It Is Unwise For Luxury Brands To Rise In Price.

The sharp fall in the euro exchange rate has made many ordinary Chinese full of enthusiasm for European luxury goods.

But what kind of impact will the euro fall on luxury goods and luxury goods companies? Rising prices must be an unwise option.

The brand side should make more use of the weakness of the euro to push the winter luxury sales season to a climax and win by "quantity".

However, the sharp fall in the euro exchange rate has made ordinary Chinese people full of enthusiasm for European luxury goods.

But what will be the impact of the fall of the euro on luxury goods and luxury goods companies?

Luxury companies are old, multinational companies with hundreds of history. They have experienced the ups and downs of the economy in the past hundred years, and have a very mature exchange rate risk prevention mechanism in their internal management mechanism.

Because these companies are multinational, they have euro market, dollar market, yen market and RMB market, so they will design a very professional foreign exchange hedging mechanism in their headquarters to avoid the risk of exchange rate.

The two multinational companies I used to have had such a mechanism, and even in the financial statements of my China region, I could see the profit and loss of this column.

So from this point of view, we are worried that the price adjustment of luxury goods companies is unnecessary because of the decline in exchange rate.

Of course, luxury is enough.

In the market, supply and demand is the main price determining factor. When the euro goes down, luxury goods will become cheaper for other market consumers.

If everyone is in the market, there is a possibility that the price of the brand can be adjusted accordingly.

But the premise is to do so.

One thing to think about.

Who are the consumers of their brands? Europeans themselves? Americans? Japanese? Chinese? Russians? Gulf Arabs? In fact, the answer is long ago. Consumers in emerging markets, like the Chinese and Russians, probably account for less than half of the total, plus the Americans, Japanese and Arabs. The consumption of luxury goods is estimated to be very large, which may not be more than 20% of the consumption in the euro area.

In this way, luxury brands seem to be "reasonable" in order to avoid exchange rate risks or gain greater profits.

If Chinese consumers want to take the opportunity to "copy the European luxury goods", they should act quickly. Before and after the Spring Festival, it is estimated that the wily luxury companies are already taking advantage of the price increase.

However, I personally think that they will certainly be cheaper in raising prices than in the domestic market and in Hongkong.

In this round of euro decline, luxury Brand Company will have a "life to death" game.

Who can leverage the leverage of the euro?

When consumption is bad, we can take advantage of the exchange rate to seize overseas consumers, especially Chinese consumers.

On the contrary, the sluggish sales of luxury goods will cause them to languish for at least 3 years.

Think about how to make Chinese consumers buy a bag and save two tickets to Europe.

For brands, I personally think that raising prices must be an unwise option.

The brand side should make more use of the weakness of the euro to push the winter luxury sales season to a climax and win by "quantity", not to mention the fact that luxury companies actually do not have exchange rate losses (because of the hedging mechanism mentioned above).