Is The Luxury Agency Model Really Coming To An End?

In recent times, it has been bubbling with excitement.

The store was taken over by PoloRalphLauren and became a direct store instead of disson.

Not only that, TommyHilfiger, who was founded by Disheng as an agent, marked by red, blue, white and tricolor flags, also announced that it had previously reclaimed the agency in the mainland of China.

Disheng did not respond to the question of ending the agency cooperation, but it said there were many other companies.

Actually, the experience of Disheng was not a case.

As early as January 2008, MontBlanc announced the recall of the agent of Shanghai Ruixin clock Co., Ltd. in 2008, Dunhill, the menswear brand of the group, gradually recovered from Wenzhou, Ningbo and Hangzhou.

On the Coach side, the recovery of Chinese retail business from the agent Junsi group started in September 2008 and was not completed until April 1, 2009.

Only 5 tourism retail outlets are operated by third party retailers.

Coach said that Junsi group is still providing Coach with logistics, warehousing and technical assistance.

We can easily find out that

However, not all partners can "break up" peacefully after such expiry.

A cause for concern in the industry is that after 5 years of cooperation in early 2008, MontBlanc announced the recall of the agent of Shanghai ruisin watch Co., Ltd.

The two sides argued so much that they went to court.

Looking back at the development strategy of the global luxury brands in the past two years, at least 1/3's luxury brands have or will cancel the agents this year and choose to operate directly in China. Almost everyone is asking a question: is the luxury agency mode really coming to an end?

First of all, why do luxury brands choose to break up?

The most important reason for luxury brands to choose direct outlets is that the interests of agents and brands are different. The former seeks the maximization of short-term profits, and the latter pursues the maximization of brand image and profits on this basis.

So despite the symbiotic symbiosis, the interest game between luxury brands and agents has never stopped.

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For these luxury brands, the early entry into the Chinese market relies on agents to be expedient.

Before 2004, China's market regulations were limited, and the first batch of large scale private foreign trade companies became the advance force of luxury brands entering the Chinese market. These agents were more familiar with the Chinese market, and some already had ready sales channels.

At that time, the mode of cooperation between agents and luxury brands was generally: brands sold to agents at a certain discount, agents were responsible for opening shop costs, personnel recruitment, etc. brand names were given support in store image, agents were responsible for handling inventory and enjoyed the right to operate in a certain area.

There is no restriction on parallel importation in China, and a brand has several agents at the same time.

For example, Zegna, which came to China in the 90s of last century, is one of them.

At that time, the Italy fashion brand wanted to open its shop in a five star hotel and sell its products to foreigners travelling to China. It found a local partner, Wenzhou Xia Meng company.

Since Xia Meng helped China enter China, Zegna's sales in China have increased by 20% annually since 1991. Now China is Zegna's fourth largest market in the world.

"Today, the brand has gone through some experience in the market, and has reached the stage of recycling."

A staff member in a luxury Brand Company said that bypassing agents can get the difference on the one hand, and on the other hand, brands can enter the retail level, thereby defending the image of the brand.

This approach directly leads to a serious psychological imbalance among agents. From their point of view, cultivating a market requires a long period of investment, publicity and promotion, shop decoration and distribution, and several tens of millions of dollars in the past few years are normal.

Unfortunately, because brands control the source of goods, agents are often in a weak position in front of the brand.

Now, where are the agents who are forced to break up with luxury brands?

One situation is that more and more agents begin to build their own brands, hoping to have a good reputation in the industry.

Some smart agents often talk about new brands before the end of a brand agent.

What is more direct is from "Party B" to "party a".

The founder of the event, Disheng, bought the French brand Dupont head for $about 50000000 in 1987.

In China, there are sporadic examples of agents buying brands.

However, acquiring a powerful brand to get rid of the situation of being controlled by others is still a dream for most agents.