.

From household essentials to kitchenware, toys, and party supplies, the store was a one-stop-shop for consumers on a tight budget.

Growth of 99 cent stores peaked in early 2000s.

As a natural next step in its growth, 99 cent stores expanded to Mexico in 2013, a strategy that misfired badly for the enterprise and set up a cascade of events that triggered the downfall of retail giant.

1. Rising Costs:Increasing costs of goods, coupled with rising labor and overhead expenses, significantly squeezed profit margins.Between 2017 and 2019, 99 Cents saw a 15% increase in operating expenses due to rising wages and rent costs.Despite efforts to mitigate these costs through operational efficiencies, the margin pressure eroded profitability over time.
2. Intense Competition:The discount retail landscape became oversaturated, with larger chains and online retailers aggressively competing for market share.Competitors like Dollar Tree and Walmart intensified their discount offerings.Increased competition led to pricing wars and reduced profit margins, making it challenging for 99 Cents.
3. Declining Foot Traffic:Changing consumer preferences, including the rise of online shopping and the decline of brick-and-mortar retail, resulted in declining foot traffic at 99 Cents stores.Between 2018 and 2020, foot traffic at 99 Cents locations declined by 20%, reflecting broader industry trends.Decreased foot traffic translated to lower sales volumes and reduced store profitability.

Lessons for Startups to Avoid Losing $1 Billion in Revenue.

• Agility: Respond swiftly to market changes and consumer demands by adapting business strategies and offerings.
• Value Proposition: Offer customers compelling value propositions through competitive pricing, quality products, and superior service.
• Customer Centric Approach: Cultivate strong relationships with customers by prioritizing their needs and preferences. Startups should focus on understanding their customers’ pain points.
• Operational Efficiency: Streamline processes, optimise supply chain efficiency, and reduce overhead costs to improve profitability. Startups should prioritize operational efficiency ensuring sustainable growth and resilience.
• Digital Transformation: Leverage technology and digital channels to enhance customer experiences, streamline operations, and drive growth. Startups should invest in digital capabilities to capitalize on emerging opportunities in the digital economy.

Biggest fraud in Chinese history? How Evergrande Burned $65 Billion?

Did you know that one of the financial misconduct cases at Evergrande involved disappearance of $2 Billion, just like thin air from the books?

Evergrande Group was founded in 1996 by Xu Jiayin, also known as Hui Ka Yan, with the vision of transforming China's real estate landscape and providing affordable housing to millions.

Xu Jiayin recognized the vast potential of China's booming real estate market and seized the opportunity to capitalize on rapid urbanization and rising demand for housing.

Many often wondered how can success like Evergrande and Alibaba could ever come to fore in a State-controlled economy like China, however most of its foundation can be traced back to the “Open door Policy” of China.

In December 1978, China announced a new policy, the Open Door Policy, to open the door to foreign businesses that wanted to set up shop in China. For the first time since the Kuomintang era, the country opened to foreign investment.

Initial Phase of Unprecedented Growth led to IPO in 2009

Evergrande over the years, grown to be a huge holding group that was internationally listed in Hong Kong and registered in the Cayman Islands.

Within the group were several different subsidiaries and types of businesses, including renewable energy businesses.

By this time Evergrande was arguably among the top three largest real estate developers and largest Chinese companies in China.

• Rapid Expansion: Evergrande rapidly expanded its presence across China, acquiring land parcels and developing residential and commercial properties in major cities.
• Innovative Financing: The company pioneered innovative financing methods, including pre-sales and off-plan sales, to fund its ambitious development projects and maintain cash flow.
• Market Dominance: Evergrande’s aggressive marketing tactics and competitive pricing strategies helped it gain market share and become one of the top real estate developers in China.
• Brand Recognition: Evergrande’s strong brand recognition and marketing prowess enabled it to attract investors and homebuyers alike, cementing its position as a trusted and reputable real estate brand in China.
• Global Expansion: Evergrande’s foray into international markets, including the United States and Australia, demonstrated its ambition to become a global real estate player and diversify its revenue streams beyond China.

BUT then, What went wrong?

• The China Open Door Policy in 1978 led to unintended consequences, such as a lack of regulation and policy loopholes in certain sectors.
• Evergrande's stock market listing caused concerns about transparency, this was always a bone of contention for international stakeholders, who often worried about prioritizing Chinese stakeholders incase if things go south.
• This panic triggered external funding freeze and an eventual debt default by Evergrande, highlighting the need for better regulation.

5 Mistakes that killed a $65 Billion Chinese Dragon

1. Excessive Debt Burden: Evergrande amassed a staggering amount of debt to fund its aggressive expansion, leading to concerns over its solvency and ability to service its debt obligations.
2. Over leveraged Business Model: The company relied heavily on short-term financing and high-interest loans to finance its development projects, exposing it to liquidity risks and financial instability.
3. Market Downturn: The brand took a massive hit in China’s tightening regulatory environment, slowing economic growth, and a slumping real estate market, added to its financial woes.
4. Corporate Governance Issues: Company’s opaque corporate structure and allegations of misconduct, including irregular accounting practices and related-party transactions, eroded investor confidence and raised governance concerns.
5. Lack of Diversification: Their over-reliance on the real estate sector and failure to diversify its business into other industries left it vulnerable to market fluctuations and economic downturns.

Impact of Evergrande’s downfall on Chinese Economy:

1. Its default dragged down many of its peers in the real estate value chain, and pushed up the Chinese loan defaults causing panic in the stock markets and raising concerns about lending infrastructure in China.
2. Led to a larger socio-economic impact by massively delaying the delivery of 1.5 Million housing units.

How Evergrande Could Have Avoided This?

1. Debt Optimisation: Evergrande could have pursued a deleveraging strategy by reducing its debt burden through asset sales, debt restructuring, and cost-cutting measures.
2. Diversification: Diversifying into non-real estate sectors, such as technology, healthcare, or renewable energy, albiet without financial misconduct and mismanagement, Evergrande could have mitigated risks.
3. Improved Governance: Enhancing transparency, accountability, and corporate governance practices would have bolstered investor confidence and mitigated reputation risks.
4. Strategic Partnerships: Forming strategic partnerships with financial institutions, private equity firms, or international investors could have provided Evergrande with access to additional capital and resources

How did Gymshark make a $1.1 Billion Startup after 6 failed attempts?

Did you know that Gymshark was Ben’s seventh attempt at opening a Fitness brand?

Gymshark was founded in 2012 by Ben Francis and his friends in a garage in Birmingham, UK. Their vision was to create innovative and affordable fitness apparel that would inspire and empower athletes worldwide.

Ben, was a teenager, and he started Gymshark out of a passion for fitness and a desire to fill a gap in the market for high-quality, stylish, and functional workout clothing.

3 Unique Strategies which drove customers growth:

1. Innovative Design: Gymshark differentiated itself by offering cutting-edge designs and innovative features that catered to the needs of fitness enthusiasts.
2. Community Engagement: The brand fostered a strong sense of community and belonging among its customers, leveraging social media and influencer marketing to connect with its audience.
3. Direct-to-Consumer Model: Gymshark’s direct-to-consumer model allowed it to bypass traditional retail channels and sell directly to customers online, enabling greater control over pricing, distribution, and brand messaging.

Did you know that Ben used to work for $6 an hour as a Pizza delivery agent to fund Gymshark’s beginnings?

They Faced 3 Major Challenges:

1. Supply Chain Management: Gymshark faced challenges in managing its supply chain and production processes to meet growing demand while maintaining product quality and consistency.
2. Competition: The fitness apparel market became increasingly crowded, with established players and new entrants vying for market share, posing a challenge to Gymshark’s growth and differentiation.
3. Brand Perception: As Gymshark expanded its product offerings and target audience, it faced challenges in maintaining its brand identity and authenticity, particularly among its core customer base.

How did Gymshark leverage Instagram?

1. Improving Shopper’s experience: Making use of the bio area, highlights and IGTV with same messaging architecture gives Gymshark a standardised brand identity. They made it very easy for a follower to contact and connect with the brand and browse its products, which improved the customer experience and built trust.
2. Acing Content Distribution: There is a similar theme across all Gymshark’s imagery. Their is a consistent grey theme in the background of all top and recent posts lending thematic uniformity in Brand’s identity on Social media.
3. Community Engagement: Gymshark’s posts are highly relevant to its target audience, with the majority of imagery captured in a gym environment and with gym equipment or weights. Gymshark also consciously includes a balance of men and women in its posts, emphasising inclusivity.
4. Integration With Influencers: Gymshark aced influencer marketing better than their peers, making it easy for its models and influencers to link with Gymshark’s main account in their bio. It became a fastest way to promote the brand to multiple audiences, right from the first glance at the influencer’s Instagram profile.

How much customer spends, Gymshark diverted from competition?

5 Strategies Gymshark used to become $1.1 Billion Brand:

1. Innovative Product Design: Gymshark’s commitment to innovative product design and quality craftsmanship set it apart from competitors, driving customer loyalty and repeat purchases.
2. Customer-Centric Approach: The brand prioritized customer feedback and engagement, listening to its audience and adapting its products and marketing strategies accordingly.
3. Agility: They demonstrated agility and adaptability in responding to market trends, consumer preferences, and competitive pressures, allowing it to stay ahead of the curve and maintain its position as a market leader.
4. Strong Brand Identity: The Brand cultivated a strong brand identity and community, resonating with its target audience and fostering a sense of belonging and loyalty among customers.
5. Direct-to-Consumer Model: Their direct-to-consumer model provided greater control over the customer experience, feedback loops, and streamlined operations.