GUCCI And LV Will Develop Two Or Three Tier Cities To Gain Market Support.

The World Luxury Association released a report in Beijing yesterday that China will surpass Japan as the world's largest consumer of luxury goods in 2012 after the peak consumption of new year's day, Spring Festival and Valentine's day.

However, in the next 1 to 3 years, luxury brands like LV and GUCCI, which are very popular in China, may be "trapped".

China's luxury consumption exceeds Japan next year

The blue book of world luxury report released yesterday by the World Luxury Association said that by the end of March this year, the total consumption of China's luxury goods market had reached 10 billion 700 million dollars (excluding private aircraft, yachts and luxury cars), occupying 1/4 of the global market share.

China has become the second largest consumer of luxury goods in the world.

In 2012, this figure could reach US $14 billion 600 million, enabling China to sit on the global scale.

At present, jewelry, luggage, fashion, clocks and cosmetics account for the top five of China's luxury consumption.

In contrast, there is little room for growth in traditional luxury goods consumption countries such as Japan and the United States.

Japan has been the world's largest luxury consumer market. By the end of May this year, luxury consumption accounted for 29% of the world's total. However, due to the impact of the earthquake, the downward trend has emerged.

"More than 70% of the brands may pfer the Japanese business plan to the Chinese market in the next year."

The report says.

In fact, Chinese consumers have already demonstrated their amazing consumption power overseas.

The report pointed out that Asian luxury goods consumption in the European market last year totaled 69 billion US dollars, and China consumed nearly 50 billion dollars, which is 4 times the domestic market.

"The future of LV and GUCCI is in the future.

Luxury products in the world regard China as a "big customer" and expand it in a big way.

According to the report, at present, China can find luxury brands near 2/3 in the Chinese market. It is estimated that by 2013, the remaining 1/3 blank may also be filled.

However, luxury brands have to adapt to the new challenges in China.

"The polarization of China's luxury market is inevitable."

Ouyang Kun, China's chief executive of the World Luxury Association, believes that in the next 1 to 3 years, the first tier luxury brands will face the shuffle of China's high-end market.

On the one hand, with the continuous influx of new consumers, the level and positioning of luxury goods will become more and more blurred. In order to show their identity, some high-end consumers have to give up the luxury brands that most people like and choose more advanced products.

"It's like if most subordinates use LV and GUCCI, the boss will buy Hermes."

On the other hand, Ouyang Kun pointed out that the high level consumers in Beijing and Shanghai have become increasingly mature, and will gradually tend to buy luxury goods of "self individuality" and leave the public orientation.

All in all, these have embarrassed the mainstream luxury goods such as LV and GUCCI which have entered China earlier.

"LV stores in Beijing and Shanghai, where high-end consumers are concentrated, store sales decline 5% to 10% a year.

They are also stepping up the adjustment of the mode, hoping to retain the top consumers, but the result is still disappointing.

"The future of LV and GUCCI is in the two or three line market."

Ouyang Kun thinks.

According to the report, households with a monthly income of 100 thousand -30 yuan or more in China's second tier cities spend 186 thousand yuan on annual luxury consumption, which is higher than that of similar consumers in the first tier cities.