Economic Downturn And Consumption Power Weaken The "Low Tide" Of Luxury Goods In China

Economic downturn and consumption power weaken the "low tide" of luxury goods in China

Lipstick theory; mass consumption psychology in the economic downturn

The theory of lipstick in economics explains the following: in a bad economic situation, women no longer buy fashionable, fashionable clothes and cosmetics as they used to, but tend to buy some classic and durable products.

Especially for luxury goods, lipstick is the cheapest luxury product. The price is not high enough to keep women in good looks, so lipstick will be sold at this time.

Same, classic style.

Shoes, bags and so on will also sell well.

"Observing the current consumption behavior, we find that consumers are no longer buying cheap products as expected, but spend money on the knife edge and buy the most cost-effective products."

Muntel (Mintel) market research company analyst Bill Paterson (Bill Patterson) said so.

His explanation enables us to feel more directly and vividly the direct purchase mentality of consumers in the face of economic crisis.

Even if the economic income is not ideal, consumers still need a buying way to relieve or relieve their stress in daily life.

As a result, consumers can give up the choice of high-end luxury brands, and then turn to those necessities or lower priced cosmetics.

Bellert believes that the past concept of consumers is vertical, that is, when they are faced with shopping choices, they will compare the prices of similar products from low to high.

Today's consumers will consider all the expenses at the same time, including cars, cigarettes and concert tickets.

Now, we are carefully grasping the balance of payments.

Entering the discount season with Europe

Facing the sluggish consumer market, many luxury brands change their sales strategies early, with discount sales promoting consumption.

Consumers in some tier cities show a gradually mature and rational regression process of luxury consumption, and no longer crazily pursue luxury goods.

Such a consumption mindset forces people to gradually decline in the purchase of luxury goods, and discount strategies can not achieve the desired effect to some extent.

According to Zhou Ting, an expert in luxury goods industry, July is the peak season for European traditional discounts. Compared with the rare luxury brand discount in the past few years, many luxury brands are involved.

This is due to the downturn in the real estate market, the downturn in the securities market, the decrease of cash flow in the hands of consumers, and some citizens' consumption panic.

In order to reduce shopping expenses and boost sales, international giants have to increase the discount rate; on the other hand, some brands advance the discount season in China market, possibly taking into account the "peak shifting" with the European discount season.

First tier sales market saturated two or three line city expansion site

The slowdown in sales of luxury brands in China's first tier cities has not affected its expansion plans in the two or three tier cities.

On the one hand, the brand seeks new business strategies to stimulate consumption, and on the other hand, it actively starts expanding the territory in the two or three line cities.

In recent years, LV's new stores in China are mostly distributed in two or three line cities, such as Wenzhou, Changsha, Kunming and so on. 8 of Gucci's 9 branches in China are located in two or three line cities. Earlier, Gucci sold 4 hours in the first discount store in Guangzhou Panyu.

In addition, Gucci, Chanel and other brands are gradually relaxed the authority of the store manager, hoping to shorten the time period of processing after-sales service, to enhance the affinity of brand stores and consumer satisfaction.

"Hunger marketing" allows consumers to switch to fast fashion

In a very undesirable economic situation, fast fashion "hunger marketing" gives consumers a taste of sweetness.

The emergence of ZARA, H&M and UNIQLO similar fast selling brands broke consumer buying habits.

Efficient planning system, that is, buyer mode.

ZARA is not fully designed and developed, but more inspired by other fashion brands' conferences.

But domestic clothing is also imitated, but little success is due to the lack of accumulation of goods and related frameworks.

With the popularity of selling prices, consumers turn their attention to the consumption pleasure brought by these fast fashion brands, thereby reducing the attractiveness of luxury goods.

Sales of luxury brands fell last year compared with last year.

Recently, the British fashion brand Burberry group announced that its sales growth in the first quarter of the Asia Pacific region (mainly in China) fell from 67% to 16% in the first quarter.

Jewellery brand Chow Tai Fook announced in the evening of July 11th that its income increased by 16% only as of June, while the proportion of jewellery inlaid with high profit margins in sales fell to 22% from 27% at the end of March.

In addition, the sales performance of the wrist watch brand is also showing a significant decline.

China's largest watch retailer Hendry Holdings Limited has also recently reported that demand for high-end watches has slowed to single digits in recent months.

CEO Cartire, a clocks and jewellery brand in the Swiss group, also revealed that China's demand for high-end Cartire watches is slowing.