The Millennial Generation Promotes Consumption Growth, And The Luxury Line Goes All Out.

According to Reuters recently reported that, because of the positive role of China's millennial generation in luxury consumption, the international luxury brands have increased investment in the Chinese market again. Online and offline, they are going down to two or three tier cities such as Xi'an, Wuhan and Chengdu. On the other hand, they continue to invest more in e-commerce, and enter online platforms or self built electricity providers.

Two or three line cities attract

In an interview with Reuters, Daniel Zipser, a senior partner of McKinsey, said that China's luxury revenue increased by 15%-20% in the first half of the year. The younger generation after 95 is the main force in the growth of luxury consumption.

According to Reuters, industry experts believe that the consumption of luxury goods among Chinese young people aged 20 to 34 is earlier and shopping is more frequent.

It has a wide range of makeup to bag.

At the same time, due to the acceleration of industrialization and urbanization, many millennials chose to settle in their hometown rather than the first tier cities with higher cost of living.

In order to cater to these consumers, the international luxury brands are heading for the two or three tier cities with smaller volume but faster growth in five years, hoping to seize the new growth point when the consumption of luxury goods in the first tier cities is gradually weakening.

It is understood that Prada group opened 7 stores in Xi'an's SKP mall this year for its three brands, including three main brands Prada and two Miu Miu brands.

Brand Church's two.

In September 5th, Herm s will also open a new store in SKP, Xi'an.

In May, Herm s opened a new store in Changsha.

Zhang Peiying, an Honorary Advisor to the luxury China Alliance and an analyst at Mei Yin Merrill, said: "as the dividends of commercial real estate in the first tier cities are gradually disappearing, luxury stores are also becoming more saturated.

The subsidy and preferential policies of large business super centers for luxury brands have gradually shifted to two or three tier cities. Considering the comprehensive consideration of cost and revenue, many luxury brands began to choose to enter the two or three tier cities.

In the first place for luxury brands to enter the city, Zhang Peiying thinks Chengdu, Xi'an and Wuhan have always been recognized as potential cities: "Chengdu ranks the top in the luxury consumption level, and there are many universities in Xi'an and Wuhan, which bring together the huge millennial generation of young people."

Changsha has been a new force in recent years.

"With the rapid development of local entertainment industry, Changsha has gathered a group of young people with high consumption level."

Zhang Peiying said.

The relationship between luxury brands and the two or three tier cities has been very different.

Over the past ten years, luxury brands have staged several shops and shops.

The last wave of large-scale shop closes was between 2014 and 2016.

Among them, from the end of 2015 to the end of 2016, Prada group closed nearly 1/3 in China.

Also in 2016, Louis Vuitton shut down 7 brand stores in Guangzhou, Harbin, Urumqi, Shanghai, Taiyuan, Tianjin and Suzhou.

The reason is that, according to Bain's annual report on China's luxury goods, because of the government's multiple factors such as corruption, outbound travel and luxury tariffs, since 2014, luxury brands in China have been forced to shut down the stores of the two or three tier cities.

This year, China's luxury consumption revival and play a key role in the growth of international luxury brands.

Jean-Marc Duplaix, chief financial officer of Kai Yun group, said in a conference call after the 2018 China Daily report: "the strong growth of Gucci performance is inseparable from the pursuit of Chinese consumers."

LVMH group also said that all regions recorded double-digit growth in the first half of this year, especially in Asia and the Americas market. China's demand growth in the second quarter was higher than that in the first quarter, and played a key role in improving the performance.

The signal issued by the earnings report has led luxury brands to see the potential of the Chinese market, especially the two or three tier cities.

Zhang Peiying said that the current layout of luxury brands is also aimed at the "vacuum" of luxury sales channels under the two or three line city line.

Traditionally, luxury integrated stores and buyer shops are the mainstream channels for sales under the two or three line city line.

In recent years, with the development of luxury electric business, Hai Tao and other formats, these integrated stores and buyer shops have gradually withdrawn from the offline market, so luxury brands choose to seize the opportunity to lay down the online layout.

Zhang Peiying said.

Increase online investment

Outside expansion, luxury brands are also increasing investment in e-commerce. In August 29th, Italy's senior jewelry brand Buccellati announced the luxury platform of the Jingdong's luxury platform TOPLIFE. At present, TOPLIFE has entered 31 brands, and 73 Tmall Luxury Pavilion, the main competitor.

Domestically

In terms of platform, besides the TOPLIFE and Luxury Pavilion, the temple library has entered over 100 international luxury brands, such as Versace, Salvatore Ferragamo, Tod's, Lanvin, Roger Vivier, etc.

Dior, Chloe and Givenchy tried to build WeChat mall.

In addition, in early July of this year, LVMH group's investment company L Catterton Asia and Jingdong jointly invested 175 million US dollars into the temple treasury. After the investment, the brand of LVMH group will also enter the temple library.

On the other hand, from the perspective of the international luxury business platform, luxury brands have gradually lowered their vigilance and continued to embrace the Chinese electricity supplier market.

Data from fashion consulting firm L2 showed that only 76% of the luxury brands on the Farfetch platform went online in the Chinese market in 2016, and increased to 85% in 2017, while Yoox increased from 72% to 78%, while Net-a-Porter increased from 48% to 57%.

The biggest move is a luxury brand. Louis Vuitton, Gucci and Prada built the brand official e-commerce website last year. According to Reuters, Herm s s's Chinese e-commerce website is also in preparation, or will be launched later this year.

Zhang Peiying analysis believes that for the first tier luxury brands, regardless of the current online strategy, the final destination must be self built electricity supplier.

The biggest advantage of the platform lies in its conductivity.

But for the first tier luxury brands, the conversion rate from electricity providers is not high, and online diversion is of little significance.

Whether from users or brands, self built e-commerce providers can provide a more elegant and controllable online experience.

Zhang Peiying said that the competition between the e-commerce platforms is fierce: "the key point is to set up user threshold by adopting membership system, so as to provide more efficient online diversion for luxury brands."

At the same time, as the definition of luxury is more extensive, some tide cards for young market are more consistent with the tonal regulation of e-commerce platform.

"No matter from the customer orientation or the value of online diversion, the cooperation between luxury electronic business platform and tide brand can go further."

Zhang Peiying said.