"Mid-Range" Luxury Days Are Bad, And Performance Has Begun To Decline.

When the "mid-range" luxury brands are everywhere and can no longer provide consumers with satisfaction and ostentation, it is not surprising that their performance is going down.

Traditional businesses dare not belittle the power of social media. along with industry The fierce changes in wind direction, in the head luxury brand and fast fashion both sides attack, the "mid-range" luxury brand began to be passive.

After the withdrawal of the original CEO and creative director Christopher Bailey, Burberry, which officially welcomed the new phase, recently released its first quarter earnings report. Its sales increased by 3% to 479 million pounds in the three months ended June 30th, but there was no growth at fixed exchange rates. It is particularly necessary to point out that its Asian market The performance did not reach the investor expectations, and MainFirst analysts even used a "rather dismal" argument to describe the brand's performance in China.

Although Burberry has always been the first luxury brand star strategy and digital person to eat crabs, it has not hit the nail on the head, and has yet to find a balance between the classic and younger brands. Its growth momentum is far behind that of competing rivals.

In the first quarter of this year, the sales of LVMH leather goods department increased by 25%. The core sales of Kai Yun group, Gucci sales increased by 37.9%, while Hermes sales increased by 11% over the same period. Obviously, Burberry, the representative of the British luxury brand, has dropped out of the first tier.

Since CEO Marco Gobbetti took office in July last year, it has been implementing a positive spanformation plan, trying to persuade shareholders to change the Burberry's current medium price luxury brand positioning, return to the high-end line, win back the price leadership and enhance profitability so that the British national brand will become "extravagant" again. He also knows that consumers are gradually turning to the two extremes of luxury goods and popular fashion brands. The dominant position of the "mid-range" luxury market is no longer.

Unfortunately, investors are not buying this. They seem to have been too much patience in the long process of brand spanformation. At the same time, Burberry's former rivals Louis Vuitton, Gucci and other brands are accelerating, making Burberry seem to be marginalized in this increasingly fierce competition.

Burberry is not an example. The Salvatore Ferragamo, Tod's, Bottega Veneta and even Prada were once popular among luxury brands, and their situation is basically similar. Faced with the severe market situation, these brands have launched the spanformation plan, but have not yet achieved any results.

Affected by too much reliance on classic style, single product structure and slow update speed, young consumers are losing their sense of freshness to Salvatore Ferragamo. In the three months ended March 31st, its sales fell 1.7% to 304 million euros, down 7 consecutive quarters, and net profit fell 18.8% to 9 million euros. Due to persistent turbulence in its performance, Salvatore Ferragamo became the first luxury brand to be sold this year, and its CEO Eraldo Poletto stepped down in only a year and a half.

The Tod's brand recorded a decline in sales for 9 consecutive quarters. The first quarter recorded a decline of 2.8% to 119 million euros. However, the fixed exchange rate recorded an increase of 1.3% to 124 million euros, which surprised the industry that the sales of Roger Vivier also ended its growth for the first time, and dropped 8.7% to 37 million 800 thousand euros for the first time. In February of this year, Bruno Frisoni Frisoni, creative director of Roger Vivier, decided to leave after the contract expires.

With the trend of retro fashion and the strong return of Logo, Bottega Veneta, which is too low-key, has begun to fade away from young consumers. Its single and dull product structure has gradually lost its appeal.

Since the end of 2014, the performance of Bottega Veneta has fallen into a downward track, and the growth rate of revenue has slowed from double figures to single figures, and has even begun to decline. In the first quarter, Bottega Veneta sales fell again by 6.8% to 261 million euros, becoming the only luxury brand of Kai Yun group, while Gucci has been leading the luxury industry for 9 consecutive quarters, announcing that it will move towards 10 billion euros in annual sales.

In addition, Coach, Michael Kors and other brand performance is also not satisfactory, Jimmy Choo was priced at $1 billion 200 million last year by Michael Kors. HSBC analysts have said that Jimmy Choo performance growth is slowing down, the actual sales growth rate in 2016 only recorded 2% to 364 million pounds, while the growth rates in 2015 and 2014 were 7% and 12% respectively. Tapestry Group CEO Victor Luis said at the second quarter report that whether the Kate Spade or Stuart Weitzman, the scale of the brand is not big enough, and it is not easy to gain profits directly.

Although the reasons for the decline of the "mid-range" luxury brands are different, the unanimous signals of release make the market dare not despise. Behind their losing momentum, they are more interested in luxury consumer migration. They are now more interested in high-end luxury brands.

According to a survey by the Royal Investment Bank of Canada RBC Europe on China's millennial high net worth consumers, Chanel and Gucci became the most popular brands in 2018. Behind the two brands are Hermes, Prada, Louis Vuitton and Dior. Compared with last year, the attractiveness of Burberry and Bottega Veneta declined significantly. This also means that Chinese consumers representing the global trend of luxury consumption prefer the luxury brand of the head.

In fact, the luxury brand of the head is not only favored by consumers of high net worth luxury goods, but also "harvesting" the middle class through the entry-level products and snatching the consumers who are originally "mid-range" luxury brands.

The middle class from Asia has become the core purchasing power of global luxury goods. According to a report released by Bain early in 2017, China's luxury goods sales reached RMB 142 billion yuan, or about US $22 billion 70 million, up 20% from 2016, the biggest increase since 2011. Bern Shanghai partner Bruno Lannes said that the reduction of China's market price by the major luxury brands, and the government's encouragement to spend at home, played a key role in the rebound of the luxury market. Another anonymous luxury brand executive said, "five years ago, China's luxury consumers were 10 years younger than other countries. Now this group is nearly 20 years younger than other countries."

For example, sports shoes are the current effective growth point of luxury brands. These brands, on the one hand, offer expensive products and, on the one hand, attract young people through cheaper products such as sports shoes. A pair of Louis Vuitton sneakers are around 7000 yuan, lower than the price of some of the brand's leather goods, and also stronger than the classic primer handbag Neverfull flu.

By contrast, the price competitiveness of "mid-range" luxury brands has become very fragile. Consumers know that a pair of Louis Vuitton sports shoes of 7000 yuan compared with 5000 yuan Tod's "Doudou shoes", which brings more luxury and satisfaction, which is more suitable for "social media show off". That is to say, consumers purchase the most brand premium in the range of ability to pay.

According to analysts, the distinction between practicality and luxury is clear in consumers' minds. When they need luxury, they want the best. At this time, the price is no longer a problem, but whether the product is attractive. The millennial generation is willing to pay for cheap Gucci logo T-shirts and Balenciaga brand baseball caps.

German sociologist Georg Simmel wrote in the 1904 Fashion. Journal International Quarterly that fashion is driven by imitation and differentiation of these two forces. The middle class reflects their social status by pursuing the latest trend, and these trends are gradually imitated by the bottom of society. When the middle class finds itself indistinguishable from the bottom of society, it starts to chase the next trend, and it also means pursuing more scarce products, which are firmly controlled by the head luxury brands.

In any industry, the stability of the head and bottom brands is relatively strong, while the position of the "mid-range" brand is always affected by various factors. No consumer wants to invest in products that may be out of date, especially for the "mid-range" brand that has experienced a low trough period or is undergoing spanformation. Consumers will think that there is a risk of devaluation, but there are more concerns.

Combined with today's unstable global economic situation, luxury consumption will inevitably be considered as an investment behavior. Consumer experience in purchasing luxury goods is important, but they are pursuing an asset sense of security. Taking Hermes's platinum package as an example, hunger marketing and rare earth jointly promoted platinum packages almost to become "hard currency", similar to Rolex, which is regarded as gold equivalent, and few brands can achieve this.

As the market becomes more and more crowded, it is more difficult for consumers to get limited attention from the "mid-range" luxury brands that do not have prominent characteristics and can not let consumers know what they represent. Especially when brands such as Louis Vuitton, Dior, Gucci and Chanel invest heavily in marketing, including attracting consumers through various topics and KOL marketing in social media, they almost occupy the majority of consumers' attention. According to the first public report released by Chanel at the end of last 108 years, the group spent $1 billion 460 million on marketing promotion, fashion shows and hosting events, which shocked the industry.

At present, the cost of getting attention is getting higher and higher. The "mid-range" luxury brands do not have enough investment to promote, but their own business efficiency is often criticized. Especially under the impact of fast fashion with high turnover efficiency, innovation ability and update speed can not keep up with the speed of consumers' pursuit of freshness.

Once the "mid-range" luxury brands lags behind the market rhythm and cannot catch up with the trend, these brands will no doubt miss the new consumers. Some analysts say that if the quality and design can not be improved, the mediocrity of the "mid-range" brand will result in the loss of consumers and the sale of products, resulting in frequent discounts due to high storage, and finally, it can only be caught in a circular dilemma.

In addition to luxury goods that embody their special social status, consumers need to end up with high cost performance mid end brands rather than "mid-range" luxury brands. "Intermediate" and extravagance, like light extravagance, are a false proposition.

The essence of luxury consumption is actually for social interaction. Multi data have proved that social media really stimulated sales growth of luxury goods. But now, not only is consumption upgrading, but consumer demand is even more escalated. Young consumers are all pursuing self actualization. When mid-range luxury brands are everywhere and can no longer provide consumers with satisfaction and ostentation, it is not surprising that their performance is going down.