Hugo Boss Self Damage: Save The Highest Price In China By 50%

Price cuts for performance

Licensing is a risky move. However, the German luxury brand Hugo Boss is in a difficult position. It has to choose to take risks and drop its price in China.

Reporters visited Hugo Boss several counters, that is,

The price cut in China is about 30%-50%, actually.

The price of 20% in China has been cut in February.

However, the price reduction strategy did not lift the performance. According to the first quarter 2016 earnings report, the Greater China region and the US led double-digit declines, of which the overall sales in the Greater China region dropped by 11%.

The highest price drop in China is 50%.

Reporters unannounced visits to Hugo Boss in several stores in Beijing and Xi'an learned that Hugo Boss further reduced the price in China, reducing the proportion between 30%-50%.

This is after the company announced the reduction of the sales price of Greater China 20% in February this year, and further down the sale of commodity prices in China.

The survey found that a classic T-shirt was sold at a price of 1150 yuan last year, while this year's selling price is 900 yuan, and the current price is 1600 yuan for men's double sided belt. Last year, the selling price was about 2300 yuan.

From the comparison of commodity prices, it is easy to find that the rate of brand reduction is around 30%.

Hugo Boss Oriental Plaza store salesperson said, in fact, the commodity began to depreciate at the end of last year, so far, most of the commodity price drop is between 30%-50%. After the price is reduced, if the merchandise meets again the discount, the men's T-shirt can be bought at 300-400 yuan, and the price is even with Nike and Adidas.

Although the price has dropped again and again, a person familiar with the matter said that the price of Hugo Boss in China is still higher than abroad, and the spread is about 10%-20%.

Decline in performance to reduce sales prices

As we all know, luxury discount is a double-edged sword, which will have a direct impact on the brand.

However, Hugo Boss, as a luxury brand in Germany, encountered Waterloo in China. In the face of the tremendous pressure of declining performance, the brand had to choose to discount or even cut prices to save the market.

Although Hugo Boss, the head of public relations brand communications in China, told the Beijing Commercial Daily that only a few salesmen could explain the shop's sales situation without any reference to the actual sales situation of the whole Hugo Boss brand in China.

However, according to the first quarter results released by Hugo Boss in 2016, the sales volume of the company was about 643 million euros, down 3.7% compared to the same period last year, lower than the previous market forecast of 649 million euros.

Net profit fell the most in six years, from 756 billion euros to 38 million 500 thousand euros.

Among them, the Greater China region and the United States led double-digit declines.

Although Hugo Boss has cut 20% of the new spring products in the mainland to boost sales, mainland sales have increased by 10%, but it has failed to save the Hong Kong and Macao regions which are in deep mire. The overall sales in the Greater China region have dropped by 11%.

It is worth mentioning that Hugo Boss also mentioned in the earnings report that the brand will continue to lower other commodity prices this year to boost the domestic market and reduce the price differentials in China and Europe.

However, the actual sales situation did not follow the brand assumption.

The Beijing Commercial Daily reporters visited more than half an hour in several Hugo Boss outlets in Beijing and Xi'an. Apart from several salesmen, customers did not go to the store for consumption.

Store sales staff also said that compared with the previous discount sales, price cuts had little effect on stimulating sales, and consumers entered the shop first to see the discount, which was not concerned about whether or not to reduce sales prices.

Zhou Ting, President of the Research Institute, believes that the biggest problem of Hugo Boss is not finding the core problem of its declining performance in China.

In this regard, reporters after the price adjustment whether there is a further strategy for Hugo Boss interview, as of press time, did not receive Corporate reply.

Reducing the price to save the market is a weapon for hurting others

After 4 months' implementation of the Hugo Boss price reduction strategy, its sales performance has not made great strides, but has had a negative effect on the brand.

Hugo Boss Oriental Plaza Shop salesperson reluctantly said that the company lowered sales prices, sales terminals did not play a role in stimulating sales, but had a negative impact.

Many consumers believe that the brand value is reduced, so they choose to abandon the brand.

It is reported that reducing sales prices in China is not a strategy of Hugo Boss family, for example, at the beginning of the year, Chanel took the lead in reducing prices in China, hoping to achieve global parity.

Zhou Ting said that brand price reduction can be seen as a strategic price reduction, but strategic price cuts must not be allowed to appear alone. If it is not accompanied by comprehensive upgrading in the fields of design, products and services, it is undoubtedly a suicidal adventure.

Because the reduction of price directly brings about the reduction of brand structure, and other aspects will not directly affect the brand value, and eventually encounter the original consumer groups to abandon. The new consumer groups do not have the embarrassment of luxury consumption persistence.