Why Are Luxury Brands Fleeing The First Tier Cities?

P has lost its support for rapid growth, and the rapid expansion of stores has become a major drag on business.

Flagship store closing is a landmark event, accompanied by an expansion of the suspension.

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< p > Shanghai's "the Bund X" was once the pride of the luxury industry. This "luxurious" area has gathered the international luxury brand. It is not easy to say that "the Bund X" is proud of the big names, or the big ones are proud to occupy a place in the Bund.

However, flowers did not have a hundred days of red. Soon, the flagship store of Giorgio Armani (Giorgio Armani), which had been in the Bund for nearly 3 years, was shut down, and the flagship store of the Bund 6 Dolce&Gabbana was closed. The Bund 18 Patek Philippe (Patek Philippe) and Boucheron (Boucheron) and other top brands were also withdrawn from the Dolce&Gabbana.

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< p > this indicates that the "honeymoon period" of international luxury goods owners in the Chinese market has ended.

According to Bain's "2012 China Luxury Market Research Report", the total consumption of luxury goods in mainland China in 2012 was 115 billion yuan, up from 30% in 2011 to 7%.

In fact, from the third quarter of 2012, the performance of many luxury brands in China has been on the decline.

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P has lost its support for rapid growth, and the rapid expansion of stores has become a major drag on business.

Flagship store closing is a landmark event, accompanied by an expansion of the suspension.

LVMH, which owns many brands such as Louis Weedon, is the first to say that the strategy for 2013 will be to completely curb expansion and stop shops in the most important emerging markets, especially the first tier cities in China. LV

Kering also announced that its most important brand, Gucci (Gucci), will also shut down its stores in China in 2013, instead of refurbishing and expanding existing Chinese stores.

This is also the first time that luxury goods have been slowed down in the mainland since they entered the mainland of China.

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< p > it is two "stumbling blocks" for big players to tighten their horsehead.

First, the supply of too many luxury goods has reached saturation in the Chinese market.

According to Merrill Lynch survey data, LV has 42 stores in China, 59 in Gucci and 66 in Burberry.

Han Weiwen, Bain's global partner, believes that when luxury brands drive their stores to thirty cities, the marginal effect is very low.

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< p > the second is the weakening of demand. The slowdown of China's economy will undoubtedly affect the consumption of luxury goods that are at the top of consumer goods in Pyramid. After all, many of the Chinese luxury goods sales are rich in the real sense, but there is also the middle income class who tighten their belts. Besides, the weakening of official consumption demand and the deepening of clean government construction also can not be underestimated.

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< p > there are three possible solutions to the big names: first, the whole line is shrinking, instead of being the producers of products at ease, giving up their own channels; two, attacking the whole line, laying the channel from the store to the electronic commerce; and third, hibernating the industry in a low period, and maintaining the current profit level through compression, and waiting for the demand side to gradually warm up.

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< p > no matter which one they choose, they must reflect on whether the existing marketing mode has come to a time of adjustment.

Because of the sharp drop in the price of luxury goods at home and abroad, luxury consumption in the Chinese market has always been in a state of deformity. Most of the real consumer groups are customers who are "dumb" or "bad money", or those who seldom go abroad to sweep goods.

However, the demand of the current people has gradually weakened, and the latter demand has been gradually satisfied by the luxury electric providers. The traditional store sales are obviously out of date, and the sales strategy of the crazy expansion stores has come to an end.

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