Armani And Other Luxury Agency Transformation Brand Business "Go All The Way"

Following Burberry, Armani and other international frontline Luxury brand After recovering their dealership in the Chinese market, the media broke the news that HugoBoss plans to set up a joint venture in China in the second half of the year and hold the company. More and more luxury brands begin to abandon Chinese agents and control the Chinese market independently. This has also become an important turning point in the strategy of luxury brands in China.

Agency has begun to transform

Unknowingly, many big names have changed the agency system to direct operation. The author recently visited some of the first tier brand stores in the city, and found that many luxury brands have been fully transformed into direct stores.

Hisense store Versace clerk told the author: "in Tianjin, all of Versace's stores are direct outlets, and nationwide agents should be few." Like Versace, Fendi's salesperson also said that at present Fendi has only direct outlets in Tianjin and even throughout the country. In addition, CUCCI, MontBlanc and other brands have also indicated that they will gradually replace the authorized agencies with Direct stores.

However, a number of first-line brands still retain agency mechanisms. A Armani clerk told the author: "Hisense's Armani is the agency, and we have not heard the news that luxury brands will be fully run."

　　 Brand dealer "Bridge the river"

It is no doubt that the big players in the world are changing their business strategy.

According to the analysis of the insiders, in the beginning of these big international brands entering the Chinese market, in order to avoid risks and not miss opportunities, they adopted the agency mode to enter the domestic market. Because local agents have a better understanding of China's national conditions, they also have rich human resources and channel advantages, which are conducive to the development of luxury brands in the domestic market.

However, with the gradual expansion and development of the Chinese market, brand dealers also see tremendous business opportunities in China. Relevant data show that in 2009, the sales of China's luxury goods market increased by nearly 12%, reaching US $9 billion 600 million, accounting for 27.5% of the global market share. In the next five years, China's luxury goods market will reach US $14 billion 600 million, ranking first in the global luxury market.

The strong growth and huge profits of China's luxury goods market have led luxury brands to adjust their strategy in China, and the withdrawal of agency power is an important step for them to change their strategy. The right to recover the agent can not only control profits, but also have more discourse power. This is also reflected in the selection of cooperative department stores from the world's major entry into the Chinese market.

　　 Tianjin Department Store Association Secretary General Wang Bingdong said that China's department stores strive to improve their business positioning, and world-class high-end brands have become competing products. At the present stage, the international high-end brands become the boosters of high-end department stores. The brand status determines the right of cooperation. It also reflects the profitability of enterprises from one aspect. "This reflects the current industry operators generally recognized the rules of the game, who controls the brand advantage, who occupies the commanding heights of operation, and has the initiative to cooperate." Wang Bingdong analyzed this way.

Prices will not be significantly reduced.

Acting as a direct battalion means less intermediate links. Will the final retail price of these big brands be reduced by reducing the intermediate links?

In the CUCCI store of Hisense Plaza, I saw a wallet priced at 6400 yuan, while two new women's bags priced at 8000 to 11000 yuan. "The pricing of Direct stores is uniform throughout the country," said the salesperson. In other luxury brand outlets, the author has received the same answer.

According to the pricing method of luxury goods, industry insiders say that price is one of the core factors of luxury brands to maintain their image, so the price will not change with the change of sales mode. This can be proved by the price of some brand products that have been gradually transformed from agents to direct ones. At present, agents will receive a profit of nearly 20% in the process of agency sales. After being directly run by the brand, the 20% profits will generally be used by the brand in store building, personnel training, and so on, and will not be directly reflected in the price of the product.

Li Dongjin, a marketing professor at the Business School of Nankai University, analyzed the situation in Tianjin. Brand operators only reduced their conflicts with their agents in terms of channels and interests to a certain extent, and did not have a great impact on the market prices of their products. At the same time, Professor Li Dongjin also said that people who buy luxury goods are not sensitive to their prices. Some people even choose to buy a product because of high price, so the brand will not easily reduce their product prices. When the luxury brand direct operation mode is operated for some time, the price of the luxury brand will decide its product positioning and price according to the market reaction and specific demand of consumers. At that time, the price of luxury goods will be more flexible.

Record of big breakup

In 2008, the brand of the menswear group's menswear brand Dunhill gradually reclaimed the agency in Wenzhou, Ningbo and Hangzhou.

In September 2008, Coach recovered China's retail business from the agent Junsi group.

In September 2008, the brand of Chlo, the brand of the peak group, announced that only one of the shops operated by the agent I.T group of Hongkong was left by Suzhou.

In December 2009, disson established its contract with Polo Ralph Lauren and ended its agency for the brand.

In May 2010, Disheng and Tommy Hilfige announced that the agency cooperation in mainland China will be concluded ahead of time in March 1, 2011.

In July 2010, Burberry announced that it will buy its franchise partner Kwok Hang Holdings in the mainland China's Burberry franchise business at 70 million pounds.

In July 2010, Hugo Boss plans to set up a joint venture in China in the second half of this year, and has signed an agreement. Hugo Boss will have a 60% stake in the joint venture.