Luxury Goods Down The Shop, Closed The Shop To Embrace The Electricity Supplier.

Recently, the American luxury brand

Close its queen's Road Central shop in central Hongkong.

Almost at the same time, COACH returned to Tmall in a low-key manner, preparing for its second China electricity supplier tour.

The contrast between the two is that the former represents the dignity and glory of identity, while the latter is a hidden reef that luxury brands are reluctant to touch.

Better lose your money than lose face.

With the declining performance in recent years, luxury brands have begun to re examine the Chinese market.

Long ago, they were no longer cheap, fake and Shanzhai gathering grounds, but permeated every capillaries of Commerce.

COACH is not the first brand to put down its image and feelings, and of course it is not the last one.

Continue to close shop

As early as 2008, COACH rented a shop in Queen's road, central, Hongkong.

At that time, the rental price was HK $2 million 600 thousand / year, and in 2012, when the rent was renewed, the rent was HK $5 million 600 thousand, plus the external wall advertisement up to HK $7 million 200 thousand, almost 3 times that of 2008.

However, at the same time, the cost is soaring, and COACH led by a lot of international light extravagance and luxury.

There has been no corresponding increase in revenue, and has been slowing down year by year.

By the end of June 27th, COACH's fourth quarter financial results showed that China's fiscal year sales for the first time showed a single digit growth, and sales growth in fiscal year 2015 was only 9%.

The corresponding sales growth in fiscal 2014 and fiscal year 2013 was 25% and 40% respectively.

This is the direct fuse of this shop.

The lease scheduled for October 2017 was released 2 years ahead of schedule.

COACH informed the mail to all members of Hongkong that "the flagship store in the central region has leased out two years ahead of schedule and has formally completed its business in August 31st.

"Although COACH has declared to the outside world that this is to optimize the structure of the store, the fundamental reason is that it is unable to make ends meet.

For luxury goods, a store is a double-edged sword, which can open consumers' wallet and hurt themselves at high cost.

Compared with other brands, luxury brand shops choose shopping malls and shopping centers in downtown areas. They are famous for their salesmen and shop decorations.

Now these have become a serious burden on the performance recession.

Luxury brands will also offer the banner of "optimizing the store structure" and continue to close their stores.

It is understood that in 2014, the year of luxury stores was the largest. Hugo Boss and Ferragamo closed 7 stores and 6 stores respectively, Zegna closed 6, and Burberry closed 4.

It is worth noting that in Burberry's latest earnings report, Burberry closed 10 stores in China, plans to shut down about 5 new businesses in the new fiscal year and slightly reduce the average sales area.

Gucci, Cartier, Dior and so on also reduce authorized authorized stores in China, instead of direct camp.

With the sharp drop in sales, luxury stores will continue to boom.

Most luxury brands will shut down some stores in China's two or three tier cities this year. Many luxury brands say they will suspend new stores in China this year.

Return to Tmall

In September 4th, the official flagship store of COACH quietly launched on Tmall, just 3 days after announcing the closure of Hongkong Central Avenue store.

However, this is not the first time COACH has come to Tmall.

COACH once opened the store in December 2011, but it closed after only a month.

At that time, COACH explained to the outside world, "because celebrating the 70th anniversary hand in hand with Tmall to open the official flagship store, the agreement will only have one month's operation period."

The reaction of the outside world is not such a breeze. It is generally believed that luxury brands are not suitable for the electricity supplier at that time.

On the one hand, Taobao has a large number of copycat COACH.

On the other hand, the online shopping users trained by electricity providers do not have the ability to consume COACH.

In other words, COACH's sales data on Tmall may be less pitiful.

This is the same as the recent exit from Jingdong by UNIQLO.

Although UNIQLO and Jingdong did not specify the details of their return, they were not very convenient to identify.

As an important channel for the electricity supplier, the Jingdong's counterpoint to the brand is self-evident, and the shop must hit the bottom line of both sides.

For UNIQLO, there is nothing more horrible than operating data and being unable to make ends meet.

Times change.

Luxury brands are becoming more and more bitter, especially in China. Because of tight policy, outbound travel accelerates and domestic luxury consumption begins to shrink.

With the upgrading of consumer demand, e-commerce has become a new battleground for luxury goods.

Burberry entered Tmall last year, and some luxury brands began to license the sale of vertical luxury electric providers such as glamour, temples, and treasures.

This is one of the important reasons why Alibaba invest in glamour benefits to seize the luxury entrance.

However, in order to stick to COACH, Tmall signed an exclusive strategic cooperation agreement with the other side.

Generally speaking, the strategic exclusivity agreement signed between branding and Tmall will be concentrated in 1 to 3 years.

In the process, branding is also looking at whether Tmall's sales and user increments are up to expectations.

If not, the exclusive agreement will go on, and at the same time, it will start multi-channel operation in Jingdong, vip.com and Suning.

Squeeze out foam

Due to frequent discounts and promotions, and the increase of electricity providers, COACH has put down its vanity and gradually squeezed out the bubble.

People close to COACH have told us that Tmall has only spent a month in Tmall shop, and is preparing to make a big eleven in Tmall.

In accordance with the requirements of the double eleven investment, the brand dealer does less than 50 percent off of the price on the day of the double eleven.

This also means that COACH will use Tmall double eleven to do a large discount sale.

In addition, another reason for COACH's exclusive entry to Tmall is that the latter's users are in line with the COACH consumer group, and is also a popular group of COACH.

According to the survey by the Fortune Research Institute of China's more than ten million rich people, 76% of the richest people in the first tier cities believe that COACH is not a luxury, which is 51% and 25% respectively in the second tier cities and the three or four tier cities.

Tmall's users are concentrated in three or four tier cities, and their purchasing power is rising.

In fact, COACH is only an ordinary brand in the US, and becomes a luxury brand after entering China.

This unreasonable position resulted in the COACH becoming a luxury brand in the eyes of Chinese after its entry into LV and GUCCI.

With more and more luxury brands entering China, as well as the hot sea and outbound travel, more and more consumers are exposed to the differences between COACH positioning at home and abroad.

According to the research and analysis of the wealth Quality Institute, the success of COACH in China is dependent on the high profit growth of China's primary market and primary consumers, the large number of previous marketing and opening up strategies.

But at present, this kind of power is less and less.

Nowadays, the visibility and frequent discounts caused by the large number of brand stores are seriously weakening the brand mystique of COACH. The low price and low consumption level caused by this brand will seriously damage the brand image and affect the subsequent development.