Burberry Combined With The Profit Model Of Vice Cards Turned Into A Luxury, Closing The Vice Line Trend Intensified.

The trend of luxury brand offline is increasing.

Following the Victoria Beckham and Marc Jacobs, the British luxury brand

Under the enormous pressure of operation, it formally merged its three largest sub brands.

Zhou Ting, President of the luxury goods field and President of the Institute of wealth quality, said that under the background of luxury winter, the merger of sub line brands means that Burberry will change its original multi brand strategy and return to its original positioning. Before the main brand, the business model of supporting brand and collateral line is gradually falling apart, and there will be more luxurious brands closing their secondary lines in the future.

Cut three pairs of lines.

Burberry owns three brands of Burberry London, Burberry Brit and Burberry Prorsum, which correspond to three different styles: formal dress, leisure and walking show.

Among them, Burberry Prorsum was founded in 1904, positioning high-end high-end customers, and even longer than some luxury brands.

Burberry CEO and chief creative officer Christopher Bailey announced in November 2015 that in order to highlight the British foundation of the brand, the three sub line brands will be merged into the main line brand Burberry at the end of the year. All the product lines will be built by the same design team in London, and the series of commodities after the brand reunification will be launched this summer.

The plan is now in force.

This is not the first time that Burberry has shut down its secondary line brand.

Burberry has shut down its Burberry sports.

Christopher Bailey said that the proportion of wholesale and retail sales at the initial stage of Burberry was 7: 3. Now the ratio is 3: 7, and the proportion of retail sales is heavier and heavier. Therefore, the consistency of brands is particularly important.

The sub line brand and brand entry will help the company to increase production efficiency and give consumers better quality shopping experience. This also indicates that the company will change the multi brand strategy of the first two CEOs RoseMarieBravo and AngelaAhrendts.

Burberry, a flagship store clerk in Beijing, said that it was not clear about the brand merger. The three major sub line brands are now sold in the store, and sales can be "yes".

The Beijing Commercial Daily reporter contacted Burberry through e-mail, but no reply was received before the press release.

According to the Burberry2015-2016 financial year, the retail sales in the first half of September 30, 2015 were not up to market expectations, and the same store sales in the two quarter even fell 4%, and the share price also dropped to the lowest level in nearly three years.

In order to cut costs, Burberry also closed the two floor of flagship store in Taigu square, Hongkong.

A senior luxury practitioner revealed that the sub line brand often changes in the price system driven by economic interests, offset the original location, coupled with over sales, and blurs the brand image.

Since last year, Burberry is facing severe sales challenges. Closing the sub line is an inevitable choice based on long-term development.

Still the main card supplement

In addition to Burberry, many luxury brands have a sub line brand. Among the 10 most famous luxury brands, Christian Dior, Tod 's, Prada, Giorgio Armani, Ermenegildo Zegna and other half brands all have a sub line brand, showing the meaning of the collateral brand for luxury goods.

Among them, Armani is the first luxury brand to enable the concept of auxiliary line, and also has the largest number of secondary line brands.

However, in recent years, Dolce&Gabbana, Marc Jacobs, Victoria Beckham and other luxury brands have closed the sub line brands, and Burberry is now joining the ranks.

Cao Yang, a luxury brand digital media marketing manager, said that the first line of luxury brands was to create more consumer groups through the rich product line and brand diversification. The price of the general secondary line brand is about 70% of the main line brand price.

Under the aura of the main line brand, the sub line brand attracts a large number of consumers with low price and stronger adaptability.

However, with the increasing volume of sub line brand business, there are two kinds of situations: one is that the price and brand image are close to the main brand, and the reputation is bigger than the main card.

D&G and Marc by Marc Jobs are typical examples.

Statistics show that the average price of Marc Jacobs is about $389, while the average price of the sub line brand Marc by Marc Jacobs is US $188, and the difference between the main and subsidiary cards is out of the normal range of theory (70%).

In terms of sales volume, Marc by Marc Jacobs is also far ahead of Marc Jacobs. The sales volume of the former is 2 times that of the latter.

So Marc Jacobs had to merge Marc by Marc Jacobs into the main card.

D&G, whose annual gold intake was more than 400 million euros, was also overshadowed by the wind, which led to consumers' ignorance of the main card and being shut down by Dolce&Gabbana.

Another situation is that the price difference between sub line brands and mainline brands is gradually widening. Burberry London, Burberry Brit and Armani exchange belong to this situation.

In addition, some sub line brands need to be designed, produced and operated separately, which also creates a certain cost pressure on the brand as a whole.

Cao Yang said that for Burberry, the integration of sub line brands into the main line brand is not only to optimize resources, save operating costs, but also to narrow the price difference between main and subsidiary cards, the fundamental reason is to better protect the core value of Burberry.

{page_break}

Industry change

At present, many luxury brands have closed the sub line brand, but in Zhou Ting's view, the end of the sub line brand has just begun.

Zhou Ting said, why does Herm e s not create a secondary line brand? Because it is the real top luxury.

Once the sub line brand is established, the brand will become popular and fashionable. If it continues to sink, the brand will become a fashion brand.

Another situation is to return, like Burberry, to turn off the sub line brand and return to the original luxury position.

But in relative terms, once sinking, it is hard to return.

Therefore, Herm s will never set up a sub line brand. It will always remain at that height and avoid popularization.

Nevertheless, the operating pressure of Herm s continued to increase. In the three quarter of fiscal 2015, group revenue grew 15.4% to 1 billion 143 million euros, still below market expectations. Meanwhile, Asia Pacific and the Americas market continued to be weak, achieving 1.5% and 2% growth respectively.

Most of the other luxury brands with sub line brands are also facing recession. For example, the Prada group, the main brand Prada and the sub line brand MiuMiu have handled very well, and the design and price structure are not violating each other. However, the earnings reported recently announced that the group's net profit fell by 37.6% to 46 million 484 thousand euros in the three quarter ended October 31, 2015.

On the whole, there will be more luxury brands to be closed in the future to ensure high-end brand image and improve performance.

Zhou Ting believes that, on the one hand, the main demand of consumers is from brand to product. Consumers are more concerned about product design, quality and experience. Brand is not the most important factor, so the business mode of multi brand strategy will gradually become invalid.

On the other hand, the sub line brand has also been impacted by many designer brands and fast fashion brands.

"For luxury goods, the era of gold absorption by sub line brands is gone forever."

Cao Yang quoted Vincent Bastien, a senior manager of the luxury goods industry, as saying: "brand extension is a good marketing strategy in the short term, but it may seriously affect brand image in the long run."

At the same time, in the present

Under the background of rapid development, the complex sub line brand classification is not too meaningful for consumers. Luxury goods are facing many challenges. Closing the sub line brand is undoubtedly a helpless and reasonable coping strategy.