Luxury Market Is In Urgent Need Of Self Rescue LV E-Commerce Platform Will Be Launched Soon

As we all know, with the rising cost of manpower and rent, too many stores will undoubtedly occupy too much operating costs. With the arrival of store closing tide, international luxury brands will undoubtedly choose more suitable sales strategies. Now, the closing of LV stores is to reorganize the stores in China, and it can also be considered that the brand is repositioning the Chinese market. Although luxury goods in China have not done much in e-commerce channels, this is a trend that no brand can avoid.

LV e-commerce platform will be launched soon, but the specific launch time and mode are not available for announcement. The reporter interviewed the Shanghai headquarters of LVMH Group on the strategy of closing stores and e-commerce platform, but as of the press release, the LV Brand Public Relations Department had not given any reply. Industry experts believe that the large-scale closure of LV stores is also to pay for the rapid expansion of previous brands in China, which is the usual means of increasing income and reducing expenditure for luxury goods, and may improve the financial statements in the short term. However, closing stores in second and third tier cities so quickly will cause long-term damage to the brand and local market consumption.

Issued by consulting firm Bain《 China The Luxury Annual Report said that in 2014, China's luxury market fell for the first time in eight years, down 1% from 2013, with sales falling to 115 billion yuan. Since 2013, China's luxury market has gradually entered a downward phase. LV, as one of the first brands to enter the Chinese market, has also entered a period of weak performance in China with the overall environment of the Chinese luxury market.

Data shows that as of the end of June 2015, the first half of the fiscal year, the Asia Pacific region can be described as overcast and rainy. In the first half of the year, LVMH Group's revenue in this market (excluding Japan) showed an organic decline of 5%, with a decline of 6% and 5% respectively in the first quarter and the second quarter. The operating profit margin of the fashion and leather goods department plummeted by 160 basis points to 28% in the first half of 2015. From 31% in the same period of last year and 30% in 2014, it further dropped to 29%. In the first half of the year, the fashion and leather goods department had a net increase of 16 new stores, far less than 56 in the second half of last year.

Last year's performance was a mess, this year's achievement Even worse. The latest performance report of LVMH Group shows that the overall sales revenue of the Group in the third quarter was 9138 million euros. Although the fashion and leather goods department dominated by the LV brand achieved a revenue of 3106 million euros, the actual revenue growth of the department in the first three quarters plummeted to 1% from 16% in the same period last year, the worst performance in eight years, resulting in the actual revenue growth of LVMH Group falling to 4% from 18% in the same period last year.

Zhou Ting said that this is the pain luxury goods must experience in China. Only by going through this stage and re arranging online and offline, can we meet the needs of domestic consumers. At the same time, Zhou Ting also predicted that LV would adjust commodity prices after the completion of the layout of stores in China. The price adjustment is aimed at the global market. Its purpose is to complete the global price integration. Only after the price integration can the e-commerce channel layout be carried out.

In addition to the continuous decline in performance, consumption outflow is also one of the reasons why luxury brands choose to close stores in China. The Nielsen China Outbound Travel Monitoring Report shows that nearly half of Chinese tourists will choose to buy when traveling abroad luxury goods It is worth mentioning that although domestic consumers are keen on overseas shopping, LV seems to be no longer on the consumer's purchase list. A recent annual survey shows that only 10.7% of the 1277 overseas tourists surveyed bought LV on their latest trip, down 15.5% from 2014. At the same time, among high-income tourists, the brand attraction of LV is declining more obviously. Only 12.9% of high-income people (with an annual family income of more than 350000 yuan) bought LV on their last trip, while this index reached 24.3% last year.

According to Amazon's statistics, from January to September last year, the overseas orders of Chinese consumers in Amazon America increased nearly 10 times year on year. In the past two years, the phenomenon of consumption outflow has become prominent, and offline physical stores of luxury brands are also facing greater performance pressure. It is undeniable that the poor sales of luxury brands in China today have put a lot of pressure on the stores opened in the past, and many stores have even become showrooms. The Wealth Quality Research Institute pointed out in the research report on luxury distribution e-commerce channels that since last year, 95% of luxury brands will choose to close stores strategically. This behavior is proactive, which is the premise for brands to seek new distribution. In the future, O2O business will become the mainstream.