The Old Framework Of The Luxury Goods Industry Will Collapse, And The New Structure Will Be Established.

These two years are not just domestic.

Facing the great changes in the market, the old framework of the luxury goods industry is also disintegrating, and the new structure is being established.

Bain consulting

The BainLuxuryStudy report of the annual report points out that since the development of personal luxury goods industry in 2015, there has been a new normal in many aspects.

For example, in 2016, the number of Chinese consumers buying luxury goods fell again on the basis of last year, and their contribution to the global luxury market decreased by 1% to 30% (including domestic shopping and overseas tourism).

For example, online channels are the fastest growing channel, and the penetration rate of the Internet in the luxury industry has reached 7%.

If the online market is regarded as a country, it is next to the United States and Japan, and the third largest market in the world.

For example, the consumption of local luxury goods has exceeded tourist consumption for the first time since 2001, reaching 5%.

Similarly, in China in 2016, the proportion of consumers buying luxury goods in China increased significantly.

According to the world clothing and shoe net, the emergence of these new normal situations has changed the way of luxury goods in Chinese market.

The era of rapid growth by opening shop is over.

Cai Yi is the "senior citizen" of the top luxury goods to develop the Chinese market. He first entered the LouisVuitton, started from the retail base until the senior executives, then became the head of Burberry China, and then joined the personal brand of KarlLagerfeld, now the managing director of Dunhill, China's second largest luxury group in the world.

Cai Yi was previously in IF.

At the meeting, he said he believed that the entire Chinese luxury market is slowly entering a new starting point - it has begun to become a real business, and the era of excellent performance over the past few years has passed.

"Especially in the past 2005~2012 years, many brands have opened five or eight stores a year, and have achieved explosive growth in different cities.

In recent years, the market has not been so fast, and at the same time, most brands in China have reached a certain degree of network construction. The luxury market will no longer grow at an astonishing speed of 30% to 50%, and the brand business will enter the track of normal business.

Compared to opening stores, Cai Yi believes that brand management is becoming more and more important, such as managing stores and employees well, and doing well in service. This is the key to brand growth in the future.

According to Bain's research report, only 1/3 of Chinese consumers purchase luxury goods in domestic channels, and another 1/3 in Hong Kong and Macao, and 1/3 abroad.

In this regard, Cai Yi judged that the proportion of luxury goods purchased by Chinese people in the future will increase.

"This is not unique to the Chinese market. The Japanese market has also appeared. For example, the LV brand I worked for before, in 90s, most Japanese purchases were carried out in Europe.

As the frequency of consumer purchase changes, the expansion of the brand in the entire market network, as well as the deepening of the relationship between the brand and the guests, coupled with some measures taken by the government to narrow the price gap at home and abroad, so that the purchase begins to localize.

I think the habit of buying luxury goods in China will also gradually adjust.

According to the world clothing and shoe net, luxury brands are constantly opening up new stores under the Chinese line, and they are becoming more and more familiar with and adapting to the Chinese market.

Even a lot of brands have increased the proportion of full price goods, and began to expand to the two or three tier cities with "one city, one store" mode.

Compared with the past, for high-end luxury goods, the opening of offline stores is still the first choice for entering the Chinese market, but the speed of some brand development will slow down.

Take the French classic luxury brand Hermes as an example. In 2015, mainland China and Hongkong accounted for 13% and 14% of the total sales of Hermes, respectively. They will adopt a steady development strategy in the mainland of China. The first consideration is to set up stores in the first tier cities.

Brand personalization is a new way to win the future.

If luxury or big brands are better off in the Chinese market, who robbed their consumers?

After Alipay's annual bill came out in 2016, Nacy, who has worked in the financial industry for five or six years, found that compared with the Alipay bill of the previous two years, in 2016, it had lost some luxury LOGO in clothes, shoes and handbags, and a number of new brands that dominated the way of life.

According to the world clothing shoes and hats net, Luan Shaomei, chairman of Beijing sprice outlets business, has publicly stated that in the future, its investment focus is shifting from luxury to more personalized brands.

In a more popular way, consumers' demands are becoming more and more personalized, not only luxury goods, but also similar changes in entertainment, consumer goods and food industries.

For example, the mainland actress "four double ice" solid framework, these years are slowly deconstructing, it is no longer hard to find which star can call as many young people as they used to do.

Luxury brands are not very slow in this respect. Some luxury goods are slowly changing into personalized, more designer brands, or directly acquiring similar brands.

For example, "up and down" is a lifestyle brand created by Chinese designer Jiang Qiong in Shanghai in 2008. Hermes group has invested 90% of its capital in capital injection.

Jiang Qionger, the founder, has been the CEO and art director of the brand, and has a remaining 10% stake.

According to the world's clothing and footwear net, the "upper and lower" positioning Chinese traditional handicrafts and contemporary design, 90% of the products made in China, including clothing, jewelry, tea sets, furniture, etc., but the price is high.

You can find a $4600 bamboo handbag or a $100 thousand Ming style furniture in your shop.

(photo: up and down shops in Shanghai)

Although no luxury product has been launched for the Chinese market or the Chinese subdivision crowd for the time being, it has been paying more and more attention to diversification in the Chinese market before and after 2012.

"Up and down" is not the first brand in the Chinese concept of luxury goods group. As early as 2000, the Shanghai clothing brand "Shanghai", which was purchased by the peak group, and the 2012 Kayun group's acquisition of Hong Kong's jewelry brand "Qilin" are all forerunners.

The director of the China duty free group board of directors has always judged that luxury goods will remain rational growth in the Chinese market in the future, but structural adjustment will take place. In the past, high priced watches and leather goods will increase slowly, while the demand for personalized and self dominated goods will grow.

Even the industry has come up with a more radical view: in the next three to five years, the old luxury goods will fall to the high-end consumer brands, and say goodbye to the era of profiteering. Diversification, individuation and customization will become the new thinking of luxury brands.

Bain divided the consumer groups of personal luxury into three levels in Pyramid: the basic level is the "light luxury" that some mass consumers can also buy, the middle layer is the middle end product which is slightly beyond their consumption ability, and the top is only the top product that only the rich people can afford.

Looking at the global market, the proportion of revenue gained by the luxury brands from the base level and the top level in 2016 increased by 10%, while the middle tier was shrinking.

This change shows that luxury goods are moving towards the poles: either to exit the luxury market, to specialize in high-end personalized mass products, such as the German luxury brand HugoBoss, to cut its brand, focus on high-end men's clothing, or to firmly maintain the high-end brand tonality, and to maintain growth through expanding product lines, for example, the leather shoes launched Coach has launched shoes and clothing lines.

The attitude towards social media is quite open.

The driving force behind personalized demand is the emergence of new consumer groups.

Like local brands, luxury goods are facing the problem of brand aging in China. They should also try to face the new generation of consumers.

"Sometimes it does not start with a positive number, but starts with a negative number. It is a very difficult task to change from negative to positive."

Cai Yi said.

Moreover, China's luxury consumers are younger than overseas.

"A lot of luxury goods outside the consumer group are usually around 45 years old, but on the other hand, they should be in the 25~35 year old section."

Lili Capital Partners LCML founder Li Lan said.

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Compared to the channel, the marketing side is the most easy to play the pattern first.

Not long ago, Papi sauce made a single product advertisement for the watch brand Jaeger Le Coulter. The product was mainly customized and sold at a price ranging from 30 thousand to 60 thousand.

Among the stars in China, Chen Kun, Donnie Yen and Zhao Wei are close stars of Jaeger Le Coulter cooperation.

Jaeger Le Coulter has taken a fancy to Papi's appeal to tens of millions of fans. With the help of Papi sauce, it can quickly face a new generation of young consumer groups.

(photo: Jaeger Le Coulter micro signal screenshots)

The reason is simple. Young people like to soak up social media. Brands need to get young new customers and social media.

This is a reason to sign the latest superstars with luxury goods, not that luxury goods should be civilians.

Abroad, luxury goods play a more daring role in social media.

According to the world clothing and shoe net, not long ago, Dolce&Gabbana released a series of autumn and winter 2017 in Milan men's wear week.

But unlike in the past, it has found 49 "opinion leaders" who have millions of fans in the global social media to display clothing, which accounts for 43% of the number of shows.

Among them, 3 star bloggers in China also went to the show, including Chen Xuedong, who has 24 million 640 thousand fans of micro-blog, because of the popularity of the TV drama "the promotion of Princess Taizi", the actor Sheng Yilun with 4 million 680 thousand fans, and gogoboi, the fashion blogger with 7 million 20 thousand fans.

This is a way to connect overseas luxury products with Chinese young people. Before that, most of the professionals were professionals. Young people rarely care about a new luxury product with high price.

(photo: gogoboi at Dolce&Gabbana show)

In this regard, Zhang Shuai, founder of net red cat, CO operated by Papi sauce and Jaeger Le Coulter, said that the practice of luxury media in social media marketing is actually a pioneer. They even launched a joint product with net red overseas, which led to a relatively cautious attitude towards luxury goods in China due to the uneven market level.

"There will be more and more cooperation between luxury goods and net red.

As far as I know, Gucci and Burberry also consider looking for net red in China.

In China, the combination of luxury and net red will also grow.

Channel integration and digital marketing are imperative

At the channel side, luxury goods are also working hard to achieve direct dialogue with consumers.

First, remove agents and do direct battalions.

For example, Burberry, which is heavily dependent on the Chinese market, has announced that it will buy a 15% stake in the Chinese company in the hands of Yao Lai Group, which is priced at 45 million pounds. After the completion of the paction, Burberry will hold 100% of China's business.

The two is to continuously test channels on the waterline.

It is learned that more than 90% of the luxury brands entering the Chinese market have opened WeChat to connect users, and some brands have done business over 10% or even more through WeChat.

As for Tmall, luxury goods have been settled since 2016. Some of the top luxury goods such as LV, although the main brand has not entered Tmall, its brand has entered a lot.

For example, in September 2016, LVMH group's high-end cosmetics brand Guerlain (Guerlain) and MakeUpForever were stationed in Tmall.

Burberry group revealed that although retail outlets and single brand stores are still the most popular sales channels, the growth rate of three niche channels is staggering: from 2013 to 2016, the proportion of discount stores, electricity providers and airports in the overall sales share increased by 23%, 26% and 13% respectively.

Entering the 2017, the rapid growth of the electricity supplier still touched the luxury brand of prudently watching the electricity supplier, and their online practice was more open.

For example, LVMH group has just announced the official website of its LeBonMarch department store will sell C or line, Fendi, LouisVuitton and other similar brands that have not been sold online before.

For example, Italy luxury jewelry brand Bvlgari added "boutique" function to WeChat public number, directly selling three rings of B.ZERO1 series, priced at 15400 yuan, 17000 yuan and 18200 yuan respectively.

Some brands even list the sales ratio of the electronic business as the business objective of the company.

For example, Gucci, who is currently in CEOMarcoBizzarri, says he has several goals in the future, including reducing the frequency of price cuts and achieving business growth in all commodity sectors, especially to increase the sales of Gucci to three times the current level (the current electricity supplier sales account for 3%).

For China's online channels, luxury goods are most afraid of counterfeit goods, but judging from the current luxury movement, their icy attitude is slowly melting.

Why did luxury goods stay away from electricity suppliers in China in the past few years?

Huang Ruo pointed out that apart from the problem of authorization and source of goods that had been repeatedly criticized, the gene and logic of domestic e-commerce, which were incompatible with the concept and business mode of luxury brands, were the focus (2012 Huang Ruo analysis as below).

(photo: 2012, Huang Ruo and Yb power network and Huang Ruo discuss luxury electric business)

But as the online environment and retail structure change, Huang Ruo's judgment in 2012 seems to have changed.

In front of luxury goods, the popular fashion brand has been rapidly Internet in China in the past two years.

Xu Yiqian, senior executive director of the international big name business service provider Bao Zun, said that the biggest change of the first international fashion brand in the Chinese market in 2016 is that they are working hard to make O2O landing and get through the whole network channels and offline channels.

Although the operation of mass brands on luxury goods is sometimes not feasible, luxury goods will also face this task sooner or later in the Chinese market.

More interesting reports, please pay attention to the world clothing shoes and hats net.