LV Suffers From LOGO Fatigue In China, Slowing Sales In China

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A big city like Shanghai is full of LV bags, Gucci purses and Omega watches.

Now consumers try to avoid buying products that are highly recognizable logo patterns, but prefer to buy some unusual products.

"Along with

With the maturity of the industry, Chinese people are more and more experienced in purchasing luxury goods.

It's not just for showing off. "

Euromonitor luxury research global president Fflur Roberts said.

According to HSBC estimates that after the collapse of the Lehman brothers bank in 2008, consumers in Europe and the us prefer to choose low-priced luxury goods, which may lead to LV and

The reasons for the sharp decrease in sales volume.

Until recently, they have reversed the situation and sold more than half of their bags in the second largest economies in the world.

Such sales also take place on other old luxury goods, such as Bottega Veneta (micro-blog) and Yves Saint Laurent, which belong to PPR luxury group.

Although this year's economic growth is slowing down, demand growth has sounded the alarm, but they still achieve a three fold increase in sales.

Cheaper package manufacturers like Coach (micro-blog) may benefit more, as more and more consumers turn to investment packages to avoid cash devaluation.

Continuous consumption

"Chinese consumers still have strong spending power, but their consumption patterns are totally different.

The luxury companies now need to spend more time on consumers than they did five years ago.

This is the question of balance. "

Uch Okonkwo, President of Luxe Corp, Paris luxury consultant company, said.

China's gross national product grew by 7.6% in the second quarter compared with earlier this year, the slowest in nearly 3 years.

According to Euromonitor (European business market research company), China is the world's fifth largest consumer of luxury goods. In 2011, the total consumption of luxury goods reached US $92 billion.

Large scale price increase

Both LV and PPR's Gucci and Burberry responded. They increased the price of the product and introduced more animal fur products, such as Gucci's $4100 boa snake shoulder bag and Burberry 6000 pounds alligator hand bag, and at the same time raised the brand image.

However, recent sales reports show that such a strategy is not effective.

Burberry said sales in the same store have declined since August of this year, and Chinese tourists travelling to Europe spend less and less money on windbreaker and other products.

"We are the first to report the drop in sales, but we will never be the last one."

2013 at the end of the spring and summer conference in London, Burberry's CEO Angela Ahrendts said.

After the September 19th Milan fashion week Gucci conference, CEO Patrizio Di Marco declined to comment on the company's performance.

The PPR group will issue its third quarter financial statement in October.

A spokesman for LVMH luxury group said it will also issue quarterly financial statements next month, refusing to comment on the sales of Vuitton.

HSBC forecasts that Chinese consumers account for about 25% of the world's luxury sales.

Logo aesthetic fatigue

As more and more domestic consumers travel abroad, it is found that designers' clothing and accessories are half cheaper than domestic prices in European and American stores, which has led to a gradual slowdown in luxury goods sales in China.

Ahrendts also stressed that the ten year national leaders' links also affected the sales of luxury goods, because many people slowed down the pace of gift giving, and finally waited to see who really was in power.

Prada's bag series now likes leather material better than LV. It realizes that products can be differentiated from LV with less logo products, so that consumers of LV can provide another option.

Prada chief said yesterday that although the economic situation is getting worse and worse, the same store sales have not declined in the past two months.

"LV, Omega and other big brands have already shown signs that they are experiencing brand aesthetic fatigue because they are the first to enter the market.

We summarize this as a "preconceived weakness".

HSBC analyst Erwan Rambourg wrote.

Luxury "generalization"

LV has 39 stores in China, Gucci has 54 door stores, Burberry has 66 door stores, and Hermes has 21 door stores.

And Hermes raised its sales growth target in 2012 last month, because the first half of the year proved that they underestimated the needs of Asian consumers.

The so-called absolute luxury sector has always been the competitive advantage of Hermes and the fastest growing part of the market. Until 2014, this sector will continue to maintain a good momentum.

Hermes CEO Patrick Thomas warned the manufacturers of scarves and Birkin bags in August 31st this year, because sales of these items increased by 25% in the first half of Asia.

Paris's company estimates that sales will not drop in the second half of this year, and plans to protect the product's image by controlling store expansion.

In the next five years, there will be more than 20 stores in the world.

More warning

Burberry's unexpected warnings made some analysts even more worried about LVMH group.

UBS (Swiss bank) Eva Quiroga has reduced the credit rating of LVMH to the middle level, reducing the estimated value of sales of clothing and other leather products in the second half of the year.

This is the largest and most profitable business of LVMH group. Revenue will increase by five percent to six percent, down 10 percentage points from the first half of 2012.

Quiroga also predicts that LVMH's gross revenue will increase by 8.5% in 2012, which has dragged the hind legs of the European luxury market by an average of 9.2%.

The luxury goods of Hermes and PPR group may be better, the growth is between 12% and 13%, but the Gucci of PPR group may continue to decline.

Prada estimates that sales will increase by 15%.

The beauty of luxury lies in their scarcity, which makes them very expensive.

You don't want to spend a lot of money on things that are not scarce.

"Rahul Sharma, founder and general manager of Neev Capital, concludes.