Why Luxury Goods Are Not Popular In China In Recent Years?

According to the latest news, luxury goods sales in China in recent years are not optimistic. Why luxury sales in China are frustrated by many local tyrants?

Do Chinese people no longer pursue luxury goods?

Face

The report card with declining sales is likely to add a few wrinkles to Laurent, head of Tiffany &Co., Greater China, Tiffany.

"I think we can say straightforwardly that the overall performance in the 2015 fiscal year is very disappointing."

Tiffany, head of the investment department, said at a previous conference call.

Tiffany's performance has been declining for several quarters, and there are also other luxury brands that feel depressed in the Chinese market.

Has the era of "lying can earn money" in the luxury goods industry has passed? Where have all the Chinese trenches gone?

Overseas luxury food retailers

Tiffany's life is not easy in the winter of China's luxury market.

In order to win more Chinese consumers, Chanel (Chanel) first launched the first shot of luxury price reduction last year.

In April 2015, Chanel made a reduction in its three symbolic packages, and its price declines in the Asia Pacific region 20%-22%.

Consumers only buy Le boy a package, which is 6700 yuan more than in the past.

At the same time, there are also brands such as Dior, Patek Philippe, tiger Heuer and so on. At the same time, the old luxury goods that once held the scarcity of products are now forced to "drop their prices" in the face of the Chinese market.

After all, Chinese consumers are not so cute.

According to the classification list of imported goods in People's Republic of China, the customs tariff rate on entry commodities is 10%-50%.

In addition, luxury goods sold in China still need to pay VAT and consumption tax, so the retail price that consumers will eventually see is probably more than 2/3 above the CIF price.

Seeing the territory

The comprehensive tax burden is so high that smart Chinese consumers have to look overseas.

According to the wealth Quality Research Institute, in 2015, Chinese consumers spent $116 billion 800 million on luxury goods globally, accounting for 46% of the total global luxury goods, and nearly 80% of them were overseas.

No longer willing to bear the high taxes and fees, the cute Chinese consumers are already far away from the domestic luxury market, while the traditional luxury brands can only continue to search for lost Chinese wallets in overseas markets.

The loss of stores is caused by expansion.

For luxury retailers in China, stores are clearly the last part of the Chinese market.

Now, the position of traditional luxury stores is also gradually losing ground.

In the past fiscal year, Tiffany closed 4 existing stores, and Prada (Prada) closed 2 stores in Hongkong in 2015. In the face of a 17% decrease in sales in Asia Pacific stores in 7-9 months in 2015, Gucci (Gucci) also halted plans to open stores in the mainland.

Little imagine, luxury stores in China's market retreat is the result of the disorderly expansion of luxury brands in the past.

In the 90s of last century, the first batch of luxury brands officially entered China.

To ensure adequate traffic, luxury stores are located in the vicinity of high-end hotels or high level shopping malls.

In recent years, with the rise of the urban complex, the invitation of luxury brands has gradually become the mainstream.

When more and more wealthy Chinese spend a lot of money on high-end leather products and jewelry, the luxury market has long looked at Chinese wallets, and retailers are also taking the opportunity to cram luxury stores in China.

But these craziness is just looking good.

Take the two or three line city as an example, although luxury brands have successfully entered various stores, traditional retail space usually fails to meet the requirements of luxury brands.

In addition, in recent years, the pace of elimination of backward production capacity in China has accelerated, and the consumption ability of the rich class that has relied on traditional industries has also declined.

Sales of luxury goods are weak, and the days will surely be even more painful for luxury stores that need high cost support.

"Consumers' habits and behaviors have changed. It is not enough to shop as they used to be. They should dare to shop," said Li Rixue, CEO of the high end luxury service platform temple.

Chinese consumers are smarter.

When luxury brands have just entered China, consumers know little about luxury goods, and often appear to recognize brands without recognition of quality. Even many luxury brands sell low-quality products in stores, or sell low-end products at a high price.

With the popularity of the Internet, Chinese consumers are becoming more and more aware of luxury brands.

They buy luxury goods no longer to highlight their distinctive social status, but rather to look at the service and cultural experience behind luxury goods.

But in this respect, luxury brands do not seem to satisfy Chinese consumers.

Emmanuel Hemmerle, an industry consultant, once said: "people are the most important problem in the luxury industry, but it is the most neglected and backward part in China."

Besides buying luxury goods, Chinese consumers are increasingly paying attention to whether they enjoy high standard services during the purchase process.

Luxury stores in foreign countries pay more attention to recommending suitable products and spreading brand culture for customers, so that consumers can enjoy a wealth of shopping experience, not only whether they have made a single business.

Compared with the exquisite shop decoration, the quality of domestic luxury retailers' sales and service needs to be improved.

In addition to requiring a comfortable shopping experience, the rising middle class of China also set higher demands on the personalization of products.

As Zhou Ting, Dean of the Institute of wealth and quality, said, "the mature rich class has passed the stage of proving itself with Logo".

Indeed, the era of Logo is gone forever.

Consumers are more inclined to design strong luxury brands instead of Logo and trademarks that rely solely on goods.

In the face of more critical Chinese consumers, the old luxury brands with poor revenue in 2015 do not have to be too pessimistic, because at present, at least 2015 is better than 2016.