Three years ago, major luxury brands began to go crazy in second- and third-tier cities in China. In the past year or two, Louis Vuitton [Louis Vuitton], Chanel [weibo] (Chanel) First-tier international brands, such as Harry Winston, Cartier, Burberry, and Burberry, have gradually reduced their expansion efforts in China and optimized the integration of opened stores. On the one hand, they closed Stores with poor store efficiency look for new locations. On the other hand, stores that are too old are undergoing new decoration or area expansion.
In fact, since last year, there have been many reports that the luxury industry is facing a “cold winter”, but the leadership of luxury brands still holds a more optimistic attitude, until China’s anti-corruption policies have intensified, and major luxury groups’ The financial report is its best manifestation.
For example, Kering’s third-quarter revenue fell 1.5% to 2.52 billion euros. Kering Group acknowledges for the first time that Gucci’s sales in China have fallen. Although declined to disclose specific data, it was also expressed as ‘single digits.’ Gucci, the head of the Kering Group, followed the decline of 0.1% in the previous quarter, and fell 5.4% in the current quarter, the worst performance since the decline of 7% in the third quarter of 2009.
Even according to analysts interviewed by the media, China is no longer a double-digit economic growth, but in the next five years, the average annual growth rate may be 8.3%. Therefore, for a longer period of time, the development of the luxury market depends on emerging markets such as China, India and the Middle East. The growing middle class will continue to buy luxury goods, which also offsets the negative evaluation of the weak demand in the US and European markets. .
China’s luxury goods growth rate hits new low
In the luxury goods industry, no brand wants to admit that the decline in sales growth in China is due to the impact of the ‘anti-corruption’ policy, because they all want to establish high-end, unique, scarce, fancy brand culture, history and other characteristics. Do not want to have the title of ‘Senior Gifts’.
Insiders revealed: ‘Take the watch brand as an example. The brand hopes that consumers are customers who understand watches, love watches, and appreciate the beauty of machinery, but these people’s pursuit of watches is by no means an entry level of tens of thousands of yuan. Watches, which are entry-level models that account for at least half of the brand’s sales, are also the best choice for gifts. ‘
Another example is leather goods and fashion brands. When consumers step into some luxury stores, smiling salespersons will take the initiative to send greetings and provide services, but before that, some brand clerks would ask: Do you choose for yourself or as a gift? ‘
InBain & Co · Bain said that because gifts are a market cracked down by the Chinese government, sales of men’s clothing and watches were hit hard in 2013, and China’s watch market sales fell by 11% in 2013. Data from the Swiss Watch Federation shows that watch sales in mainland China fell by 14% in the first 10 months.
贝 In the luxury goods report released by Bain, the total sales of luxury goods in 2013 will reach 217 billion euros and 212 billion euros in 2012. The development in the second and third quarters is ‘almost stagnant.’ Bain also predicts that the capacity of the luxury goods industry will reach 245 billion to 255 billion euros by 2016.
It is worth mentioning that the growth rate of China’s luxury market in 2013 hit a new low since 2000, only 2%. In addition to the economic slowdown, the Chinese government’s crackdown on corruption and the tendency of Chinese consumers to shop overseas have slowed down. The main reason.
According to statistics, 29% of customers who purchased luxury goods in 2013 were from China, and the total value of luxury goods transactions in 2013 reached 15.3 billion euros. China will surpass France as the fourth largest luxury consumer market in the world, behind only 62.5 billion The Euro is far ahead of the United States, 17.2 billion Euros in Japan and 16.1 billion Euros in Italy.
Nevertheless, the latecomer “Southeast Asia” has been hailed as “the new emerging market in Asia”, and luxury goods transactions this year will rise 11% from 2012.
Bruno Lannes, partner of Bain & Co Shanghai, said that the mentality of luxury goods in the Chinese market is changing, mainly in two aspects: on the one hand, from the previous land grab site to a more focused focus on strategic priorities, on the other hand, from the search for The growth point has become a growth point of creation, among which the addition of customized services and so on belongs to this category.
Dubai luxury market will grow optimistically
Everyone knows the reason that “eggs cannot be put in the same basket”. When the luxury goods business in China was blocked, most luxury goods shops have quietly extended to emerging markets such as India and Dubai.
Geographically, more than a third of the world’s population lives within a 4-hour flight from Dubai, and the remaining two-thirds of the population is within an 8-hour flight from Dubai.
In the past ten years, the number of visitors and traffic at Dubai International Airport has grown extremely significantly. Among them, the number of international tourists almost doubled, from 24.8 million in 2005 to 47.2 million in 2010. Last year, the airport hosted 57 million passengers from over 225 destinations on more than 140 airlines.
Recently, the 154th General Assembly of the International Exhibition Bureau voted on November 27 in Paris, France to become the host city of the 2020 registered World Expo. Winner.
In the end, Dubai, the UAE city, successfully won the right to host the Expo 2020, and Emirates, based in Dubai, also said that Emirates expects to transport more than 70 million passengers on six continents in 2020.
Of course, Dubai’s luxury not only attracts the attention and longing of tourists, but also the decision makers of luxury goods groups have a longer-term vision and the sharpest sense of smell than ordinary people. According to statistics, the Middle East is one of the fastest growing markets for Swiss watch exports. In the first ten months of this year, the total value of Swiss watch exports to the UAE increased by 13.3% year-on-year to 771.5 million Swiss francs, making the UAE the tenth largest market for Swiss watch exports.
Swatch Group SA (UHR.VX) naturally already knew this signal. According to the financial report, in the first half of this year, affected by a 1% positive exchange rate, the Swatch Group ended the first half of June 30, 2013 Fiscal year sales increased 8.7% to CHF 4.181 billion, operating profit reached a record CHF 910 million, and operating profit margin was 22.9%. Net profit increased by 6.1% to CHF 768 million, and net profit margin was 19.2%.
Although the performance in the first half of the year has steadily increased, the group’s desire to exceed 9 billion Swiss francs in sales this year may not be realized. Nonetheless, the Swatch Group is aggressively launching its business in emerging markets.
Recently, the group announced that through its subsidiary Technocorp Holding Ltd., it will purchase an additional 18% stake in Dubai retail group Rivoli Investments LLC from Dubai Holding LLC, an investment fund owned by the Dubai royal family. After the transaction, the stake of the Swatch Group will be changed from the original 40% to 58%, forming a holding.
It is reported that Rivoli Investments LLC is mainly engaged in watch retail business, including products of various brands under the Swatch Group. It has a retail network of more than 360 stores in the Middle East and employs more than 1,500 people. Swiss private bank Vontobel analyst Rene Weber estimates that 60% of Rivoli Investments LLC’s sales come from the Swatch Group Ltd. (UHR.VX) Swatch Group brand.
In fact, the Swatch Group’s intention to increase the purchase this time is not difficult to speculate. After forming a holding, the group can integrate the Middle East retail channel by controlling Rivoli Investments LLC, which will bring faster sales growth and more Good business performance.