The Luxury Market Will Not Solve All Problems.

According to the world clothing shoes and hats net, 2013 Luxury goods The scale of the market was 217 billion euros, an increase of 2.2% over the same period last year. The double-digit growth era has become the past, and the explosive growth driven by the Chinese market is no longer there. The number of new brands of the 47 brands participating in the World Luxury Association survey in China has decreased from 280 in 2012 to around 100 in 2013, and the global luxury industry is in the cold winter.

Perhaps it is high and cold, and the days of luxury in the doldrums are not easy. The "winter" situation is also mixed. However, in 2016, the signs of recovery began to revive. By 2017, one of the big luxury group's surprising earnings data was as if the spring of luxury is coming.

Most luxury brands are recovering.

The performance of several luxury brands Q1 also confirms this point, which was changed in 2015. Designer Of Gucci (Gucci) is recognized as the best performing brand. The spanformation of the brand is regarded as a good example of the luxury industry. In recent quarters, Gucci's performance has also been called an "impossible miracle", which is very eye-catching.

Kering (Kai Yun group) was strongly driven by its luxury brand Gucci, and its revenue rose 31.2% to 3 billion 573 million 500 thousand euros in the first quarter. Among them, the luxury sector, which owns Gucci and YSL brands, recorded an increase of 34% to 2 billion 417 million 100 thousand euros. The sports and leisure sector recorded an increase of 16.5% to 1 billion 64 million 100 thousand euros. It is noteworthy that the growth rate of Gucci exceeded YSL for the first time in four years, and the revenue rose 51% to 1 billion 354 million euros in the quarter. YSL recorded an increase of 35.4% to 364 million 400 thousand euros. Share prices have risen 28% in the past 3 months, and the market value is about 37 billion 200 million euros.

In the first quarter, sales increased by 16% to 276 million euros, of which retail channel sales rose 20% to 204 million euros, while wholesale channel sales increased by 7% to 73 million 300 thousand euros in the first quarter of Moncler. During the period, down jacket is still the core category of Moncler, but knitted goods will be the product category that the brand will focus on in the future. Remo Ruffini, chief executive of the brand, said that the quarter's performance exceeded expectations, mainly due to the resumption of the purchasing power of Chinese tourists. This year, it is expected to add 15 stores. In the last 3 months, the stock price has risen by 21%, with a market value of about 5 billion 500 million euros.

LVMH (MOET & CHANDON Hennessy LV group) announced recently that the group's sales rose 15% in the first quarter, 9 billion 900 million euros, and organic income increased by 13%. Sales of fashion and leather sectors including LV, Givenchy and other luxury brands rose 15% to 3 billion 405 million euros compared with the same period. The sales of perfume and make-up departments also increased 15% to 1 billion 395 million euros, while jewelry and watches sales increased 14% to 880 million euros, and the group's performance in Asia, Europe and the United States showed a positive growth trend. Share prices have risen 20% in the past 3 months, and the market value is about 115 billion 400 million euros.

The first quarter sales of Hermes (Hermes) increased by 11.2% to 1 billion 352 million euros in the first quarter, compared with the same period in the first quarter of this year, with the growth of demand for Asian consumers, especially Chinese consumers. The sales of leather goods and harness Department of the group grew 17.8% to 696 million euros over the same period last year. Share prices have risen 7% in the past 3 months, and the market value is about 46 billion 500 million euros.

This trend has been noticed by more organizations. First, in May 29th, the US consulting firm Bain released a forecast report that the global luxury market's total revenue in 2017 is expected to increase from 249 billion euros in 2016 to 259 billion euros, with an increase range of 2% to 4%, which is higher than its 1%-2% growth forecast in October 2016.

Then, in May 31st, Moodie Investors Service Inc also released a research report on Luxury Retailing. It analyzes the performance of 11 luxury goods manufacturers in terms of revenue, cash flow, profit and share repurchase and dividends. It believes that the average revenue growth of the global luxury industry in 2017 will reach 7%, which was only 4% in 2016.

By June 13th, McKinsey, the world's leading management consulting firm, released the "China luxury consumer report". It is estimated that by 2025, the global market value of luxury goods will increase by 1 trillion yuan to 2 trillion and 700 billion yuan.

This shows that the long-standing luxury goods began to warm up in 2016, back to the growth track, and has continued to this day, though it has not returned to the golden age, but this seems to indicate that the winter of the luxury goods market has passed.

From "sweeping" foreign market to domestic market

In the latest financial reports, whether LVMH, Richemont, or Burberry, Prada, Hugo Boss, they unanimously expressed optimistic about the Chinese market, and released signals of warmer weather.

The global luxury market monitoring report released by consulting company Bain combined with Fondazione Altagamma of Italy Luxury Association shows that the performance of the global luxury market in 2017 will be much better than that in 2016, and the sales growth in mainland China is expected to be between 6% and 8% this year.

Claudia D'Arpizio, one of the authors of the report, said that after the cold winter last year, the luxury industry began to show signs of recovery in the first quarter of 2017. The recovery of Chinese consumers' purchasing power has a great positive impact on the growth of the entire luxury industry.

The luxury industry research report released by market research firm Euromonitor International shows that global luxury consumption is expected to continue to grow in 2017, but the growth rate will slow down. However, Asia is an exception. China's economic recovery will help accelerate the growth of the region. According to its prediction, China will replace the US as the largest luxury market in five years. The Bank of France, Paris, is also optimistic that the consumption of luxury goods in mainland China will continue to grow by 5% in 2017.

Previously, because of the exchange rate and the pricing strategy of the major luxury brands, the price of the same goods in the overseas market in the luxury goods industry is usually much lower than that in the mainland. But in recent years, in order to promote the sales of the mainland market, many luxury brands have adjusted their pricing strategies, reducing the price gap between the Chinese market and overseas markets.

For example, Richemont, Hugo Boss, Channel, Prada and so on have adjusted commodity prices to the Chinese market and reduced the price advantage of offshore outsourcing. Hugo Boss has increased 20% of its same store sales in the fourth quarter of last year after narrowing the price gap at home and abroad.

Moreover, there have been many terrorist attacks in France over the past two years, leading to a sharp decline in the number of Chinese tourists going to France and Europe as a whole. The number of tourists to France has dropped by 20%. In addition, the depreciation of the RMB exchange rate also inhibited the desire of Chinese consumers to buy abroad.

Over the years, many Chinese consumers have rushed into luxury stores such as Paris and New York, buying snapped bags and watches. Nowadays, more and more Chinese consumers choose to buy luxury goods in China. With the Chinese government levying taxes overseas, and the price of some luxury brands being lowered in the Chinese market, the attractiveness of offshore consumption is declining. Luxury consumption outside the country is slowly returning home.

The recovery of the market will not solve all problems.

Since 2015, the market structure of the luxury goods industry has undergone a drastic adjustment in China. At the same time, consumer shopping behavior has undergone major changes. Luxury brands have changed from the past to the strategic store, that is, the initiative to close the store mode. The random shopping mode will become the past tense.

Due to the change of consumer habits and the appearance of new retail mode, the traditional retailer's business structure and business mode must be adjusted in time to adapt to the new market environment. In the face of the continued youth of luxury consumer groups, luxury goods have to go down to the altar, in order to attract young consumers to open a new digital strategy. Over the past year, luxury brands began to open channels of e-commerce, watches and jewellery brands also tried similar "flash" selling methods in WeChat, and self electric business, Tmall and WeChat brands were increasing.

The millennial generation has driven most of China's luxury goods growth, especially the two generation. Compared with 2015, the average age of consumers in 2016 dropped by 5 years. But female consumers are still the main force of VIP. This makes some light luxury brands expand rapidly in China. For example, Pandora, a Danish jewellery brand popular with young girls in recent years, accounts for 20% of China's mainland revenue and continues to grow at a rate of Pandora. By the end of 2016, the number of mainland concept stores has reached 97, with a net increase of 44 in the whole year, while the same store sales in the local stores have achieved a rapid growth of 25%.

In addition, children are emerging consumer groups. In 2016, clothing sales increased by 7% to become the best performing group. Although the overall proportion is still relatively small, brands including Burberry, Dior, Armani, Moncler, Gucci and Fendi are actively participating in the design of children's lines.

The consumer director of McKinsey Global director Bo pointed out that Chinese consumers will continue to play a leading role in the luxury industry. To seize this growth opportunity, we need to take advantage of Chinese consumers to make their stores a "destination station" for Chinese tourists outbound travel. At the same time, we need to reflect on the business model of the mainland. Taking into account the serious mismatch between supply and demand, it is imperative to focus on fostering the loyalty of Chinese affluent consumers, instead of concentrating solely on attracting new customers. We should gradually abandon the "sales promotion" mode and establish long-term relationships with customers to respond to the needs of Chinese luxury consumers in the local market.

Chinese consumers' shopping habits and preferences are changing rapidly. Brand operation is becoming more and more important. Strategies that are truly suitable for local development, product innovation, professional training and VIP service customization will be the key to the development of luxury brands in China in the future.

In short, the recovery of the market can not solve all the problems. Luxury brands should seize this growth opportunity, conform to the market trend, increase investment in brand marketing and social media in the global market, make full use of various digital channels, including mobile devices and social media such as mobile phones to gather more loyal young consumers, while strengthening the brand's culture and image in young people.

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