Close Shop "Attack" LV Atrophy Declares Luxury Goods To Decline

Last Friday, ranking The world's first luxury goods giant LVMH (MOET & CHANDON Hennessy Louis Vuitton group) announced the two quarter earnings report, the actual sales growth in the two quarter was only 1.3%. Among them, Louis Vuitton (Louis Weedon) belongs to the fashion leather department sales growth compared to the first quarter of 10.7%, down 75%.

LVMH's management has not pointed out the decline in market demand in China. LVMH's share price plunged 7.2% last Friday, the biggest single day decline since 2009. LV has always been seen as a weathervane in the luxury industry, and the effect of its benchmarking is reproduced. Followed by the other two world luxury goods groups Switzerland Richemont and France Kering. Shares of the two companies fell by 3% and 3.7% respectively.

In fact, the "dim" growth rate of luxury goods has already been issued. But luxury magnates are not enough to shake their positions despite their impact. In 2011, when China's luxury market grew by 30% over the same period last year, it fell to 7% in 2012. After that year, the PRADA in China's mainland market, which sold more than 1/4, was gradually calmed down. After that, the flagship store of Giorgio Armani, which was held in the Bund for 10 years, was closed last year, while the Bund six Dolce & Gabbana, the Bund eighteen, Patek Philippe and Boucheron, which were not far away, were also evacuated.

　 Luxury market sales in China

The seemingly luxurious luxury brands are closing up with the sale of luxury goods in China last year. According to Bain consulting statistics, the Chinese luxury market in 2013 was 116 billion yuan, up only 2% from the same period last year. In 2013, Chinese spending on luxury goods fell by 15%.

However, the traces of recession have not subsided. During the Spring Festival this year, scenes of crowded scenes were replaced by few people. The total consumption of luxury goods in China's Spring Festival is only 350 million US dollars, which is 57.8% lower than last year's US $830 million and also the lowest in ten years. The April data released by the Swiss Federation of watches and clocks also showed that mainland China had fallen out of the top three markets of Swiss watch exports, and its sales in the mainland of China dropped by 6.5% in April.

It can be said that the shrinking of LV has declared that luxury goods have fallen into the Chinese market. What is interesting is that at the beginning of this year, some international investment banks and brokerages also called on the prestige of the luxury market.

　 　 Weaken Connotation luxury enterprises bury themselves

From the spoil to the cold, overnight changes, most people locked the spearhead to China's anti-corruption and curb extravagance and waste. The timing of the policy coincides perfectly with the growth curve of luxury goods, and strengthens the majority's perception of the policy force.

It is undeniable that luxury consumption is very easy to link corruption. Especially for politicians who are wearing small amounts of civil servants but not wearing luxury goods, this is nothing like silver three hundred and twenty. Before the "cousin" was fired, it was burning with fire. Even with the ability to match their wealth with luxury goods, the high profile "show off" can easily incite the public's emotions. Hengda Jiayin was ridiculed by the media during the two sessions.

But what is more important than anti-corruption is the pursuit of profits by luxury enterprises. Especially for many luxury listed companies, luxury brands are often irreconcilable with shareholders' interests. Because luxuries are not necessarily necessities of life, they rely on the virtual intangible value, only to satisfy consumers' desire for no limit, can consumers pay for them.

However, listed companies emphasize the interests of shareholders first. If chase profit becomes the prime motivation of many luxury brands, it is equivalent to burying a hidden bomb. In fact, the expansion of LVMH, Richemont and Dior in 2011 is really crazy. They increased by 3 to 4 times more than in 2010 (see table). Take LV as an example, behind the expansion of LV's high profile is the layout strategy from the second tier cities, which is based on the high-profile advance of the three or four line cities. When LV stores are sold all over the country, it not only violates the rule of "top niche customization brand", but also brings the brand of LV to the "mass" mire.

9 luxury companies 2010-2013 years of net increase stores

The failure of business strategy has gradually reduced the "brand weight", lost the original luxury and noble brand connotation, and also lost the virtual added value that brought "glory" and "satisfaction" to consumers. When expansion is destined to sacrifice brand value, all of these are destined for LV to pay the price.

Apart from shop expansion, some luxury brands are over commercialized. For example, the centenary brand will be copied into new fields. With the brand foundation, it seems easy to succeed in business modeling, in fact, it hurts the public's awareness of the brand. Chanel, who has always been noble and cool, has been criticized by fashion people for its production of yoga mats.

　 Recognition ambiguity, consumer awakening accelerates falling

8 luxury companies accounted for 2001-2013 years of Asia Pacific and related regional income share (%)

In the past, the popular strategy of rapidly expanding the scale of luxury brands and making huge profits is now accelerating its "side effects" because of the mature transformation of Chinese luxury consumers. The survey data show that when choosing luxury brand, the most important factor in the selection of luxury products is 72.2% of the products and 54.5% of the products.

From the initial preference of flaunting big trademark to the concern of the value and performance of the product itself, this reflects the rational awakening of consumers. It is mainly shown that luxury goods are most concerned about genes and blood, but the expansion of cost reduction in China's processing plants will only stimulate consumers' rejection. A simple example, a Armani dress is labeled with made in China logo, which means it will greatly weaken the brand's unique charm and prove its high price rationality.

In addition, the common degree is regarded as a measure of scarcity. Luxury brands in the past were enough to make friends circle. But faced with a group of people who have luxury brands, can they stand up and enjoy others' worship and appreciation?

In fact, the most important meaning of luxury lies in packing the buyers into different identities. If the degree of identification is swept away by more people, it will be a blur to spend money to buy or not to buy, which needs to be reexamined. If we can not satisfy the consumer's desire to have no upper limit, the power of consumers to buy luxury goods will undoubtedly be greatly reduced. Facing the increasingly discerning eye of consumers, complemented by a popular strategy, the crash will be effective.

epilogue

To some extent, luxury goods reflect the rise of economic level and the rising of Living welfare, and also the inevitable rule of the development of consumer goods market to a certain stage. China's anti-corruption and containment of extravagance and waste are only the trigger for the contraction of luxury goods in China. The more important reason is that ignoring the connotation of the brand, blindly pursuing the expansion and weakening the connotation of its brand value, are destined to become more and more blurred, and the degree of recognition that consumers expect will no longer exist, and will accelerate the "side effects" of luxury goods.