Luxury Stores: Results Of Vertical Integration

What we see now

Mostly located in the main street.

In fact, this is not the case. This is the result of an important reform in the luxury industry, and it is also related to Louis Weedon.

In 1977, Henry Recamille, a 65 year old Weedon family son-in-law, accepted the management of Louis Weedon brand.

After reading a lot of books, Ray Kamil found that in the commercial chain, retailers, especially franchisers with franchises, took the biggest part of profits.

Most of that time

The company is still small, run by the founders' families, and they are not good at commercial operation.

Ray Camille is not a fashion man, he is a businessman.

He decided to implement a strategy of "vertical integration" for Louis Weedon: he kicked off middlemen and opened Louis Weedon's direct management.

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This is an important reform in the luxury industry and has achieved unprecedented success in finance.

In just a few years, Louis Weedon's profits rose to an astonishing 40%, while most of their competitors could only earn 15%-25% profits.

Nowadays most of the luxury brands use Lei Camille's mode to vertically integrate upstream and downstream.

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Reporters learned that Chanel is not the only price adjustment brand.

In 2014, LVMH's high-end watch brand, Yu Bo, Zhen Li Shi and Hoya, launched the banner of Hongkong and the mainland in the same price, hoping to activate the mainland consumer market by price advantage.

Previously, the price difference between mainland watches and Hongkong was between 10%~20%.

This seems to be out of line with the way in which luxury goods consistently play. Previous news has been that some luxury brand manufacturers would rather destroy some damaged products than sell them at a low price, so as to maintain the high-end image of luxury goods.

In the reporter's visit, a number of boutique staff also told reporters: "we never discount."

According to the scholar of consumer psychology, School of economics and management, Shandong University, for many luxury goods consumers, the price tag is not important, because discount will give customers a hint of quality, thereby reducing their brand image and affecting consumers' desire to buy.

The reason why Chanel has adopted different price adjustment strategies in Europe and the Chinese market is that the continued depreciation of the euro is on the one hand, and on the other hand, the sales in the mainland of China continue to decline, while most Chinese consumers spend overseas.

According to wealth quality statistics, in 2014, the consumption of Chinese luxury goods in the mainland was 25 billion dollars, down 11% from the same period last year. The proportion of China's luxury goods market in the global luxury market dropped from 13% in 2013 to 11%.

"Chanel Chanel has always been the vane brand of the luxury goods industry. Its move is also releasing a signal: Chinese people can buy reasonably priced luxuries without going abroad."

Zhou Ting, Dean of the Institute of wealth and quality, told the media.

Zhou Ting said, first of all, we should change the mentality of irrational consumption of Chinese people.

According to the data of University of International Business and Economics's Cheung Kee luxury Research Center, the proportion of luxury consumption expenditure in the mainland is too large, and the proportion of Western luxury goods consumption accounts for no more than 4%, while China's one hundred share is about 20%.

China is still in the initial stage of luxury consumption, and is a show off consumer.

This has prompted foreign luxury companies to "discriminate pricing", thereby pushing up the price of luxury goods in China.

In addition, the domestic sales policy is not perfect.

Although China has a large number of processing trade made in the mainland, such as some high-end clothing, but according to the current policy, these products must be exported after processing in China, and can not be sold in the Chinese market.