Luxury Goods In China Farewell Honeymoon Period Two Or Three Line City Suction Gold Power Drop

In July 11th, jewellery brand Zhou Dafu (micro-blog) announced that its revenue increased by only 16% as of June, especially the jewelry with high profit margins, accounting for 22% of its sales volume from 27% at the end of March. Then Britain Fashion brand Burberry group released the financial report, the first quarter of the company's Asia Pacific region (mainly in China) sales growth fell from 67% to 16% during the same period. CEO, a Cartire watch and jewellery brand, has also revealed that China's demand for Cartire's high-end watches is slowing down.

Last July 13th, the first luxury fund launched by Fullgoal Fund Management Company Ltd (micro-blog), the world's top consumer goods equity investment fund, lost 12% in a year.

What's wrong with the Chinese market, which has always been favored by luxury brands?

From wrist watch to cosmetics, lipstick effect appears?

"Chinese consumers plan to control spending on high-end watches, jewellery and handbags, and they are increasingly planning to shop in the mainland instead of consuming luxury shopping centers such as Hongkong and Europe. luxury goods Consumption is also becoming a "normal" component of life. Shou Yu Ying, general manager of Rhodes PR China, told reporters.

According to the 2012 China luxury goods report jointly released by Ipsos and Rhodes public relations, according to the statistics of 1135 luxury consumers in the mainland of China, consumers' enthusiasm for buying is much lower than before. 48% of the respondents said jewellery and handbag products would not be the first choice for their consumption next year, and 54% of consumers said they would reduce or even buy luxury brand watches next year. At the same time, according to the respondents' response, high-end cosmetics became the first choice for consumers.

"Is it the" lipstick effect "in economics that has begun to show itself?

In the face of reporters' questions, Shou Yu Ying believes that consumers' wait-and-see and uncertainty lead to "indeed, whenever the economy is in recession, the sales of lipsticks will rise straightly, because lipstick as a" cheap and unnecessary thing "can play a comforting role for consumers. But now the whole luxury collective slowdown is on the one hand, the global economic downturn. On the one hand, consumers in some tier cities are showing a gradual and rational return to luxury consumption, and no longer crazily pursue luxury goods. Such a consumption mentality forces people to face the declining enthusiasm for luxury purchases.

Rhodes, general manager of Shanghai public relations, told reporters after the crazy expansion of the shop. Luxury brand Faced with business problems, luxury marketing is more difficult than ordinary brand marketing, because people must be persuaded to buy goods that are not essential at all at a high price.

At present, the major brands have announced the pace of slowing down. For example, Prada planned to set up 10~12 stores in the Chinese market in early 2012, but in the first quarter of fiscal year 2012, the growth of Asia Pacific stores was zero, indicating that the actual expansion of its stores was behind schedule. Bvlgari President Trapani recently interviewed by the media also said that only 10% of Bvlgari's new stores will be opened according to the original plan.

Two or three line cities absorb gold power drop

Research reports from McKinsey and many other organizations have shown that over the past few years, the development speed of luxury goods in two or three tier cities has exceeded the trend of the first tier cities (see the September 2011 article, luxuries also below the grassroots level). After nearly two years of crazy shop, how are these brands performing in the two or three tier cities?

"Some luxury brands are slowing down their expansion in China and focusing on improving store sales." Bain consulting company in its recently released "China luxury market report" pointed out.

Previously, brands including LV, Gucci and Coach entered the mainland of China, hoping to develop new profit margins through sinking sales network. However, with the sinking of the channel, the two or three lines of urban real estate rentals and labor costs are rising. Now many brands flagship store's ability to absorb gold is not as good as before.

"In fact, Beijing's single store sells well, and the company itself knows that Hangzhou, Beijing and Shanghai sell well all over the country. The sales of many two or three line cities are not ideal this year. Now the competition is fierce. Many people go abroad or Oteri J buys cheaper ones. " East Xintiandi a luxury store's shopping guide is like that. Ken Kress, managing director of the luxury brand Zegna Greater China, said that, considering the possibility of a slowdown in business growth in the future, it would reduce orders to reduce inventory, while temporarily postponing recruitment and entering a number of emerging cities.

Gaoming has revealed that the 1/3 rich in China now says it will cut back on its purchases of luxury goods. "Past surveys have found that sales of jewelry and watches are often inseparable from gift giving. But this year, the volume of watches and jewellery declined significantly compared with the same period last year. Moreover, many Chinese people like to buy cheaper goods through the Internet. In the context of slower growth, how to make good use of the Internet and maintain the personality and taste of high-end brands has become the primary topic of precise communication. Gao Ming told reporters.

From overseas to mainland

On the one hand, in the face of the depressed consumer market, many luxury brands change their sales strategies early, with discount promotions to boost consumption. On the other hand, a significant change is that the mainland has surpassed Hongkong and Europe for the first time to become the preferred place for luxury consumers in China.

"Overseas purchases of Chinese consumers have led to changes in many market formats: the price gap between Hongkong and the mainland market has shrunk, so consumers are no longer willing to wait for a long time." Shou Yuying told reporters. She believes that with the surge of Chinese consumers' desire for overseas purchases in recent years, many subtle changes have taken place in the luxury industry. For example, Europe and Hongkong in China have noticed the consumption power of the Chinese from the mainland. On the one hand, they have vigorously promoted sales, and on the other hand, they have also increased their prices.

Reporters survey found that although the mainland counters this year, a comprehensive price adjustment, but China's Hongkong, Singapore and other places counters have also fully adjusted the price of luxury goods, of which Hongkong's price adjustment is particularly obvious, such as the ClassicFlap series "Jumbo large", from the original HK $39600 to HK $44700, or 12.88%. Europe and the United States have also fully adjusted their prices. The difference between the two countries has narrowed significantly. According to the analysis of the industry, the rising price of raw materials such as leather and bare drills is one of the main reasons for the price adjustment of luxury goods. Besides, the operation strategy of luxury brands is also one of the factors of price adjustment. In the context of inflation, no price increase means depreciation. This makes consumers' overseas purchases less affordable than before, and has helped them move to the mainland.

In this regard, Shou Yu Ying believes that Chinese consumers have shown a gradual and rational return to luxury consumption, and no longer crazily pursue. Such a consumption mindset has reduced people's enthusiasm for luxury purchases and weakened the cash flow of consumers in the real estate market and the stock market downturn. "This period is an important period for luxury brands. Brands need to find new breakthroughs -- limited edition, origin protection, exclusive stores (rather than brand integration stores), price differences, reasonable distribution and professional Chinese shopping guide are all important weights to attract Chinese consumers." Shou Yu Ying thinks so.