Gucci Stores In Mainland China Formally Raise Their Prices

It is understood that luxury brand Gucci carried out a comprehensive price adjustment in China on the 16 th of this month, with a price adjustment of 10%.

It is reported that at the beginning of this month, Gucci has adjusted the price of the whole product in the European market, or about 10-30 euros, far below the domestic level.

It is worth mentioning that this is the second increase in the price of Gucci this year, which is quite different from the current big cut strategy for luxury goods.

But in terms of pricing strategy, Gucci has never taken the unusual path. Last year, Gucci was the most fierce brand of discount sales promotion, with 50 percent off promotions in Beijing and Shanghai.

Over time, with the triumph of Gucci performance, the strategy of discounting the bail market has turned into a price raising brand.

However, in the eyes of the industry, the Gucci pricing strategy that sells well and sells well is likely to yield a profit in the short term, but it is harmful to the long-term value of the brand.

From low to 50 percent off to two times in a year

Reporter survey found that a few days ago, some Gucci stores in mainland China officially raised the price of some goods, or about 5%-10%. This is the second time since April this year, Gucci stores in the mainland have once again raised their prices.

The price increase is not comprehensive.

It is understood that Gucci in the European market early this month on the entire product price adjustment, the price range is only 10-30 euros.

In this regard, Gucci clerk said that the price increase is mainly affected by the price of raw materials, global currency exchange rate changes and other factors.

However, Zhou Ting, President of the Institute of wealth studies

The reasons for the price increase do not agree. Zhou Ting said that the price increase factor proposed by Gucci can not be ignored. However, the analysis of brand price fluctuation in recent two years is not difficult to find. The two increase in Gucci prices is more due to optimism in sales.

Compared to this year's high-profile price increase, Gucci last year's price promotions are also spectacular.

Last summer, Gucci launched an unprecedented discount sale season in Shanghai, Beijing and other markets, most of which were directly 50 percent off.

The rest of the summer promotion season is still alive, and Gucci's winter promotion season is coming again.

In the past year, many discount promotions have been stocking up, which has led many consumers to get a bargain but also deeply questioned the brand.

It is understood that unlike summer discount promotions, Gucci

It seems a bit cold and cheerless. Consumers are asking questions. Discounts affect the brand positioning of luxury goods, and the discount is so great that everyone grabs the same as buying cabbage, but does not want to buy it.

The industry pointed out that discount sales for luxury goods is a double-edged sword. Brands blindly pursue short-term interests, choose discount sales promotion methods to inventory, and ultimately will have a negative impact on brand value.

Performance report as brand price vane

For the two price adjustment in a year, Gucci said that the annual price adjustment is the usual practice, that is, the annual price of the brand will increase to varying degrees, mainly due to the impact of raw materials and exchange rate.

In addition, consumer psychology and tactics are also part of the reason. Brand hopes to create a brand appreciation impression by raising prices.

The reporter has read Gucci financial report to find that the pricing strategy of the brand is directly linked with the sales data of the financial newspaper. It is not difficult to see that the brand basically follows the discounts and sells well on the price principle.

{page_break}

It is reported that in the first quarter of this year, Gucci's performance rose by 3.1%, much higher than that of the industry average of 1%.

At the same time, Gucci's latest financial report shows that its profit in the first half of the year increased by 7%, and the two quarter price earnings increased by 70%.

Gucci CEO Marco Bizzarri has publicly told the media that the goal of Gucci is to achieve the annual sales target of 6 billion euros, and the brand will advance two times the average growth rate of the industry.

Insiders pointed out that this year's Gucci performance has not only led Kai Yun group, but also better than many luxury brands in the market.

Perhaps it is the rapid progress of the performance, so that Gucci can have enough confidence to raise the price of luxury when it is singing and declining.

The price hike is due to the rapid progress of performance. Is the discount sale caused by the decline in performance? It is understood that the Gucci performance has plummeted since 2014.

In the 2014 fiscal year, the operating profit of Gucci brand from continuing business fell by 6.7%, from 1 billion 131 million 800 thousand euros in the same period last year to 1 billion 56 million euros.

Moreover, the decline in Gucci performance continued to the first quarter of 2015, and Gucci net profit plunged by 5.7%. In addition to the US and Western European markets, the Asia Pacific market performance of China and Japan was not satisfactory.

As Gucci's performance fell all the way, its parent company's group's first quarter performance also showed a negative growth of 2.6%, the worst performance in recent years.

In this regard, Zhou Ting pointed out that Gucci prices and discounts are more of the reasons for the impact of performance, the Gucci performance fell sharply the previous year, resulting in last year's brand 50 percent off inventory.

This year's performance has improved, and the brand has begun to adjust prices.

Whether it is discount sales or price increase, the Gucci only sees short-term profits, but ignores the brand value of luxury goods.

Pricing strategy hurts brand value

Facing other

In China, a price reduction strategy is being implemented to achieve global price integration.

Gucci's willful price increase may not only bring consumers' doubts about brands, but also lead to further loss of domestic consumption.

Although the two increase in Gucci prices involves European markets, the price rise of only 10-30 euros is far below the 10% level in China.

Generally speaking, the price of overseas luxury goods is about 40% lower than that of the domestic market. The difference between domestic and foreign prices of Gucci will further increase the price difference at home and abroad.

Industry analysts pointed out that last year, overseas sales of luxury goods to luxury manufacturers reached 34 billion -500 billion yuan.

The Chinese market has gradually become a showroom for brands, and more and more consumers are buying luxury goods through overseas channels.

While domestic market rents and human costs continue to rise, many brands are starting to adopt global price integration, hoping to retain domestic consumers. Gucci obviously has not yet realized the seriousness of this problem.

Zhou Ting added: "nowadays more and more younger generation of consumers are becoming more and more light brand, heavy product design and quality. Gucci's blind discount and price increase will give consumers a reverse mentality.

Brand can not simply increase prices or reduce prices, we need to constantly innovate products, establish a good brand image, and improve business and development strategies.