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Luxury Big Market In China Began To "Go It Alone"

2011/1/17 9:44:00 118

Goodbye, Mei Mei.

to one's heart's content

Department store

It is a high-end retail business retailing of the Hongkong Hua Kong business management company affiliated to the Kowloon warehouse group.

brand

Since its entry into the mainland market in 1994, it has successfully invested in luxury goods in Shanghai for the first time, and has invested in Beijing, Tianjin, Xi'an and Chengdu, but its performance has not been satisfactory in recent years.

In recent years, stores in Tianjin, Xi'an, Shenyang and Beijing have been closed down.

Director of the DRC music foundation, USA

Luxury goods

Hu Jianqiang, a research expert, said that Junsi group belonged to a group belonging to Meimei department store. It was the largest luxury brand agent in the country. The rise of MEEI department store was inseparable from the selfless assistance of the "brothers". Gucci and Prada both succeeded in becoming the top brands of the US Department store.

Nowadays, Junsi group has lost many agency rights of luxury brands, and its department stores are naturally affected.

Hu Jianqiang said that the decline of the US Department Store is also related to its innate "arrogance". The threshold of membership is very high, and there is no promotion and promotion.

"The relationship between department stores and consumers, distributors and manufacturers has become more subtle," said Mu Feng, a senior marketing planner.

Foreign brands will no longer see your face.

Once the threshold is too high, luxury goods will choose to cooperate with other shopping malls or make direct selection.

He said that with the surge in the consumption power of the Chinese market, more and more luxury goods chose to build their own stores in China, and the "two landlord" department stores were gradually being built up.

"The major luxury brands have shifted to direct businesses, which is a big trend."

Cui Hongbo, chief executive officer of Lian Zhi Da brand management consulting company, believes that luxury brands generally adopt the practice of opening stores. "Luxury brands in tier one cities are more and more inclined to set up independent stores and flagship stores.

Unless the location is very competitive, shopping mall will gradually pform into a supplementary sales channel.

Cui Hongbo said that only by changing the mode of operation can the department store get new life.

It is reported that the US Department store has begun to choose to keep pace with the times and its pformation will start in Chongqing.

It announced the investment of 100 million yuan, closed the door "face change", in the local end of 5 years of department store management model, pformation into "brand flagship store + department store".

The ambition to break up

In fact, many luxury brands are already surprised to see that China's strong luxury consumption capacity has begun to "hide" in China.

As early as January 2008, MontBlanc announced that it had regacted the agency power of Shanghai ruisin watch and clock company. In 2008, Dunhill, the menswear brand of the group, gradually recovered the agency rights in Wenzhou, Ningbo and Hangzhou. In September of the same year, the brand of Chlo, the brand of the peak group, announced that only one Suzhou restaurant was operated by the Hongkong agent I.T group. At the same time, Coach also recovered the retail business in China from the agent Junsi group.

On the Coach side, the Chinese retail business started from September 2008 in the hands of Junsi group, and it 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.

From this, it is easy to see that the "breaking up" process of luxury brands and agents can be described as painful and lengthy, often requiring a very long cycle.

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 their agents in China and choose to operate directly in China. Almost everyone is asking a question: is the luxury agency mode really coming to an end?

In this regard, experts analyze, 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, while 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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On the one hand, with the development of China's economy and the improvement of life, some people's pursuit of luxury life is becoming more and more intense.

According to the 2010 Hurun wealth report, mainland China now has 140 billionaires and 1900 one billion billionaires, while the number of billionaires is as high as 55 thousand.

The average age of the richest yuan in China is 39, 15 years younger than foreign countries, and the speed of wealth growth is faster.

The rich have an average of 3 cars, 4.4 watches and an average annual consumption of 1 million 700 thousand yuan.

This big cake reveals the ambition of luxury brands.

At the same time, experts say, in fact, for these luxury brands, the early arrival of the Chinese market depends on the situation of agents.

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 came to China in the 90s of last century.

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."

One industry insider 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.

The smoke of the Ming Dynasty

From the "rainy days" to "bold and resolute" to "bold and resolute", "the path of Ming Ming and repairing", the smoke of luxury brands in China has become increasingly strong.

An industry source said, at present, including India and other emerging luxury goods market is repeating the old road in China, and the Chinese market has reached the stage of luxury brand direct.

On the day of the end of April 2010, LV opened its seventh flagship store in the mainland of China.

Large luxury brands are making great progress in the Chinese market.

According to some of the data released previously, Ermenegildo Zegna plans to open more monomer stores in Beijing and Shanghai, and Burberry plans to open 4-6 new stores in China every year. LV plans to open two new stores in China every year. Prada plans to achieve 15 stores in China within one year, and Gucci hopes to open 3-5 new stores in China every year.

According to a rough report of Bain's report, 80 new luxury stores were opened in the first 8 months of 2010.

In fact, behind the resurgence of this agency, it reflects that the development mode of luxury brands in China has changed significantly. Luxury brands have changed from passive sale to active attack, and Burberry has regain the right of agency.

It is reported that according to the new cooperation agreement between Burberry and Kwok Hang Holdings, Burberry plans to invest 70 million pounds in cash to acquire Kwok Hang Holdings's 50 stores in the mainland and 85% of the company's shares.

For agents to upgrade from "buyers" to partners, a luxury industry veteran thinks this will accelerate Burberry's expansion in the domestic market.

According to the personage, the agent has the right to establish a brand to open a store. The cost of only one purchase is often as high as several million yuan. At the same time, the agent also needs to pay the daily operation expenses such as store rents and staff salaries. The high investment makes the agents cautious in dealing with the opening shop, which restricts the further expansion of luxury brands.

When the brand agent reclaims the power of agency and changes the mode of cooperation, the brand also becomes passive marketing at the marketing level.

Moreover, after the withdrawal of agency power, the brand does not need to continue to pay the agent's "intermediate fee". This part of the cost will "pition" to the profit return of the brand as the capital support for brand expansion.

"Compared to opening stores, integration of Chinese elements is the sign of luxury brands to force the Chinese market."

Yu Guanghua, chairman of Lotte intime department store, said that the brand business opened more stores in the market, and it only copied a large number of merchandise sold in Europe, America and Japan.

At present, many luxury brands have already treated the Chinese market as well as the European and American markets and Japanese markets. They have introduced commodities that incorporate local cultural connotations and signed local designers.

A few days ago, Hermes, a luxury brand with 18 stores in the Chinese market, announced that it would launch a new brand "up and down" in China in September.

It is reported that "up and down" is a "Chinese brand", which will be developed and produced by Chinese design team in China based on Chinese traditional craft and culture.

In the interview, the managing director of the North Asia sub district of Hermes said that the first store of "upper and lower" brand will be located in Shanghai, which mainly sells household products such as tableware and furniture with traditional Chinese cultural themes.

With the rapid development of China's luxury market, the relationship between luxury brands and the Chinese market is becoming more and more closely related.

It is understood that Burberry's Black Label and Blue Label are only available in Hongkong, China and Japan.

In addition, Levi Strauss & Co is also planning to launch a Chinese brand this year.

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The draught problem of "three monks"

It is worth noting that now, those who are forced to break up with luxury brands, where to go?

In the interview, reporters learned that a situation is that more and more agents began to build their own brand, hoping to have a good reputation in the industry.

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

More directly, from "Party B" to "party a".

Of course, the most famous example was the acquisition of the French brand Dupont head company, Shang Disheng, 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.

At the same time, another luxury mode of retailing, which is a proxy mode, is also quietly expanding.

The luxury brand store CASA MILANO, founded in October 2009, will open its first store in Guangzhou market after its three store in Shanghai and Dalian on the five apron (G5).

OUTLETS is also one of the most important channels for luxury goods.

Following the announcement of the Guangzhou friendship group's announcement of the joint venture Changlong joint venture to build a famous discount shop and Libai Plaza to launch the international famous brand discount shop, the Chinese luxury OUTLETS brand ballet rain project has also been announced.

Experts also pointed out that in the future, professional luxury chain agencies will continue to emerge.

For example, DRC will become the world's first professional chain store for luxury functional footwear. The first brand of world health shoes, Dr. Dr.Comfort comfort, has been established.

The opening of flagship stores in Financial Street shopping center in January 10, 2011 is an important step in China's DRC layout.

Chen Bing, an expert who has always been concerned about the sale of luxury goods in China, also said that the consumption channels of luxury goods will also be diversified. "One of the most important reasons for luxury is the restriction of sales channels. Whoever can master luxury resources will win."

He said that after the Customs General Administration 54 orders and other tariff policies, the domestic luxury market will usher in an explosive growth.

From the perspective of channel, luxury market will form a variety of channels such as exclusive stores, online shopping, luxury goods stores, OUTLETS and so on to compete for the market.

observation

Behind the strategic shift of luxury brands, in fact, luxury brands' active attack on the Chinese market is no longer satisfied with the channel level, and many luxury brands have extended their tentacles to the production process.

Although the brand image is highly valued and many consumers do not fully accept "made in China", driven by the maximization of interests, many luxury brands have moved factories to China with relatively low labor costs.

Since 2000, Coach has pferred more than 90% of its factories to Asian countries with relatively low labor costs.

Second years after the pfer, the effect began to appear.

It is understood that the gross margin of Coach commodity is up to 64%, even more than 62% of LV.

With the reduction of labor costs, this figure has jumped all the way to 77% in recent years.

In response, a business expert said that Coach's reputation in the domestic market was not as good as that of LV, and its product line pricing was also low, so that it could get such a high gross profit margin, benefiting from the compression of production cost.

Moving the factory to a relatively low labour market also gives Coach confidence in the company's future prospects.

According to a market report from Coach, by 2013, the market for handbags and accessories in mainland China, Hongkong and Macao will probably exceed $2 billion 500 million, far higher than the current sales of US $1 billion 200 million.

According to statistics, about 80% of the world's top luxury brands have entered the Chinese market.

In some provinces and cities in China, in order to introduce luxury brands, some shopping malls are willing to take the "down payment" method, such as decoration, to attract luxury brands to enter.

Analysis of the industry, luxury brands in China to recover the agency power, cloth factory shop, in addition to improving profit margins, it is possible to further control the right to speak Chinese luxury market.

The expansion of global luxury brands in China has entered an era of active growth.