How Does The Price Adjustment Do Not Work On Fashion Luxury Goods

Hong Kong

The dilemma is still a stumbling block for Burberry, and in the eyes of the company, this doom will not end soon.

Burberry does not do well in the Asia Pacific region. It seems that even price adjustment is not necessarily effective.

The first quarter financial report released by British luxury brand Burberry7 on 15 may show that the total retail revenue of the company reached 407 million pounds (3 billion 948 million yuan), an increase of 8% over the same period last year.

Although in the analysts' expectations, it is far from the 14% increase in the same period last year.

The same store sales did not even meet expectations, but only increased by 6%.

In the 3 months ending June 30th, Burberry's revenue growth in the Asia Pacific region was only a low single digit.

Europe, the Middle East, India and Africa have become the driving force of earnings growth: two digit growth; Burberry also has a higher digit growth rate in the US.

Carol Fairweather, chief financial officer of Burberry, blamed the weak growth in China on Hongkong's "occupy" protests. She also predicted that the pace of growth in the region would further slow down, "the luxury market in this region will become more challenging."

And most luxury

Similarly, Burberry was dragged down by the "recession" of Hongkong in 2014.

But as the euro and the US dollar gained strength, Chinese consumers turned around and chose to go abroad to buy luxury goods.

However, Burberry has not rebounded.

Burberry 30-40%'s sales performance is currently contributed by Chinese buyers.

"We do not have statistics on the loss of passenger traffic due to the Hongkong problem, but we have observed that Chinese consumers have not decreased."

She added: "you can see them in stores all over the world."

In a telephone interview, Fairweather said there would be no major adjustment measures in Hongkong, but would intensify efforts to attract local consumers.

In the 2014/2015's second half performance report released in April this year, Burberry has announced plans to adjust its pricing.

When asked whether the price adjustment was to make up or to lower the sales figures in the Asia Pacific region, Fairweather did not give specific answers, but said that adjusting prices is a long-term strategy, whose main role is to offset the adverse effects of exchange rate fluctuations.

In fact, Burberry is not dominant because its competitors, such as Chanel, announced and implemented the price reduction strategy in April.

The quarterly report also showed that after the Burberry implemented the digital marketing strategy and launched a real investment and development of mobile terminal functions last year, its mobile performance was three times that of the same period last year.

Burberry opened a total of 5 new stores in the first quarter, closing 3 original stores.

Fairweather also mentioned the company's first restaurant in Regent Street, London recently. "Its main purpose is to provide customers with brand experience".

In order to serve meals, there are lobster and fries, fried salmon with scrambled eggs and oyster.

The shop also specially opened Burberry gift area, and equipped with printing custom service.

After the announcement of the performance report,

That day, it opened at the London Stock Exchange and fell 2.96% at a time, which may make the company's CEO Christopher Bailay more difficult to explain at its shareholders' meeting on Thursday.

Burberry's predecessor, CEO Angela, moved to apple in May last year, and then became the new director of Christopher Bailey, the company's creative director.

However, his salary has become a hot topic of controversy within the group.

At the annual general meeting held in July 11th last year, a salary increase of 8 million 100 thousand pounds (78 million 577 thousand yuan) was rejected by the board.

If prices do not work, businesses will have to find another way to stay on their feet.