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The expansion of luxury goods that has always been above and beyond China appears to have been somewhat underpowered. After LV said that it would not continue to open stores in second-tier and third-tier cities in China, it was recently reported that GUCCI has also announced a slowdown in its development plan in China. Relevant statistics show that the rapid growth of sales of some luxury goods in China in the past two years has dropped from double digits to single digits. However, people in the industry revealed that the relatively rapid decline is part of the first-line foreign brands, while some second-tier brands still maintain strong growth.
Shop plan to adjust
Constantly opened flagship stores in major cities in China and announced that it would aggressively enter China's second and third-tier cities. In the past two years, a number of foreign luxury brands have intensified their expansion in China. However, this year, this wind direction reversed for the first time.
A few days ago, the GUCCI report will slow down the opening of stores in China. Confirmed by related media, GUCCI will open 10 to 15 stores a year, reducing it to 3 to 4 stores each year. Instead, it will refurbish and expand existing stores to maintain the brand's high-end image.
The reporter found that the same LV related person in charge of foreign brands also said that the Group's strategy will restrict the opening of stores and focus on high value-added leather products. What he particularly emphasized is that he will not continue to open stores in China's second-tier and third-tier cities and avoid being too commonplace.
According to industry sources, many foreign big-name luxury brands have chosen to adjust their store-opening plans in China this year, â€œthe overall adjustment has become the main direction, especially to improve the profitability of single stores. For example, think about how stores already opened in first-tier cities in China should be Improve growth instead of opening new stores."
The spread is still developing market constraints
Luxury goods slowed down in China, is it because of poor performance?
Recently, the 2012 financial report issued by the French luxury goods and retail giant PPR Group showed that the groupâ€™s performance increased significantly last year and achieved sales of 9.736 billion euros, a year-on-year increase of 20.8%. The net profit amounted to 1.048 billion euros, an increase of 6.3% over the previous year. As a GUCCI shareholder, the performance of the PPR Group seems to be good, but its sales and sales to the GUCCI in China have not been disclosed.
The LV more closely follows Chanel and Dior to raise prices in the Chinese market, and will raise prices by 4% to 15% for Neverfull, Palermo and other classic series bags. If there is a lack of confidence in China's expansion, why should luxury goods continue to increase prices?
"On the one hand to control production, on the other hand to raise prices, in order to maintain or expand market space and profit margins." There is a luxury goods expert analysis. However, people in the industry pointed out that not all sales of luxury goods in China have been smooth. â€œIn the past, there has always been a double-digit growth in single-digit growth, and some have also seen negative growth. Increasing overseas consumption of luxury goods has also hindered the expansion of Chinaâ€™s domestic luxury goods market.â€ Analysis of the industry, with China It may impose more stringent taxation policies on the consumption of high-end luxury goods, and the domestic luxury market sales will face new challenges. While some foreign second-tier luxury goods performed relatively well last year, USA New York brand Coach recently released its financial report data for the second quarter of fiscal year ended December 29, 2012 showing that sales continued to perform strongly in China and total sales increased 40%, same-store sales increased at a double-digit rate. In the second quarter, the company added 13 stores in mainland China, bringing the total number of stores in China to 117.
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