Does Purchasing Standardization Affect The Stock Market Of Luxury Goods?

Recently, luxury goods purchasing has made the garment industry, especially the clothing industry, because of the trade war, the national electricity supplier law, the standardization of purchasing agents, and the turbulence of the global economy.

In the past two years, we have experienced young, street oriented, frequent designers' personnel mobilization, and so on.

Share price plummeting in luxury sector

Domestic schemes to crack down on irregular purchasing agents have begun to take effect, although luxury goods group says China has stepped up its efforts to crack down on purchasing agents.

It is good news, but in the overall stock market crash trend, the normalization of purchasing agents brought a lot of panic to the industry. The price of luxury goods industry continued to decline in the past two weeks, and the stock price plunged again in October 10th, known as the new black Wednesday.

In addition to LVMH's share price dropping by 3.7% and Burberry's share price falling by 4.3%, the share price of Gucci's parent company, Kai Yun group, also dropped to 435.7 euros, compared with 5.8% of the 522.4 Euro peak in July.

But contrary to this, the recent results of the luxury group's performance are good:

In the first half of the year, total sales increased by 26.8% compared with the same period last year, and Gucci reached 44.1%.

LVMH's third quarter performance report also showed a double-digit growth rate during the period, up 10% to 11 billion 380 million euros over the same period, of which Louis Vuitton increased by 14%, a double-digit growth for 8 consecutive quarters.

Even so, it is still not able to stop the continuous decline of stock prices. Although there are also reasons for the overall decline in inflation, the continued decline of the stock market has proved investors' uneasiness. China has had a great influence on the reasons for the severe crackdown on purchasing agents and the downgrade of the market.

The impact of Chinese consumption on luxury goods market

Any action in the Chinese market will be influential.

The movement can directly affect the wind direction index of luxury brands.

According to McKinsey's latest report, China

The annual consumption of consumers has accounted for nearly 1/3 of the global luxury market, and Chinese young generation and other young consumer groups have become the main consumers of luxury goods.

In September this year, the Boston consumer consultancy and Tencent Inc jointly published the consumer digital behavior report on China's luxury market, which shows that the composite annual growth rate of China's personal luxury market will reach 6% by 2024, which is even higher than that of the 4% luxury market in China from 2015 to 2017.

Sales of 40% of the global luxury goods market will be contributed by Chinese consumers, leading to a 75% growth in the global market. Even more, the success or failure of the Chinese market will largely determine the fate of the luxury brand.

1. the impact of Chinese consumers on the proportion of luxury goods market is bigger and bigger. Any change will bring great influence.

2., China's millennial consumers are mostly women, and more than 50% of the consumers live outside the top 15 cities.

This means that these consumers live in cities that may not have luxury stores. Digital marketing based on urban agglomeration is very important.

3. the luxury purchase path is highly digitized and highly dispersed.

The main source of information is network information, which means that digital consumer behavior will also promote the strategic layout of luxury brands.

Family friends and overseas purchasing accounts for a large proportion. For today's young consumers who pay more and more attention to price performance, this kind of consumption mode has greater attraction.

In China, where consumption accounts for such a high proportion of luxury goods consumption, the turbulence of the purchasing industry will affect the purchasing power of Chinese consumers to luxury goods, which is also one of the reasons for the stock market turbulence.

The impact of China's national conditions on most of the non front-line consumers will be relatively large, for example, the electricity supplier law has improved the impact of upstream actions such as cracking down on non-standard purchasing agents.

Well, we have every reason to doubt that grey areas such as purchasing and purchasing are still playing a more important role in the rapid growth of luxury goods.

Therefore, even if we lose the support of this big data, even if the earnings report of the luxury brand is good, it will still not be able to stop the panic of the market. It will not be able to predict the market share that will be reduced by purchasing agents. This can only wait for the next quarter's financial statements.

Although it will increase official orders to some extent, it is not optimistic as a whole.

First of all, the stock market is declining as a whole, and volume is also declining. This means that the pace of inflation is approaching. The luxury market has always been skeptical that Chinese people are really rich. We do not know what the profit distribution ratio of luxury goods group is, but it is certain that purchasing agents, especially the tour directors' purchasing agents, have a large number of Chinese consumers' resources.

We have been talking about the purchasing power of Chinese consumers, in principle, including these purchasing groups, and even more, they have become the lifesaving straws of duty-free shops in Korea before, and before Celine announced that the old package was about to stop production. It is said that a large brand purchase order can reach up to hundreds of bags or even more than one day, and a well deserved consumer "big household".

Before, there were few channels to buy in China. Even today, more than half of the non tier cities consumers' cities do not necessarily have brand stores and express delivery services. They can only choose to buy through unsafe purchasing channels.

The bias is dominant, which is even lower than the domestic price of dozens of percentage or even more, even if purchasing agent plus 10% purchasing fee is much cheaper than domestic counters.

Foreign shops may have limited payment or incomplete domestic style.

Purchasing as a very large proportion of consumption, the three or four tier cities in China can not expand the storefront quickly; in the case of luxury goods group, even if China's import tariff is lowered, it will not deliberately reduce the price of the mainland. Under the circumstances that domestic and overseas can not achieve complete design or some of the styles are not in stock, the country's vigorous efforts to regulate irregular purchasing will lead investors to be suspicious of the future purchase prospects.

To sum up, under the big environmental factors such as national policy arrangement and international stock market crash, the disappearance of purchasing agents is not so understatement for luxury brands.

From the legal point of view, "purchasing" as a gray area of a large number of non regulated pactions, there is no need to say more about the inevitability of consolidation, but at the same time, how to fill a large number of people's demand for goods is also one of the directions that need to be followed up. After all, there is a new solution to the demand.

The gradual awakening of China's consumer awareness will also let these millennial "young people" start paying attention to the value of quality and cost performance. The "cost performance" here also refers to the psychological and social value factors brought by the brand when accepting the brand premium.

But before we change the trend of luxury goods, we must not forget that the original luxury itself is also famous for its exquisite workmanship and design.

And the consumer demotion brought by inflation will also be very obvious. In recent years, the rise of rent in the first tier cities, the gradual generation of the millennial generation into the family and other factors will also affect the purchase choice of luxury goods because of the change of the amount of money and the change of family status. Purchasing is just one of the factors.

In general, the demand for luxury goods will always be there, not so pessimistic, but there will also be new and interesting changes.