Original: Was the last time you wore leather shoes last year at the annual meeting?

Red Dragonfly’s revenue in 2025 will be 2.025 billion yuan, with a net profit loss of 140 million yuan attributable to the parent company, which is twice the loss in 2024 and the highest loss record since its listing. 572 stores closed throughout the year, a net decrease of 181 stores. Fuguiniao delisted and went bankrupt in 2019, with total claims reaching 3.082 billion yuan.

02 The market has not shrunk, and the reason for buying shoes has changed.

If you look at the financial reports of Aokang and Red Dragonfly together, you will see a common curve: revenue decline, store shrinkage, continuous losses, and transformation failure. This is not a problem of one company, but a generation of leather shoe giants collectively trapped in the old path.

Take the men’s shoe category. According to Euromonitor International, in the past five years, there has been no traditional leather shoe brand among the top ten men’s shoes market share in China. Sports brands such as Anta and Xtep have taken up all the seats.

According to data from Euromonitor International, the total size of China’s men’s shoe market has barely changed over the past five years and has been around 1,780 billion. The market has not shrunk, but the reasons why people buy shoes have changed.

In the past, when men bought shoes, the first filter in their minds was “what occasion to wear them.” When going to work, meeting clients, or attending weddings, leather shoes are the default choice.

Now the first screening becomes “Are your feet tired after wearing it for a day?” Analysts from Euromonitor put it bluntly: the logic of men’s shoe selection has shifted from “matching status and occasion” to “taking into account comfort, style and multiple scenarios.” Wearing sneakers for commuting is no longer out of the ordinary, and it makes sense to wear a pair of light casual shoes for light business occasions. Leather shoes are no longer the only solution to “respectability”, or even the main solution.

Looking at the channels again, the situation is clearer. The home base of the leather shoe giants is the commercial pedestrian streets in third- and fourth-tier cities, relying on franchise stores to locate their locations. But in recent years, the street-facing shops in pedestrian streets have gradually been taken away by sports brands such as Anta and Xtep. According to “Enshi Daily”, there is a franchisee in Enshi, Hubei Province. It originally opened six Aokang stores, but later closed down to only two. The reason is very simple: “Fewer and fewer people wear formal leather shoes every day.”

So the middle logic of this matter is not only that “leather shoes can no longer be sold”, but that the status label of “formal wear” is no longer the high-premium pass that everyone needs. The market has not become smaller, but consumers’ decision-making portal has changed from “who am I” to “what am I going to do today”. The leather shoe giants did not follow suit.

Today we will quickly sort out a few mistakes we think the giants have made.

03 Success is also Xiao He, failure is also Xiao He

Mistake 1: Tying the category to the “formal wear” scene

Aokang, Red Dragonfly, Fuguiniao, and earlier Daphne and Belle all face the same challenge: to define themselves as a “formal shoe brand.”

What’s the scene with dress shoes? Weddings, interviews, meetings, business receptions, and work within the system. Over the past two decades, these scenes have either shrunk or been replaced by casualization. In the post-epidemic era, the rise of office leisure and outdoor lifestyle has brought sports shoes into commuting and light business scenarios, and the scene space for formal leather shoes continues to narrow.

A nearly 40-year-old male consumer told Jiemian News that he has leather shoes in his shoe cabinet, but wears them very rarely, basically once or at most twice a year, mostly for company annual meetings and other occasions. Even at the annual meeting, some colleagues choose to wear sneakers.

But here is a counter-intuitive discovery that most people ignore: Aokang’s problem is not that leather shoes are uncomfortable, but that it does not try to solve problems other than “uncomfortable” at all. If consumers don’t buy leather shoes, they just add soft cushions to them. When consumers don’t wear formal attire, they wait for wedding orders. The consumer’s value coordinate system has changed, but it has not changed.

O’Connell is not alone.

Daphne has suffered losses for six consecutive years since 2015, with cumulative losses exceeding HK$4 billion. Its stores have shrunk significantly from the peak of more than 6,000 stores. In 2020, it announced its withdrawal from physical retail of mid-to-high-end brands and closed all sales points of its other brands. Its market value dropped from HK$17 billion at its peak to single digits of HK$100 million. Belle was privatized and delisted from the Hong Kong Stock Exchange in 2017. CEO Sheng Baijiao admitted that he “cannot understand e-commerce” and “if he does not transform, he will only die slowly” and “if the transformation fails, the responsibility lies with himself.” Tianchuang Fashion changed its ownership to Anhui Xianrui in early September 2026.

What are the common characteristics of these brands? Success is also Xiao He, failure is also Xiao He. The formal wear scene has always been the target of the company’s core products and services. The company has been successful because of this, but the inertia is also great, and the ship is too big to turn around quickly.

Red Dragonfly has tried white shoes and sneakers, but its R&D expenses in 2025 will drop by 12.52% year-on-year, indicating that the investment is far from enough. Daphne has tried to be high-end, but the stereotype of “Daphne = affordable” is deeply rooted.

Their failure is that they regard “leather shoes” as an end rather than a means. Leather shoes are just a type of shoe. What consumers want is shoes that “balance the scene and their own preferences”, not the word “leather shoes” itself.

Mistake 2: Treating scene bonuses as your own abilities

Those giants have tied their core products such as leather shoes to the “formal wear” scene. If the scene shrinks, the brand will shrink.

And some giants did another thing.

Salomon was originally a French cross-country running shoe brand, and few people outside the outdoor circle knew it. In 2019, ANTA consortium acquired Amer Sports, including Arc’teryx and Wilson. At that time, the price was 4.6 billion euros, which was questioned by the market as “too expensive”.

What did Anta do? It doesn’t improve on the Salomon’s trail running shoe performance. It put shoes designed for muddy gravel tracks into Anfu Road in Shanghai. The sales pitch has changed from “What kind of terrain are these shoes suitable for?” to “This pair of shoes goes well with clothes.” The core users have changed from hard-core cross-country runners to young consumers in first- and second-tier cities who are looking for stylish clothing.

The shoes are still the same pair of shoes. But the people who wear it, the occasions when they wear it, and the reasons for wearing it have all changed.

Every brand Anta buys is a vertical brand. FILA is tennis and golf, Arc’teryx is mountaineering, and Salomon is cross-country running. But when the dividends of the original scenes were almost exhausted, Anta pulled them into a larger lifestyle narrative.

This ability to add new narratives to categories is the core competency of consumer goods companies.

O’Connell’s problem is not that he lacks ability. It can make durable leather shoes, open more than 4,000 stores, and turn a regional brand into a listed company. But its capabilities are all based on the bonus of “formal wear scene + rapid expansion of channels”.

But when scene dividends are migrating, the company’s core capabilities must continue to evolve to keep up with the times.

Mistake 3: Missing the window for self-transformation

O’Connell is not without a sense of crisis. It tried.

Your best chance: Skechers.

In 2015, Aokang won the agency rights for Skechers in the southern region of mainland China and proposed the goal of “opening approximately 1,000 stores in five years.” The number of stores soared from 16 at the end of 2015 to 125 at the end of 2016, reaching a peak of 160 in 2021. In 2021, Skechers agency business contributed 368 million in revenue to Aokang. And then all the way down. It will drop to 125 at the end of 2024, and all will be cleared at the end of 2025. There are only 7 Puma agents left. Skechers’ agency business revenue plummeted 55.45% year-on-year to 114 million yuan, and its gross profit margin fell from more than 30% at its peak to 19.49%.

Why? Skechers later proposed “returning to the original intention of comfort”, focusing on the first and second-tier core markets, and promoting the DTC direct sales model. Aokang relies on the traditional channel model of sinking street shops. Brands want to go up and do direct sales, while agents will only go down and do wholesale. The strategic directions are completely divergent, and it is only a matter of time before the cooperation comes to an end.

Also acting as an agent, Taobo International has made the agency of Nike and Adidas its main business, with a gross profit margin of 41.0% in the first half of the fiscal year 2025/26 as of August 31, 2025. Aokang turned the Skechers agency into a side business, and its gross profit margin dropped from more than 30% to 19.49%.

Aokang uses the channel thinking of making leather shoes to make sports shoes, uses the logic of product distribution to make brands, and uses the mentality of side business to transform its main business. You already have sneakers on hand, why not try to reorganize your skills, split and deconstruct the sneakers, and think about whether sneakers and leather shoes can create new sparks? At least we didn’t see the results.

In addition, failure to respond positively to quality reputation and failing to protect the brand’s “private territory” will also cause the brand to miss the courage to transform.

Aokang leather shoes, which used to be “durable”, have been frequently complained about on the Black Cat complaint platform about “glue opening” and “skin peeling off”.

Aokang has not responded publicly to quality complaints. In 2025, Aokang’s main brands will close a total of 566 stores, and the number of directly operated stores will decrease from 869 to 675, with a net closing of 399 stores in a year.

結語：

Leather shoes are not dead, what is dead is the brain that “treats leather shoes as an end”

Back to the original question: Where did O’Connell lose?

The loser is that he regards the “scenario bonus given by society” as his own ability.

Leather shoes will not disappear, but when the period of change comes, path dependence will kill the companies that rely on it.

Luxury leather shoes, handmade customization, and niche designer brands, this part of the market still exists. Loafers, Derby shoes, and Chelsea boots live well on young feet.

What’s dying is the status of traditional formal black leather shoes as “the default everyday work attire.” What’s dead is the old pointy leather shoes, not the fashion, not the scene.

Salomon is redefining the scene, Ocon is keeping the old stall. Salomon sold trail running shoes to people who never ran. O’Connell sold dress shoes to people who only wore them a few times a year. Some people are still looking for new paths, while others have given up.

However, there are also companies that have successfully transformed. Belle has returned to profitability after its privatization, and Daphne will rely on an asset-light model to turn around losses starting in 2021.

In the field of consumer circles, there will always be waves from behind in the Yangtze River pushing ahead. Whoever can continuously explore the needs in the scene according to the situation will be able to grasp the first-mover advantage of defining the category.

• END-

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