Most Luxury Brands Face Difficulties In Closing Stores.

At present, the industry consensus is

The market is changing with the Chinese people, because luxury in the past 10 years.

The growth of three points and two is driven by the consumption of Chinese people both inside and outside the sea, while the Chinese are currently contributing 1/3 of the world's consumption. In the expensive luxury and luxury categories, especially the high-end watch and watch market, the Chinese consumption is up to 80%.

Since 2013, China's luxury market has been declining for two consecutive years, along with China's anti-corruption, slowing economic growth and well-known changes. Among them, men's clothing analogy is the most influential factor, and this also makes many.

The brand is in dire straits and is forced to close shop on a large scale.

According to the latest report of Exane BNP Paribas, Paris Bank of France and RE Analytics, Italy's high-end menswear brand Ermenegildo Zegna Holditalia SpA Zegna has reached 15 stores in the first quarter, accounting for 5% of the group's Direct stores.

Greater China is currently the largest single market of Ermenegildo Zegna Holditalia SpA Zegna, which occupies 1/3 of group business. The decline of Chinese market has directly affected the profitability of Italy menswear group.

According to media data, in 2015, Ermenegildo Zegna Holditalia SpA Zegna core profit EBITDA EBITDA fell 21% to 146 million euros, and net profit decreased by 45%, from 94 million 400 thousand euros in fiscal 2014 to 45 million euros.

In the first quarter, the number of stores close to Zegna was Gucci Gucci, which closed 6 stores. In April, the brand also announced that it would close its only European menswear store in Brera District, Milan.

As the growth of luxury goods market has slowed down rapidly and costs remain high, especially in the past 10 years, China has gradually abolished the preferential and even free policy for luxury goods in terms of rent, and luxury goods groups have been forced to restructure their stores, especially in the Chinese market.

Such a store is bound to further affect the global luxury market. According to MainFirst Group of European investment bank, 55% of the global luxury market in the past 8 years has come from the contribution of new industries.

The number of luxury stores in the world has surged in the past 10 years, especially in China. China has jumped to become the more than 2 largest luxury store in the world, after the United States.

The great leap forward of China's luxury stores is due to the consumption demand of China's economic growth in the past 10 years. Another important reason is that the expansion of China's real estate industry and commercial real estate are everywhere.

According to commercial real estate service and investment agency CBRE Group, Inc. (NYSE:CBG), the annual "Global Shopping Centre Development" report of CB Richard Ellis, China's cities have dominated the largest number of cities built and built in shopping centers in the world for many years, and Beijing, Shanghai, Chengdu, Wuhan and other cities have taken turns.

The shopping centers are most willing to invest in the two luxury brands of Louis Vuitton Louis Weedon and Gucci Gucci. The two major brands usually get preferential policies to exempt 3 years from rent in the two or three tier cities, while shopping centers attract other brands, upgrade shopping centers and attract customers.

However, with the slowdown of China's economy, the decline of luxury goods market and the rapid development of electricity providers, luxury goods have been unable to compete with the smaller and declining luxury market in the two or three tier cities after the rent preference policy has ended.

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At the February annual press conference, the world's largest luxury group LVMH Mo t Hennessy Louis Vuitton SE (MC.PA), MOET & CHANDON, Hennessy LV Group Chairman and chief executive officer Bernard Arnault warned China that there were too many shopping malls and excessive construction. He also said that the excess of real estate is one of China's economic challenges, and the Chinese real estate industry may collapse.

For the fact that China closes stores, Arnault said that if China has some new shopping malls not to rent for two or three years, LV will consider reopening its stores.

However, unlike traditional brands such as LV, Gucci and Prada, which are weakening in the Chinese market, some emerging brands, especially light luxury categories, are still relatively late in the Chinese market and still have great potential.

For example, the Michael Kors Holdings Ltd. (NYSE:KORS) and Tory Burch are still expanding in the Chinese market. Besides, the French luxury luxury clothing brand Sandro and Maje SMCP parent SMCP SAS also express that it will expand rapidly in China. The group plans to add 30 stores in China this year.

In addition, Pandora, PANDORA A/S CPH:PNDORA (CPH:PNDORA), the best performing jeweller in the industry, has said that it will continue to expand. This year, it plans to add 275 stores, of which Asia Pacific market is expected to account for 20%. According to the data of no fashion Chinese network, the growth rate of Pandora A/S, Pandora, and Pandora in the 2015 fiscal year is 40.2%.

The first quarter earnings report released by Pandora A/S Pandora at the beginning of this month showed that the group started strong this year, not only in all regional markets but also in all product categories.

Among them, the Asia Pacific region has the most prominent growth rate of 58%, and both mainland China and Australia have double digit sales growth in the same store. The two countries account for 20% and 30% of the Danish kronor in the region respectively, that is, about 176 million DKK and 264 million DKK in the region.

However, due to the impact of the economic environment and many new store sales, the same store sales in Hongkong continued to shrink, and the revenue grew by 10% in Hong Kong dollars, accounting for 15% of the income in the Asia Pacific region, or about 132 million Danish kronor. In the past 12 months, the group opened 10 new stores in the region, and now operates 26 conceptual stores, while the total number of stores in mainland China is 58.

However, the space of light luxury categories is actually a sign that the global economy is weakening and consumption tends to be conservative.

In the 2016 spring report released today by Worldwide Luxury Markets Monitor (global luxury market monitoring), Bain & Company Bain consulting and Fondazione Altagamma Italy Luxury Association predicted that the global luxury market growth in 2016 is expected to be 0%-2%, lower than the growth rate of 2015 spring report 2%-4%, and 2015 Bain refers to the global luxury market fixed exchange rate increase of only 1%, indicating that the company was optimistic in early 2015.

However, the report released earlier this year by No Agency, a luxury goods and clothing research consultancy and investment agency in China, predicts that the global luxury market will stop growing in 2016 and will fall into recession in the next three years.