The Light Luxury Brand Has Lost Its High-End Image And Lost Money.

Some time ago, the luxury brand COACH launched a strategy of low price sales, but this strategy not only failed to save the deficit situation, but also damaged some of the high-end image.

Recently, Shanghai Nanjing East Road big pill department store's Kou Chi.

Stores are luxurious, but few consumers enter.

Although the staff explained that Cox had played a diversion role in the two shops of the big pill department store, but in the two layers of shops, it was found that there was not much traffic.

After ten quarters of reform, its earnings report finally recovered slightly.

In the third quarter 2016 earnings report, the brand's net sales amounted to US $1 billion 30 million, an increase of 11.2% over the same period last year of US $929 million 300 thousand.

Nevertheless, the gross margin and net interest rate of the company still decline to varying degrees.

Low price promotion, layoffs and a series of broken arm survival strategies did not seem to embarrass the development of the company.

In response, the company responded that because it is now on the eve of the company's annual and quarterly earnings reports, it is unable to accept a complete interview in the brand's silent period, and only responds to some questions.

Low price strategy damages high-end image

Recently, reporters visited Shanghai's Chi Chi store to learn that in addition to the sales volume of discount promotions, the flow rate of the stores is not bad. Even in Shanghai's old core business district, there is still a lack of popularity in the shop without discount.

For the analysis of Bu Anxun, founder of the big think tank, it seems that under the background of slowing economic growth, there will be a downward trend in the luxury consumer market. Many luxury brands are relying too much on the single market, and the problem of poor risk tolerance is gradually emerging.

Of course, it is no exception that the slogan "once for all is luxurious".

According to reports, in March of this year, the company sold a frenzy discount in Beijing ole market, and 2 of the goods sold in the past quarter were sold.

Hundred yuan shoes, thousand yuan package trigger consumer looting.

The sale of low price strategy is very harmful to the brand image of the company.

Zhu Yue, director of consulting and executive director of CIC, said that in recent years, the company has been promoting various kinds of low price discounts, year-end promotions and friends and family promotions, and has also opened various outlets to attract consumers to rush.

Frequent discounts and promotions have virtually fostered the mentality of consumers that "no discount is not worth buying", "and then there will be a discount".

In this way, the low price promotion strategy and the strong expansion of orlies are very harmful to the brand image of the company.

"To sell high-end brands at a low price, though it can increase consumers' desire to buy some special products, will damage the high-end image of the brand and make consumers lower the price expectations and brand value of the brand itself. At that time, it will be more difficult to regain the recognition of consumers for high-end products."

Zhu Yue said.

In response to the interview, the head of the relevant department of the chi chi group said that in terms of price positioning, the price of its products has always maintained the price orientation of the people, whether in China or in other countries or regions.

"Brand pformation" and "price increase" are linked with the wrong interpretation of the brand upgrading price. In fact, the brand does not raise the price when optimizing the product, and the product mix is also differentiated to meet the diversified consumption needs.

But for the company's low price promotion behavior, the above people explained: "sales promotion is according to the market situation, different brands will make a discount, this is understandable.

Coco has never said that it will take a low price strategy, and its price positioning is more traditional than that of Europe.

Luxury brands will probably be priced at a low price of 40%~60%, which is a pricing strategy they have been playing. "

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Accused of "blind expansion"

It is worth noting that, despite the fact that sales of coke and other indicators have been warmer, the gross profit and net profit index of the company's third financial quarter still showed a downward trend.

According to non GAAP and financial reporting basis, the gross margin of the company was 69%, compared with 71.6% in the same period last year.

The operating profit margin was 14.7%, compared with 15.8% in the same period last year.

On the basis of financial reporting, business income was $134 million, compared with $124 million in the same period last year.

The operating profit margin was 13%, compared with 13.3% in the same period last year.

According to the company's earnings report, apart from discounted sales promotion, the company has further consolidated its financial results by reducing its labor costs.

The corresponding labor costs have also declined to varying degrees.

At the same time, Cox group also proposed the "operational efficiency enhancement plan" to enhance organizational efficiency, update core technology platform and optimize supply chain network, so as to effectively cope with the rapidly changing global market situation, fluctuating tourism consumption flow and increasingly fierce competition environment.

The plan to reduce corporate jobs in the global market will generate about 65 million ~8000 million pre tax expenses, which will be reflected in the financial statements from the fourth quarter and are expected to be completed in the end of 2017 fiscal year.

In the earnings report, the group did not disclose the size of the layoffs.

Despite this, many of the luxury brands have been dismantling in the high-end business in China.

Jan Bozek, President and chief executive officer of the Greater China region, said that in view of the good performance of the mainland market, the company plans to add 10~15 stores in China in fiscal year 2016 and continue to invest in the renovation of its existing stores. It is estimated that the Chinese market will sell for up to 600 million dollars in that year.

In the eyes of industry observers, this is another sign of "blind expansion".

It is understood that as of March 26, 2016, the company has 161 stores in mainland China, including more than 40 modern luxury retail outlets.

By the end of fiscal year 2016 (end of June 2016), the company expects to have about 400 new retail outlets around the world. "At the same time, we expect that about 40% of Chinese market stores will be presented to consumers with new and modern luxury concept stores".

In recent years, the environment for the development of luxury goods in China is not very prosperous.

The study found that in 2015, China's luxury goods market fell by about 2%, and the market size dropped to about 113 billion yuan.

At the same time, store sales and passenger volume continued to decline, new brands have also encountered similar situations, many luxury brands have emerged from the shop.

Against this background, however, the company still plans to expand its stores in the Chinese market.

The industry has pointed out that the action or the blind expansion of the company in China.

"Our long-term prospects for the Chinese market remain.

Because the Chinese market still has long-term growth driving force. "

Jan Bozek, President and chief executive of the Greater China region, said.

CIC, director of consulting and executive director Zhu Yue, pointed out that in China, because of the stereotypes of consumers' stereotypes of the brand, it is not always possible to make changes.

Its expansion in China and the low price promotion strategy mentioned earlier can be considered as an adequate reserve for the company to bring stable cash flow to achieve the pformation of overseas brands.

On the other hand, in 2015, when the sales volume of global sales declined, only the sales in China maintained a positive growth. The plan to open new stores in China seems to be the lifeline of the brand.

Many of the new stores are open.

In the two or three tier cities, expanding channels is also the main way for the company to open these markets.

However, whether or not the opening strategy of the company has the final effect can be seen.

Bu Anxun, the founder of the big think tank, pointed out: "it is similar to the way that such foreign enterprises in China directly open chain stores and direct outlets. On the one hand, its total consumption may go up, but on the other hand, its revenue will come down.

Similar to previous best buy and so on.

Besides, we know that the disadvantages of physical stores are obvious now.

Worries about pformation prospects

As a listed company in New York and Hongkong, Cox published the strategic goal of brand pformation in 2013, and in June 2014, it outlined a comprehensive multi-year brand pformation plan to cope with the rapid change of market and customer demand, and to create a greater degree of fashion relevance for the company, and to establish closer emotional ties with customers.

As a matter of fact, there are many hidden worries in the eyes of the industry observers, such as the promotion of low price and layoffs.

For a moment, Cox fell into a lost pformation.

In fact, this is also one of the typical problems encountered in the development of luxury goods industry.

In the past few years, many luxury brands have encountered difficulties in the background of domestic and foreign prices, overseas shopping, e-commerce and anti-corruption.

However, the company uses the crazy discount and expansion stores to seize the Chinese market.

In Bu Anxun's view, China's luxury market is facing the impact from all aspects of development and changes, on the one hand is the change of consumer culture, on the other hand, the change of industrial manufacturing system leads to a decrease in demand.

"Cox Chi's use of discounts to seize the market is one of the ways to deal with market competition. However, if there is a discount, there will be many problems.

If you maintain the old product model, there must be other new growth points, new products or services. "

Zhu Yue believes that in recent years, the luxury industry is in the

The development is not very smooth. The main reason lies in the slow economic growth, the lack of consumer confidence and the fact that tax policy has led to a big price gap between China's luxury goods industry and foreign countries, and the speed of product renewal is too slow. Thus, more and more consumers are switching to other channels such as Hai Tao, buying on their own or buying abroad by themselves.

"The development of luxury brands in China should gradually reduce the price difference to attract consumers who choose other purchase channels because of excessive price differentials as the best priorities. This has been able to take a look at the situation from last year's Chanel price adjustment in China."