Luxury Goods Enter China'S Small City &Nbsp; Two Or Three Tier Cities Have Great Potential For Consumption.

In 1959, on the eve of 10th anniversary founding of the people's Republic of China,

But in October of 2011, when you personally stand on the streets of Daqing on Sunday afternoon, you will find that this 52 year old base for the construction of new China "black gold" is becoming a luxury gold mine in the world.

Pedestrians carrying luxury bags can be seen everywhere at the new shopping mall in front of the New Mart mall.

In just a half hour, the reporter saw 6 LV, 4 Chanel, 4 Gucci, 2 Dior and 2 Celine.

These luxury owners told reporters that because Daqing did not have these brand stores, they used to go to Harbin, Dalian, Beijing and even Shanghai to buy, of which Harbin was only 1.5 hours away.

According to Bain's 2010 China Luxury Market Research (Bain report), about 67% of mainland China's luxury market growth in 2010 came from new consumers, and they came from a large number of two or three line cities.

"At present, the average annual growth rate of Ermenegildo Zegna in the two or three tier cities is 25%, and the growth rate of some cities is even higher than 30%.

In an exclusive interview with this newspaper, Ermenegildo Zegna global CEO, Zegna CEO, revealed this sensitive figure without any cover.

20th anniversary of China's stores and more than 60 stores nationwide, Zegna is clearly satisfied with this game.

Daqing Omega sells more than ten watches a day

According to the bain report, only 30% of the Chinese affluent stratum live and live in the first tier cities such as Beijing and Shanghai, and more than 70% live outside the first tier cities.

As the main market of luxury goods in the future, the two or three line cities are close to consumers in Shanghai, Beijing and other front-line cities. The amount of consumption is almost equal to that of consumers in the same tier of cities.

"The big engine of the two or three line city is booming."

This is what Zegna described.

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"There are about 7 commercial buildings with annual sales of over 1 billion in Heilongjiang, of which 2 are in Daqing, and the New Mart is more than 16.7 billion."

Daqing Commerce Bureau spokesman Chen Wanli told reporters that Daqing's purchasing power really attracted the attention of many brands.

Data show that in 2009, the retail sales of per capita consumer goods in Daqing amounted to 17937 yuan, which was more than 15207 yuan in Harbin.

The purchasing power of these cities is too turbulent. Some brands have to lay down their positions in order to seize the opportunity and appear in areas that are usually not possible.

On the first floor of the New Mart Plaza in Daqing, the list headed by Omega, Longines (micro-blog) and Girard Perregaux (PERREGAUX) is surrounded by supermarkets and cottage promotions. Longines is only 10 meters away from the supermarket, and Omega is separated from McDonald's by only one wall.

However, such a lot does not reduce the city's enthusiasm for luxury goods.

According to the salesperson, the Ulysse Nardin (Athens watch), which has only been in the shopping mall for a year, has just sold a tourbillon watch worth more than two million yuan last month, and the Girard Perregaux price range of 140 thousand ~40 yuan has also been quite good for a year.

"In addition to purchasing power, brand recognition is also a big reason for Daqing consumers to buy luxury goods."

Chen Wanli analyzed.

Because luxury consumption has only risen rapidly in China in recent years, the two or three line consumers are not familiar with all kinds of related information, which results in their rapid learning through imitation.

Therefore, when consuming luxury goods, it is not rational enough. It belongs to the stage of material and conspicuous consumption. It pays more attention to brand awareness and the frequency and quantity of luxury goods.

"At present, China's first tier cities of commercial real estate core areas of property, is a brand competition for Chinese and foreign brands.

The cost of such a settlement is very high.

And emerging businesses such as Daqing are rising in the two or three tier cities, and the surrounding customers have great potential for consumption.

Chen Wanli said.

Some commercial buildings have long been unable to control. In November this year, Wanda Plaza, which has a shopping area of 160 thousand square meters, will be officially opened.

In addition, by the end of this year, four other comprehensive business circles, including Hualian Commercial Building, Tang people center, world Olympic Center and new trend international, will gradually enter Daqing.

According to Daqing media reports, "with the investment of these new commercial bodies, many luxury goods both at home and abroad will also come to Daqing market, such as Versace, Vacheron Constantin, Cartier, Piaget, Rolex, Tudor, Gucci and so on."

"The survey shows that 39% of the respondents in second tier cities believe that the purchase of luxury goods will increase in the coming year, and the proportion is 3% higher than that in the first tier cities."

Rhodes's public relations fresh "2010 China luxury goods report" shows: 57% of the second tier cities respondents said that the average annual luxury consumption amount was between 10 thousand ~5 yuan, while 36% of respondents were motivated by business gifts, while the number of first tier cities was 28%.

This has also become a driving force for luxury goods.

This year, the Gucci brand was founded 90th anniversary. According to official information, since its entry into the Chinese market in 1997, as of the end of October this year, Gucci stores in China are expected to reach 45 cities and 31 cities.

In 2009, 9 stores were opened in Changsha, Xiamen, Fuzhou, Wuhan, Shijiazhuang, Ningbo and Shanghai 1, Beijing 2; in 2010, 10 stores were located in Changzhou, Zhengzhou, Zhengzhou, Zhengzhou, Taiyuan, 2, 1 and 2, 1 and 1, respectively.

Among them, there are more media reports that the first day of sale in Zhengzhou broke millions, and the first month of Hefei sold tens of millions of news.

"In this regard, Omega is a pioneer, because we have already put shops in second tier cities, and even many three or four line cities have set foot in it.

And this market reaction is very amazing. If you look at the sales performance of Omega, you will find that sales are by no means the big head of North Canton, and the whole Chinese market is very active.

Omega global CEO Ou Kehua (Stephen Urquhart) told reporters that during the period of 2001~2005, Omega sprouted into the idea of two or three line cities and began to pay attention to cities in the mainland and Northeast China.

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The World Luxury Association 2010~2011 official report shows that more than 100 international top brands are accelerating the layout of luxury goods market in China. The total number of franchised stores has reached 1000. Apart from big cities such as Beijing, Shanghai and Guangzhou, the branches of central and western cities have mushroomed.

LV has opened 27 stores in 22 cities in China, including Changsha, Xi'an, Qingdao, Xiamen, Wuxi, Wenzhou and other two or three tier cities. Ningbo and Hangzhou have gathered almost all of the international luxury goods.

For the expansion of the two or three tier cities, gill Zegna was very satisfied, he told our reporter: "in fact, as early as entering the early days of China, we knew very well that for the brand like Zegna, the key to success is certainly not just to catch the first tier cities, but the bigger markets are in the two or three tier cities.

This "occupation" to the two or three tier cities can be a new store, or from a small shop to a bigger one.

We have opened 10 new stores in mainland China this year.

In particular, some cities in Western China have become our new cities.

Problems of land and human resources

Before entering these cities, the maturity of the market is the primary concern of Omega.

"We will consider the consumption level, consumption potential and consumption environment of the city, including the location of shopping malls, the brand around the shops (not necessarily luxury goods, but at least boutique), and we need a good working team.

But we do not have a fixed list, or we need to adjust it to local conditions.

Sometimes, some cities already have their own high-end consumption points, and some luxury brands have already gathered around us, so we will be happy to enter them.

Ou Kehua said.

Obviously, although the market potential of the two or three tier cities is huge, there is still a huge gap between the supporting market and the first-line market. Therefore, luxury goods manufacturers need to respond to local conditions and cope with them flexibly.

Ou Kehua believes that site selection is the first problem.

First of all, the retail space of the two or three tier cities is very limited, and it is necessary to have rich local experience to find and store the appropriate stores. Most luxury brands have limited familiarity with the two or three line city retail property market.

Secondly, the local shopping mall in the two or three tier cities lacks experience in cooperation with luxury brands, while luxury brand management concepts and operational standards may be quite different from local stores.

Some large shopping centers can not meet the requirements of luxury brands even after being renovated. The expected market performance of new shopping malls is difficult to determine in the short term, and the risk of rush into the market is great.

In addition, recruiting and retaining the right store staff in two or three tier cities is another problem for luxury brands.

It often takes months to train a professional store, but excellent salespeople are still very easy to lose.

Zegna said that a suitable luxury store salesperson should have both "global experts' opinions on luxury goods and" local expertise ".

The former includes how to make a comprehensive and appropriate combination of products, how to display products better, and how to develop marketing strategies that can enhance core values. The latter mainly refers to understanding local laws and tax policies, familiarity with the development of local retail market, and effectively identifying, developing customers and communicating with them.

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No longer "sell" simply.

Zegna said: "as the top three brand of China's luxury retail industry, we should not only occupy more cities and markets, but in the final analysis, we want to occupy the wardrobe of these customers."

The bain report shows that in 2009, China's new consumers increased sales of luxury goods by 7 billion, up from 10 billion in 2010.

In the face of rapidly growing new customers, luxury stores that want to "occupy wardrobes" need to face more than just "selling".

There is a view that in the next 1-3 years, the first tier luxury brands will face the challenge of China's high-end market to shuffle them.

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 most people recognize and choose a more high-end and more niche route.

On the other hand, the high level consumers in Beijing and Shanghai have become increasingly mature and will gradually tend to buy luxury goods that highlight their individuality.

This will embarrass the mainstream luxury goods such as LV and Gucci that have entered China earlier.

Although many professionals believe that the future of mainstream luxury goods such as LV and Gucci is in the two or three line market, can they maintain the brand image that has long been high?

In response to this situation, Alfred Dunhill's Asia Pacific sales director talks about the strategy of his own brand: "our business keeps growing in two independent channels.

First of all, through the retail driven mode, the brand will continue to open flagship stores in the first tier cities, and further promote the Dunhill house in Shanghai to enhance our brand image. At the same time, we will develop two or three tier cities, because there are huge business opportunities there.

With the continuous consolidation and enhancement of our brand in the Chinese market, we can invest in the second tier cities without weakening the brand image in the major cities. "

"It does not mean that the opening of new shops means that this place can be concluded. The existence of shops is aimed at better meeting our customers."

Zegna said that the Chinese market has become more and more important and can be compared with the whole European market.

"First of all, in this huge market, the aesthetic taste, shape and even shopping habits between cities and cities are different. For example, men in Harbin and Guangzhou have different requirements for Western-style clothes.

People hope that their different dress wishes can be met. In different cities, we provide more formal men's clothing for our customers in Beijing. In contrast, you can see more styles of casual wear in Chengdu.

That is to say, when we enter these cities, we must maintain the flexibility of all aspects of brand services.

In addition, Zegna also believes that shops in second tier cities bring more than sales, but more about communication between brands and customers.

"In the past, when we didn't have so many stores, many other city customers had to go to Beijing, Shanghai and even Hongkong to buy goods. Even though they had enough purchasing power, they could visit shops only two times a year, even though they were restricted by geography.

And when they have shops in their own cities, this number will turn into ten times a year or even more.

Customers can feel and even learn how to dress on different occasions to understand the current fashion trend.

The relationship between this shop and our customers is our focus in the past 20 years.

That's why we have a team of 800 people scattered across China.