LV Began To "Go Out Of Business"?

France Luxury goods Brand Louis Vuitton has been acting frequently, but it has nothing to do with the main business garment business. Now, what is new? market Growth point?

On the 13 th of this month, Louis vuitton series perfume was officially launched in the mainland stores. Shanghai is the first place, and Guangzhou is expected to be launched in August. In order to ensure the scarcity of products, this series of perfume products is only in the brand Stores sell, and the price of $240 a bottle is relatively high. It is reported that Louis vuitton has been ambitious to enter the Chinese perfume market, but there is news that China's customs policy has been delayed for only a year before entering the mainland market.

Louis Vuitton has been pushing the perfume business for 70 years. The brand also attaches great importance to the newly launched perfume business. It invites renowned Jacques cavalier to modulate this series of perfume, set up perfume factory in Provence area of lavender planting area in France, and from last year, shifted most of its focus to the promotion and marketing of perfume category, and invited French actress lea seydoux as the leading role in the first advertising blockbuster. Last July, Louis Vuitton officially launched 7 fragrances to its 473 global stores.

The current luxury market environment is obviously the direct reason for Louis Vuitton to regain its perfume business. The chairman of the LVMH group and CEO Bernard arnault of the parent company are quite optimistic about the market opportunities of perfume business. Louis Vuitton CEO Michael burke also revealed in the media interview that the brand looked at the current market timing. In the past few years, the high-end perfume line had not yet matched the mature audience. With the perfume market moving from the public to high-end products, consumer awareness gradually improved. Now it is the right time to launch the high-end perfume line.

On the other hand, the perfume business is also becoming the growth engine of luxury brands coveted. Analysts say that the main purpose of Louis vuitton's re launch of its perfume business is to stimulate growth in performance again. According to the world clothing shoes and hats net, LVMH group's 2016 annual sales increased by 6% to 376 billion compared with the same period last year. Among them, the perfume beauty makeup business battalion contains 8% of the high number of organic growth. The group emphasized that the growth in the 2016 fiscal year largely benefited from the rising sales volume of the group's core brand LV perfume series, Marc newson's newly launched horizon suitcase and classic products.

John guy, an analyst at mainfirst bank, points out that nowadays luxury brands are so competitive that brands need something else to attract customers to stores. He predicted that the perfume category could increase the annual income of Louis vuitton by more than US $500 million over the next few years.

LVMH's part in the perfume business is also due to uncertainties in traditional businesses such as garments and handbags. In the first half of last year, LVMH group's fashion leather business revenue and profit recorded a negative growth, which is the only group of LVMH group that recorded revenue and profit losses in the first half of 2016. Although the growth momentum has been regained in the third quarter, it seems that the development space of clothing and leather goods sector is now full of challenges.

LVMH's fashion and leather goods are very large in the industry. The negative growth in the first half of last year at least indicates the great resistance that the industry has encountered. There are indications that consumers are increasing consumption in drinking and cosmetics, but clothing and handbags are still unable to see consumption drivers. In the first half of last year's earnings report, the group also confirmed that compared with the fashion and leather goods business, wine, spirits, perfume and cosmetics business has been eclipsed. Last year, LVMH group sold the fashion brand DKNY to G-III group at the price of 650 million US dollars when it was unable to reverse the profit situation. Analysts said that LVMH group had begun to restructure or strip some garment brands to reduce losses.

Global luxury brands are faced with problems such as insufficient identification of handbag products, excessive inventory and excessive promotion, due to the lack of innovation and the decline in consumer demand for luxury goods.

According to edited survey data of fashion analysis company, luxury brands such as Michael kors, Prada, Louis vuitton and Burberry reduced the number of new handbags in the fourth quarter of 2016. In the third quarter of December 31, 2016, the number of novice bags was reduced by 24%, while the number of new bags of Prada and Louis vuitton decreased by an average of 35%. In addition, the number of new versions of Michael kors also decreased by 8%.

Some analysts believe that this is because the major brands are busy reducing inventories, reducing promotional activities and streamlining the store network, while ignoring product innovation. Milton pedrza, a luxury consultant at luxury institute, said that on the face of it, the reduction of new brands by luxury brands is a worry about the high inventory of goods. In fact, it is an escape from brand's lack of creativity and difficult to arouse consumers' interest again.

Luca solca, head of the luxury department of Paris bank, recently pointed out that luxury garments are becoming increasingly difficult to make profits, clothing production costs are high, fashion conferences are expensive and sales are not satisfactory. People have more and more price choices of clothing, and the identification of clothing status identity is far less than accessories.

Bain consulting also confirmed this. The report shows that sales of luxury handbags, clothing and jewellery have slowed down. The trend of global luxury sales is not reversed. It is pointed out that when the economy is in recession, female consumers will reduce the purchase of luxury goods and shift their focus to cosmetics. The sales of perfume are similar to those of cosmetics, especially the sales of high-end perfume.

In the increasingly fierce competition in the luxury goods industry, luxury brands have begun to look for new growth points. Cosmetic Perfume is one of them. Some analysts point out that the perfume business known as "profit cow" has become the most vulnerable business of all luxury brands.

The Chinese market has also become the most active area of luxury brands, cosmetics and perfumes. In the Chinese market, there is great potential in the field of make-up and perfume. A data shows that only about 16% of Chinese women regularly use make-up products, while 47% of Chinese women only use perfume occasionally. Statistics show that the global perfume market is expected to reach US $45 billion 600 million in 2018, which is mainly driven by the consumption power and the launch of innovative products in emerging markets. This also explains why although Louis vuitton perfume is blocked in China, it is still ambitious for the Chinese market. Since July, this series of products has begun intensive promotion in the Chinese market.

Chanel, the main competitor of Louis vuitton, has benefited greatly from the beauty perfume business. Some analysts say that Chanel's high profit margins mainly come from its beauty and perfume business. According to David Wu, a luxury analyst at Telsey advisory, New York, the proportion of beauty and perfume business in the Chanel business should be around 55%, and Chanel's perfume and beauty products become its largest business department.

As the flagship product of the company, No.5 has also been in the leading position in the market share of the overall perfume market. In recent years, Chanel has also continued its efforts in the perfume business. It launched a new version of No.5 perfume last year. It also launched a new Gabrielle perfume with Paris this week. It is a new perfume launched after 15 years. It has just become the strong rival of LV perfume.

In addition to the perfume business, Louis Vuitton's second half of this year's "no business" is to enter the science and technology IT industry and launch smart watches.

This week Louis Vuitton and Google and Qualcomm (Qualcomm) technology company jointly launched the smart watch tambour horizon. The product runs Android wear 2.0 system, not only has the basic telephone, SMS and mail function, also added the "my flight" and "City Guide" two more fit the needs of business people. The product also includes Chinese applications such as WeChat, public comment and so on for the Chinese market.

However, the biggest feature of the watch is that its appearance looks different from the traditional mechanical watch. Louis Vuitton, chairman and chief executive officer of Michael burke, explains that this design is more consistent with the steady image of business people, and can be distinguished from other brands of smart watches.

Some analysts expect that luxury brands will also start to move closer to it, hoping to enhance their sense of presence in new markets. In fact, in response to the new technological impact brought by Apple watch and other smart watches, LVMH group's high-end watch brand Tigo Hoya has launched two smart watches in Google. In March this year, the newly released connected modular 45 watch added new functions such as fitness records, schedule management, touch control, Google wireless voice control and so on. The first watch released by Tiago Hoya in collaboration with Google Android system was released in 2015, making tiger Heuer the first Swiss luxury watch brand to move toward smart watches.

Louis vuitton obviously attaches great importance to this new smart watch. In order to promote this new smart watch, the brand invites 12 celebrities from different countries in the world to take pictures of the time honored by the name of science and technology, including Lu Han, a Chinese region. Lu Han's popularity has led to the widespread exposure of this high-end watch product, which is obviously attracting more young people's attention.

Data show that in 2017 the proportion of smart watch market will reach 20%. The cooperation between Hermes and apple watch has proved to be successful, but since then, this type of cooperation has almost become a blank. The slow pace of technological innovation of smart watches may be one of the reasons, but as smart watches keep eating the market share of high-end mechanical watches, traditional watches will face an intellectualized revolution. The market opportunity implied by this market change is what the luxury brands look forward to.

　　 What do they have in common from perfume business to smart watch business?

The answer is lifestyle. As more and more consumers begin to pursue high quality life, the experience of luxury goods begins to spread from clothing accessories to every field of life. Some analysts predict that high-end consumers in the future will pay more attention to lifestyle consumption. According to McKinsey's report on accelerating the road to modernization of Chinese consumers, Chinese consumers are upgrading from mass products to high-end products. 50% of consumers claim to pursue the best quality and the most expensive products, while 23% of consumers prefer to spend money on tourism products, while cosmetics have the prospect of upgrading products more than other consumer goods.

It is noteworthy that, as one of the most important markets of Louis vuitton, American consumers are also changing. According to a previous US data, the affluent American population has passed the stage of showing off their wealth by luxury goods, buying more fashionable brands with high cost performance, and high cost performance fashion brands do not mean cheap, but represent a certain way of life.

Similarly, a recent WeChat tweets entitled "eight thousand monthly salary of the legal concession" is a description of the way of life of residents in the French Concession area. "You drop the boat, the French Concession people take the subway, you wear 3800 pairs of coconuts, the French Concession people wear 38 pairs of leaps, you go to Bangkok to massage, the French Concession person goes to Nepal to close down," he said. "Shanghai, France." The lifestyle changes in Shanghai law concession, which represent the trend of lifestyle of China's middle and high end groups, are already very obvious.

For the current domestic luxury market consumers, there are roughly four categories.

The first category is those who dream of having luxury goods. Most of these groups want to have a luxury item, but their consumption is not about those top luxury items, but some of the entry level brands of luxury brands, such as beauty perfume series and shoe series.

The second category is consumers who save money to buy luxury goods. This part of consumers is not a loyal consumer of luxury goods, and the frequency of purchase is small. It is often a luxury item that needs to be saved to buy.

The third category is fashion lovers. This part of consumers want to give people the appearance of fashion, keep up with the trend of the image, consumption frequency slightly higher. Generally speaking, those who dream of buying luxury goods are always younger, consume less, but have more people. They can easily change into second and third types of consumers through age and work. The total number of consumers at each level is decreasing.

The last category is rich consumers. This category is originally a luxury brand with the highest and most loyal consumers. Now it has become more rational, and the size and total consumption of people are decreasing year by year. This leads to the fact that the future of luxury consumption is not on these people. Luxury brands need more power from the bottom of the demand for Pyramid.

Nowadays, the millennial generation in China is becoming a new growth point of luxury brand performance. For the new generation of wealthy consumers, traditional luxury goods are common, accessible and lacking in freshness. They are eager for more special services and personalized lifestyles. In this way, Louis vuitton is aiming at the transformation of this new consumption mode.

Whether it's the perfume that represents the personal image, or the smart watch that monitors health and helps consumers manage their schedules, Louis vuitton now touches on all aspects of the quality of life needs. Louis vuitton's core brand spirit "travel" is also one of the most popular lifestyles nowadays, especially for Chinese consumers who are increasingly keen on outbound travel. This element of travel can easily be combined with lifestyle products, such as the "City Guide" program in the new smart watch.

In fact, LVMH group has already begun to expand its lifestyle business. In early October of last year, LVMH group announced the acquisition of the luggage brand rimowa, reaching the high-end travel and lifestyle business. In the same month, according to Bloomberg news, lvmh's investment fund L catterton is negotiating with Italy's top bicycle brand pinarello (cicli pinarello s.p.a.) for the purchase. In November of that year, LVMH also announced that it would buy the Rapha of the British bicycle brand, which is famous for its high performance equipment and high price.

This year, Louis Vuitton also launched a series of stationery and gift products called "the art of gifting (gift art"), which contains more than 30 products, mainly based on daily stationery and other small objects, such as pencils, pen holders, bookmarks, notebooks, photo frames, makeup mirrors, and toys like cards, dice as elements. The price of the product ranges from 90 euros to 900 euros. The series is also the main way of life, and the wider price range can attract more consumers with low threshold.

And Gucci, a luxury brand under Kai Yun group, has started to work hard. Its latest rule is to launch home products. Gucci announced this week that the Gucci dcor family, which will be launched in September, is co operated with the Richard Ginori porcelain master. The products include pads, metal pallets, tableware and scented candles, all decorated with the dynamic elements of Gucci's creative director Alessandro michele. The series will be on sale at the flagship store and official website of Gucci in September, ranging from 150 to 23 thousand pounds. Some analysts believe that the purpose of Gucci's move is not only to expand its business, but also to challenge Hermes.

In addition, gucci emphasized in the statement, "in order to fully display the creative concept of Alessandro michele, this series does not have a special display area in the store, but extends the Gucci dcor home decoration series to a natural Gucci lifestyle, and integrates with the clothing accessories and interior furnishings in the shop without trace."

There are more and more luxury brands that are "not doing business", and are expanding in cross business areas, including services, such as hotels, restaurants and cafes. Today, Chinese consumers are moving their passion for luxury goods to new areas. In the first half of 2015, prada announced the acquisition of shares of pasticceria marchesi 80%, a traditional pastry shop in Milan. Prada and LVMH group contended for a stake in Cova, a well-known coffee shop in Milan's high-end fashion district, but eventually lost the position of LVMH group. In addition, Hermes also runs coffee shops in flagship stores in Seoul, South Korea.

"Over the past decade, these brands have invested a lot of money in building brand reputation," said Ken grant, director of fdkg insight in Shanghai. But brands still need to make profits from past investments. If these benefits can not be obtained by selling handbags or other products, they will benefit from China's huge hotel and entertainment market.

Now, luxury brands are beginning to realize that beauty, home, travel and technology will be the new growth point that the industry will pay close attention to next. Obviously, Louis vuitton is not "out of business", and the industry competition dominated by its lifestyle is probably just beginning.

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