LV France Raises Prices, Can Consumption Go Back To China?

Reducing prices in the Chinese market will not only affect profits, but also damage the brand image, because Chinese consumers believe that "expensive is good". Then we can only raise the price in the European market. This will not only ensure the sales share and profit of the Chinese region, but also make a profit in the frenzy of sweeping the goods at the end of the year.

Back in August of this year, LV The international luxury goods giants such as LVMH, the manufacturer, have announced plans to raise the price of luxury goods in the European market in order to protect the Chinese market. Prada has also followed up. Its spokesman claims that if the euro continues to be weak, the company will consider raising its price in Europe in order to reduce the price gap with China.

After two months, the LV's pricing plan is the first to cash in. The price of several classic handbags of LV's official website has been raised on the whole, up to 10%, and the difference between some products and the domestic price has narrowed to about 1000 yuan. And China market Sales staff said that the price adjustment plan has not been followed up for the time being.

The LV only raised its price in France instead of raising the price in the Chinese market, is it to take special care of Chinese consumers?

There are a number of reasons why international luxury goods makers consider this: on the one hand, the consumption of luxury goods in Europe and the United States has begun to remain depressed due to the economic downturn; on the other hand, the relevant data have proved the potential of Chinese consumption many times. As a result, LV and other international brands have been optimistic about the Chinese market, and have invested huge sums of money in China, laying out first tier cities and even two or three line cities.

However, what surprised them is that Chinese consumers are Luxury goods The consumer mindset is not too mature. They do not spend their time in the nearest luxury store, but they go abroad to shop. According to the global luxury market research report released by Bain in October this year, Chinese consumers have purchased 1/4 of the world's luxury goods, of which tourists account for 40% of the world's total consumption of luxury goods.

The crazy blood of Chinese consumers in the European and American markets has become a shot in the arm of the economic cold winter, but at the same time, it has also led to the consumption of luxury goods investors in China. According to public information, Burberry group's sales growth in the first quarter of this year dropped from 67% in the same period last year to 16%, while China's sales growth also dropped from 30% to 15%, while Prada earnings also showed a decline in sales in the Chinese market. Sales margins in countries with high profit margins have declined, and brand companies obviously do not want this momentum to continue.

Why are Chinese people so keen on overseas consumption? The reason is that apart from the big difference in luxury goods in China, the problem of consumers not buying enough in China and after-sale services, the huge price difference between the same products in the European market and the Chinese market is one of the important reasons for Chinese people to rush overseas.

Finding the crux of the problem, the simplest way to guide related consumption to the Chinese market is to narrow the price gap. Reducing prices in the Chinese market is undoubtedly risky. This will not only affect profits, but also damage the brand image, because Chinese consumers believe that "expensive is good". Then we can only raise the price in the European market. This will not only ensure the sales share and profit of the Chinese region, but also make a profit in the frenzy of sweeping the goods at the end of the year.

Today, luxury brands such as LV have taken the lead in raising the price in the French market in the name of exchange rate, and this pricing plan has also been followed up by overseas purchasing agents. Whether other luxury brands will follow up remains to be seen. However, according to well-informed overseas buyers, brands such as YSL, CELINE and CHANEL will rise to varying degrees in Europe.

Can European luxury price schemes really bring luxury consumption back to the Chinese market? I am cautiously optimistic.