Will The Mode Of Pmission Become An Inevitable Choice For China'S Luxury Market?

Now buying in mainland China's local market

Become more attractive.

With the rise of the purchasing power of the millennials and the Z generation, the traditionally conservative luxury brands are facing China.

This big cake has to rethink the strategic layout. Will online shopping malls, brand public accounts, social media and other ways of communication become their inevitable choice?

Strong prospects for China's market performance

China's growing middle class has led to the prosperity of the luxury market.

Today, China has become one of the largest markets in the luxury industry.

The McKinsey report shows that Chinese luxury consumers spend more than 500 billion yuan a year, accounting for nearly 1/3 of the global luxury goods market.

According to the world clothing and shoe net, as of last January, China accounted for 32% of global luxury consumption, and the market size was $25 billion.

In the 2018 Global Luxury Market Research Report released by Bain Capital, it is estimated that by 2025, 46% of luxury goods will be purchased by Chinese consumers, half of which will be purchased in the mainland.

It is undeniable that the current mode of shopping of Chinese consumers is changing: tourism consumption abroad is decreasing, but consumption in China is increasing.

Include

Among the global luxury giants, they have recently stressed that "buying luxury goods on the mainland market in China is more attractive".

Under the new normal economic situation, the consumption demand of Chinese consumers is changing.

However, it can be seen from the latest earnings data of Kering, LVMH and Hermes, that China's luxury consumption growth is still strong.

French luxury giant Kai Yun group's earnings report showed that sales in 2018 surged 29.4% to 13 billion 665 million euros compared with the same period last year, while operating profit rose 46.6% to 3 billion 944 million euros, while the luxury sector's revenue grew by more than 20% in the eight quarter.

Among them, the Asia Pacific region, including China, grew by 34%, and the North American market registered a strong growth of 38%. Sales growth in Western Europe, Japan and other regions was 24%, 24% and 23%, respectively.

It is worth mentioning that the core brand Gucci of Kai Yun group has been leading growth for 12 consecutive quarters. In 2018, the brand sales reached 8 billion 285 million euros and entered the 8 billion euro club for the first time.

During the reporting period, the annual sales volume of Gucci wholesale channel increased by 30.7%, and the direct retail channel increased by 38.3% year-on-year. It was mainly driven by an increase of 70% in online sales. The retail sales in Asia Pacific and North American markets, including China, increased by 45% and 43.6% respectively.

Last year, 62% of Gucci consumers were the millennial generation. On the whole, 35% of them were Chinese consumers.

French luxury group Herm (s) announced its fourth quarter and full year earnings in fiscal 2018.

Benefiting from the outstanding performance of the brand classic bag in the world, especially in China, year-on-year sales as of December 31, 2018 increased by 10% to 5 billion 966 million euros, a record high.

In the fourth quarter, sales grew by 10.1% to 1 billion 650 million euros, and sales in Chinese stores continued to grow.

"Our growth in Asia is still strong," said Axel Dumas, chief executive of Hermes, in an interview with foreign media.

According to Burberry's latest third quarter results, the group's retail income fell 2% to 711 million pounds on fixed exchange rate in the 13 weeks ended December 29, 2018, which is 1% higher than that of the store sales.

Sales of comparable stores are divided by region, and the median growth rate in the Asia Pacific region is mainly due to the good performance of mainland China.

From the above luxury brand performance report, we can see that China's luxury market performance is still strong.

With the restriction of purchasing power by the electricity business law, the consumption of luxury goods will decrease, that is, the consumption of luxury goods in Europe and other overseas areas will gradually decrease, which will lead to an increase in domestic consumption in Asia and China.

{page_break}

Millennial generation rewrites digital strategy layout

Luxury retail is usually associated with physical stores.

However, due to the pformation of market structure, the improvement of online and offline logistics, the proportion of online consumption of Chinese consumers is much higher than that of other countries, and the consumption power of non tier cities is also very strong.

Nowadays e-commerce plays a more important role in the sale of luxury goods.

The biggest driver of this change is consumers: millennials and Z generations account for 30% of the e-commerce consumer market, making them the most attractive group of consumers.

By 2025, this figure is expected to increase to 40%.

Bain's 2018 global luxury industry research report showed that luxury online sales increased 22% in 2018 and sales reached 27 billion euros.

The Asian market surpasses the European market, and China leads the global luxury market growth trend, becoming the global luxury brand "a battleground".

Today's conservative luxury brands have realized that the best way to deal with the Chinese market is to embrace the digital strategy.

According to Tmall data, in 2018, 35 luxury brands opened flagship stores in Tmall, covering many luxury goods, such as clothing, luggage, watches, cosmetics and so on.

Nowadays, Tmall users only need to move their fingers to purchase the latest Canada Goose feather clothing, Burberry windbreaker and other luxury items.

Gucci still holds a more conservative attitude towards actively embracing e-commerce platform, especially in the Chinese market.

Despite the opening of e-commerce services in China's official website in 2017, Gucci's electricity supplier revenue has been rising. However, in order to maintain the uniqueness of its brand, Gucci has made it clear that it will not cooperate with Alibaba and Jingdong's electronic business platform, because the two are full of fake goods.

However, digitization is the key to touch and pform low - line consumers.

The proportion of luxury goods purchased online by three and below urban consumers is 16%, far more than 8% of the first tier cities and 9% of second tier cities.

Luxury brands have opened official flagship stores through Jingdong and Tmall to solve the geographic differences, so that users in low line cities can also buy luxury goods that are originally sold under only one tier city line.

Tmall data shows that over half of the sales of Tmall luxury luxury platform Luxury Pavilion are created by three to six line city users.

From this point of view, it is still necessary for luxury brands to embrace the electricity supplier actively.

Nowadays, the way of luxury consumption is highly digitized and fragmented.

The millennial generation found that luxury, information collection, shopping, payment and delivery methods and after-sale activities are becoming more and more diversified. They get information through various social media and network platforms, shopping is no longer limited to physical stores, online shopping centers, brand public accounts, social media and other ways emerge one after another.

If the luxury brands do not change their thinking, it is not feasible to sell goods through the official website alone.

Reporters learned that Chinese consumers use WeChat and other applications much more frequently than Internet browsers. The major brands will follow this trend and cooperate with existing applications to maximize exposure on the platforms they already trust.

For example, Armani used WeChat to establish contacts with Chinese consumers.

In addition, some brands also use WeChat platform to set up flash stores to sell restricted products.

Dior also has official accounts on vibrato to release new products.

According to the insiders, with the development of this trend, the competition for luxury goods is rapidly shifting from offline to online. It is expected that in the next five years, the 2 era of luxury goods digitalization will be realized and the close combination of online and offline businesses will be realized.

Data show that by 2024, the composite annual growth rate of China's personal luxury market will reach 6%, and Chinese consumers will contribute 40% of the global luxury market sales, leading to a 75% growth in the global market.

China's millennial generation has become the main consumer force. Their unique digital behavior has promoted the qualitative change of the relationship between luxury brands and consumers.

This shows that luxury groups must rethink the layout of digital strategy.

More interesting reports, please pay attention to the world clothing shoes and hats net.