Luxury Gold Nuggets In China Market Is Blocked By Fast Speed And Poor Service Progress

In the 90s of last century, it was modeled on the pattern of The Peninsula Hong Kong. The Royal Palace of Wangfujing in Beijing converted the underground 1 and 2 floors into boutique corridors.

In 1992,

Before and after 2000, luxury brands shifted their goals to the Chinese public.

There is no shortage of such scenes: white-collar workers who earn only three thousand or four thousand yuan a month, eat salted vegetables and instant noodles, save a few months' salary for a LV bag, and then squeeze the subway and buses with their bags on their backs.

The news said that because of the increasing number of Chinese buyers, luxury stores in France had to limit people's traffic and change their practices for many years, and continue to open their businesses on weekends.

The city is full of LV.

In 2004, luxury goods were studied in France.

High tariffs lead to China

In 2009, luxury brands were hit hard all over the world. European luxury goods sales fell by 4%, while the US fell by 20% and Europe by 15% to 20%.

Sales in China alone increased by 20%.

In 2010, China's luxury goods consumption stood at 6 billion 500 million US dollars for the first time in 3 consecutive years.

By the end of December 2011, data from the World Luxury Association show that the total annual consumption of China's luxury goods market has reached $12 billion 600 million (excluding private aircraft, yachts and luxury cars), accounting for 28% of the world's share and the world's top.

According to the World Luxury Association report, in 2012, after the peak consumption of new year's day, Spring Festival and Valentine's day, China's luxury consumption will exceed 14 billion 600 million dollars.

French CLSA forecasts that by 2020, China's luxury goods market will reach nearly 170 billion euros, and 44% of the world's luxury goods will be sold to Chinese people.

In 2010, LV had 35 stores in 28 cities in China, accounting for nearly 40% of global sales, while the traditional luxury consumption market accounted for 19% and 23% of Europe and the United States respectively.

As of the end of June 2011, PRADA's sales in China were 223 million euros, up 38% over the same period last year.

PRADA CEO CarloMazzi also said that in the next two to three years, PRADA's annual sales in mainland China will increase by more than 3 times.

It is not comprehensive to evaluate the contribution of Chinese market to luxury brands solely by domestic data.

A considerable portion of luxury sales in Europe and the United States are also supported by the Chinese.

In South Korea's duty-free shops, the most expensive tourist has changed from Japanese to Chinese.

In the overseas media reports, because Chinese people like Cartire, Cartire's sales in duty-free shops in Korea rapidly increased from tenth to No. 1.

GianfrancaD, Ignazio, an official in charge of economy, finance and commerce at the Italy Embassy in China, said at a press conference of the World Luxury Association that 60% of Italy's luxury goods were sold to Chinese people.

According to the World Luxury Association report, in 2010, Asians bought 69 billion dollars of luxuries in the European market. Among them, the Chinese consumed nearly 50 billion dollars, which is 4 times the domestic market.

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Scramble for two or three tier cities

The huge expansion of luxury brands in the Chinese market has become a trend.

"More than 70% of luxury brands will pfer their original plans in Japan to China in the coming year."

Ouyang Kun said.

Public information shows that the US brand COACH plans to open about 30 stores a year in China in the coming years, and the new store will mainly open in two or three line cities.

At present, COACH has more than 60 stores in China.

PRADA plans to increase the number of stores from 15 to 45 in the next two years.

In 2009, BURBERRY has 50 stores in mainland China, but the brand's plan is to increase the number of stores to 100 in the short term.

"The main expansion direction of these brands is the two or three line city."

Ouyang Kun said, now, Ningbo, Hangzhou, these second tier cities, the number of luxury brands, has long been comparable to Shanghai and Beijing.

From a commercial point of view, the development of luxury goods in the two or three tier cities is wise and successful.

In the 2010-2011 annual survey report on luxury goods consumption in China, the top three of China's luxury consumption ability are Hangzhou, Wenzhou and Qingdao.

According to McKinsey's survey, in 2015, 75% of the rich will live in two or three line cities and some non coastal cities. Their spending power is almost equal to that of consumers in the same tier of cities.

Goldman Sachs predicts that the number of people willing to spend luxury goods in the next 5 years will increase from 40 million to 160 million, mainly in two or three line cities.

"In 2010, GUCCI opened a store in Wenzhou and completed its annual sales in less than half a year. In Zhengzhou, its sales volume was over $3 a day before its opening.

LV in Chengdu flagship store, trial business for a day and a half, the sales volume is 5 million yuan, the annual sales volume of Chengdu's direct selling stores is 900 million yuan, but the LV's most profitable store in the world is in Wenzhou; the first floor of Hangzhou Tower, six or seven of the luxury stores are all national single store sales champion, and the monthly sales volume of $30 million is normal.

CEO Zhao Yanbing, the American business consultant, told orient weekly.

Zhao Yanbing worked abroad for many years in the luxury goods industry. In 2008, he founded the company, which specializes in two or three line developers and luxury brands in China.

Fast speed and poor service

Before and after 2008, luxury brands paid large sums of money to reclaim domestic agents on a large scale.

The most striking events in this wave of agency reunification include: in 2007, Armani set up a sole proprietorship company in China and announced the opening of a direct store; in January 2008, MontBlanc regain the agency power of Shanghai ruisin watch and clock company; in May, COACH announced the acquisition of COACH retail business in Hongkong, Macao and the mainland in Hongkong Junsi, and Dunhill also gradually regain the agency power in Wenzhou, Ningbo and Hangzhou this year.

In July 2010, BURBERRY bought its franchise partner KwokHangHoldings, a Burberry franchise business in mainland China for 70 million pounds.

At that time, the general theory of luxury brands was that the profit focused agents could not agree with the brand in terms of brand training, image maintenance and so on.

The implication is that agents only focus on short-term interests, but can not help brand growth.

Zhao Yanbing said, but after the recovery of agency rights, luxury brands have not changed much in brand image and service. "The only change is that the speed of luxury brand shops has greatly accelerated."

Wu Xiaojia, who buys luxury goods as an industry, tells "Orient orient weekly" that the quality of luxury brands in China can only be described by "bad".

"In Europe, people's understanding of luxury goods is: products that are worth repairing.

Store staff are also very enthusiastic about customers who want to repair their products, because these people are loyal customers of the brand.

Wu Xiaojia has been in Europe for 9 years, and has also gone to luxury stores to have sunglasses, pens, leather bags and other luxury items.

"Do not need invoice, follow the repair, the efficiency is very high, generally do not charge, even if it is overhaul and repair, maintenance costs are low enough to make you feel embarrassed."

After returning to China, he enjoyed the treatment of roadside stalls.

"In France, a few minutes to solve the problem, in China, you need to wait for more than 1 hours, and then the other told you, need to wait two months, expensive maintenance costs, not to mention."

"In a few years, the overseas purchasing business will not work.

It is because of foreign purchases, domestic stores do not repair you. "

Wu Xiaojia said.

In 2010, about 67% of the mainland's luxury market growth came from new consumers, which means that the loyalty of Chinese luxury goods consumers is very weak.

Ouyang Kun said that although this is also a common problem in luxury emerging markets, luxury brands in China are not very careful in managing customers.

If the service is not done well, the brand image of the luxury brand is not well maintained.

Apart from the same level of service and price, and no improvement in the accusation, luxury brands continue to produce more negative news.

In October 2011, GUCCI was hit by a labor abuse scandal at a flagship store in Shenzhen.

In an open letter to the top management of Gucci employees who resigned from the GUCCI store, the employees cited a number of instances accusing GUCCI of ignoring employees' "normal physical needs".

This event, known as the "sweatshop" of luxury goods, ended in a statement issued by the public relations department of Gucci headquarters in China, saying that GUCCI "does not allow nor tolerate the misconduct stated in the complaint."

Gucci has conducted a thorough investigation of relevant complaints and has taken a series of measures, including the removal of relevant managers and shop supervisors, establishment and high-level direct and confidential dialogue channels.

GUCCI did not mention the result of the investigation and whether it would compensate employees.

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The last time to collect money

The high price is not up to the standard of service, coupled with the large-scale shop opening plan, so that the industry has a different interpretation of the luxury brand moving towards the two or three tier city.

In Zhao Yanbing's view, the luxury brand's recovery of agency power and large-scale entry into the two or three tier city are actually the last money movement before the collapse of luxury brands.

In most cases, luxury brands can start to make a profit from the very beginning, instead of taking huge cost pressures.

Luxury brands open stores, the biggest cost is rental and distribution.

At present, the rent on the first floor of Hang Lung Plaza in Shanghai is about $10 per square meter per day. The rent of many cities in the two or three line is less than 1/5, while the turnover can reach 2/3 of Shanghai store.

Lu Qiang, CEO of Shanghai's rich guest group, said that in addition, the pursuit of luxury brands by commercial real estate in the two or three tier cities and the competition between them also provided a great number of opportunities for luxury brands.

Lu Chunhua, a deputy general manager of a shopping mall in Zhejiang, is deeply touched by this.

"Real estate development is advancing to the two or three tier cities, and the bad habits of luxury brands have been moved to all parts of the country."

Lu Chunhua said that in Beijing, Shanghai and other first tier cities, luxury brand entry has always been considered as one of the most effective ways to increase commercial real estate value.

"How many luxury brand shops on the first floor directly affect the rental level of the whole property."

Lu Chunhua said, but there are so many luxury brands, so developers must fight for brands in Shanghai.

Under normal circumstances, developers should subsidize the decoration cost of luxury brands with the standard of 20 thousand yuan per square meter. If the brand adopts the agent system in China, the developer will pay extra agents 2 million to 3 million yuan agent fees, and the first batch of stocks that some brands open when they sell their own stores, and developers should buy them out.

"Luxury brand shops not only do not require cost, but also make a lot of money."

Lu Chunhua said that because of the fierce competition in the commercial real estate investment of the first tier cities, "even the advertising and activity fees of the brand will also be shared by developers."

In Beijing and Shanghai, developers can make up for the loss of levees inside the embankment. "The introduction of luxury brands, though losing money, can raise the rents of other floors."

In the two or three tier cities, it is more difficult to achieve such a balance.

"In many commercial property, the first floor is full, brilliant, two floor, the third floor is empty, or the first floor is the international line brand, the two floor becomes an unknown brand."

Lu Chunhua said that despite the existence of luxury brands and harsh accusations, the model has been growing in the country.

The expansion of the two or three tier cities is aimed at maximizing profits, but it also speeds up the "civilian" process of luxury brands in China.

"In the next one to three years, the loss of the most high-end customers of luxury brands, instead of taking the two or three tier cities as the focus of the market to maintain sales performance, will become the norm."

Ouyang Kun said that in 2010, about 67% of the growth of the mainland's luxury market came from new consumers. If luxury brands could not convert new consumption into loyal customers, such development could soon come to an end.

Ouyang Kun said, "LV stores in Beijing, Shanghai and other first tier cities will decrease annual sales by about 5% to 10%.

Although they are also worried about the loss of high-end consumers, this trend is not easy to reverse. "