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    The Luxury Market Is Facing A Revolution.

    2015/6/3 16:00:00 33

    LuxuryMarketRevolution

    On the morning of May 27th, there was a long queue in front of Gucci stores in China. This is unusual.

    In the past, such queuing purchases appeared overseas, and the purchase of "cheap" luxury goods is an important travel destination for many Chinese tourists.

    Luxury goods are really luxury products in China.

    Take the Chanel Le Boy handbag as an example, the price in China before the price adjustment is about 32700 yuan, and the price in Europe is about 3100 euros (about 20514 yuan), the difference is about 12 thousand yuan.

    After the price adjustment, the LeBoy handbag price in China dropped to 26000 yuan, rising to 3720 euros in Europe (about 24617 yuan), and the difference narrowed to 1300 yuan.

    BrunoPavlovsky, President of Chanel brand division, said in an interview that the price of all products except perfume will not exceed 5% of that in Europe after the price cuts.

    Luxury brands have made the price of Chinese market close to the normal level of global retail price through internal adjustment.

    One argument is that

    Luxury goods

    In the Chinese market unable to sustain, the decline in performance prompted the luxury brands to make up their minds to solve the ills over the years.

    Kai Yun group financial report shows that Gucci in the first quarter of this year, global sales fell by 7.9%.

    Prada

    Net profit fell for the first time in 2014, while sales in the largest market in the Asia Pacific region fell 3.1% to 1 billion 253 million euros compared with last year, with sales in mainland China falling by 6.8%.

    L'OREAL in China in 2014

    Sales volume

    Growth has not reached two figures for the first time in 14 years.

    But the actual situation is not the bottleneck of consumption capacity.

    China's luxury market has declined for the first time around 1%, while the scale of overseas purchasing market has reached about 550-750 billion yuan in 2014. The number of tourists who travel to Japan and South Korea has increased by about 60% (according to Bain consulting 2014 China Luxury Market Research).

    Anyone can see the potential of the market, but the price distorts the market.

    For brands, purchasing agents have eroded the potential profit margins of brands and disrupted distribution channels.

    Fake goods appearing in purchasing process also bring uncontrollable risks to brand image.

    More and more people began to buy overseas, and Chinese stores became experiential shops, while same store sales declined.

    At the end of last year, the major brands gradually took part in overseas financial reporting.

    Wang Jing, an associate professor of marketing at CEIBS believes that for brands, Chinese customers' shopping abroad has a great impact on the brand customer management system (CRM).

    Because brands do not connect with CRM systems in all markets, the long-term impact of customer churn data on brands is very serious.

    She believes that exchange rate fluctuations and tax cuts are only the trigger points for luxury brands to cut prices, and the decision to reduce prices is a deliberate consideration.


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