Behind Anita Yuen'S Rumor Sweeping Luxury, LV'S Difficulties And Self Rescue

Mention of celebrities and luxury goods, many people's minds will inevitably make up such a picture:

A famous star walked out of the famous luxury goods shop with sunglasses, followed by 35 assistants carrying a famous brand with big bags on his shoulder. It seemed that the only way to buy luxury goods was to sweep goods.

This is not very recent. Some netizens broke the news on the social platform, saying that after the isolation of the epidemic, Anita Yuen began to go shopping crazily. He bought 6 bags and 16 clothes in Hermes. In this regard, Anita Yuen personally clarified, she said no matter: "can not have 6 packages, are small purses, 6 clothes are not, is a hat." And jokingly said, "don't exaggerate, otherwise you can't enter the house."

But now, even if someone wants to go shopping in luxury stores, the difficulty is not too small. On the one hand, affected by the epidemic, the offline stores of luxury brands have been closed down; on the other hand, France and Italy, the two major luxury producing countries, have become the worst hit areas of the epidemic. Not only factories have been shut down, but also the supply of luxury goods has been severely restricted.

In the dilemma of supply and demand, the entire luxury industry may need to go through a difficult period, and the brand of the foresight has begun to save itself through digitalization.

2020, is the worst year in the history of luxury goods?

When it comes to the impact of the epidemic, people often think of the first time that the catering industry and the tourism industry are at a loss. It is the media cries of xibaer, seabed fishing and bosses' "saving the catering industry". In fact, the problem of luxury goods may be bigger than that of the catering industry before the epidemic. After all, luxury is nothing compared to eating. It is not just needed.

At the end of last year, all kinds of 2020 forecast reports related to luxury goods were generally favored by all parties. However, the outbreak of the year opened up a cold water for everyone.

At the beginning of February, Bernard Arnault, President of LVMH group, said pessimistic when it came to the epidemic. "I can not answer the impact of the epidemic on our performance. If the epidemic can be resolved in the next 2 to 2.5 months, then it will not be very bad. If it continues for two years, it will be completely different", said Bernard.

Bernard Arnaud's position is not groundless. Compared with the previous year, the Chinese consumers' Spring Festival files are missing, and the huge overseas trips are gone. The flow of luxury stores in Paris and London has dropped sharply, all of which made him smell a bit of an unknown flavor. Dong Xiaolin, an economics professor at Guangdong University of Foreign Studies, told the reporter of Yangcheng Evening News that the purchasing power of Chinese consumers for luxury goods has also declined sharply due to the lack of travel. Foreign luxury sales market has lost a large part of its consumer groups.

Capital markets also made the same judgement and response. Only in the two week of February, LVMH, Kai Yun group shares fell by about 8.5% and 8% respectively, while Burberry declined 12%, while Capri Holdings's share price evaporated 14.7%. At the time, analysts said that the main reason for the overall decline in the overall price of luxury goods was the outbreak of new pneumonia that could affect sales of luxury holidays during the Spring Festival.

Today, such judgement is still optimistic. With the outbreak of the epidemic in Europe and the United States, not only the sales side will be "cool", but also the production side will have to "stop eating". To curb the spread of the virus, luxury brands have shut down the stores where they are located, cancelled and postponed some activities and stopped factory production.

For example, Chanel, a famous Chanel, spent a heart warming year in "Guan Guan Guan".

In March 16th, Chanel decided to close all American stores, cancelled the early spring holiday fashion show originally scheduled for May in Capri, postponed the advanced custom fashion show scheduled to be held in London in March 26th and the advanced manual workshop series originally scheduled for the end of May in Beijing, China. In March 18th, Chanel further announced the two week stoppage of the production, and gradually closed down production bases in France, Italy and Switzerland, including the suspension of advanced custom garments, advanced garments, advanced handicraft shops and jewelry workshop.

Chanel is not the first company to adjust to the epidemic. In stopping production and shutting down, Gucci, Herm s, Kai Yun group and other brands soon had to join them. In this regard, Luca Solca, director of luxury research at Paris bank, France, concluded that "the first half of this year is obviously the worst in the first half of the history of the luxury goods industry, and much worse."

In the face of the impact of the epidemic, luxury goods are better able to resist than catering and tourism?

In the impression that luxury labels are always linked to the rich, businesses are famous for their high profits. In the face of the impact of the epidemic, is the luxury industry more resistant than catering, tourism and other industries?

Not really.

First of all, the epidemic brought about a change in the structure of consumer spending, and luxury goods became the priority items to be cut down.

The definition of luxury is: "a kind of consumer goods that is beyond the scope of people's survival and development needs, unique, scarce, rare and so on." To a certain extent, luxury goods often indicate the trend of fashion, and are the leading weathervane, but this also means that when people's income falls or may decline, luxury goods are also the easiest to be cut off.

In March 21st, the survey results of luxury consumption in mainland China released by the Rhodes communication group and the precision Market Research Center showed that compared to the survey data three months ago, the proportion of jewelry, bags, cosmetics and cars planned to increase in the next year decreased significantly, with the jewellery reduced from 48% to 35% and the bag from 43% to 29%.

At the end of 3, a survey by Kantar, a market research firm, also showed that 21% of respondents said they would continue to reduce or cancel their consumption on luxury goods after the outbreak.

The reduction of demand will undoubtedly have an adverse effect on the sales of the luxury goods industry. Bain consulting predicts that the luxury industry may lose 30 billion to 40 billion euros in sales this year, and the industry revenue will be reduced by about 15%.

Secondly, for luxury brands, high profit is also a high cost.

Look at those luxury flagship stores in high-end stores. They know that the rent payable by businesses is a high figure every day. There are also expensive celebrities who endorse luxury goods, which are not expensive because they will not disappear because of the epidemic.

However, when luxury goods can be sold normally, these costs can be easily offset by their own heat. Once there is no income, the expenditure will immediately become "dazzling". The whole industry's sales estimate this year will drop sharply. According to the latest report by investment company Bernstein (Bernstein), the new crown virus will cause the luxury industry to lose 43 billion US dollars in sales in 2020. Forbes even predicted that the health event would erase the profits of luxury goods in the international market in the past 5 years.

At present, luxury goods enterprises abroad have gone to the brink of bankruptcy. According to Reuters quoted by people familiar with the matter, the US luxury goods retailer Niemann Marcus group is preparing to apply for bankruptcy protection as early as this week, becoming the first major department store operator in the United States collapsed due to the economic impact of the new crown pneumonia epidemic. The main reason for the company's bankruptcy is that two industries, both luxury and retail, have been hit by serious epidemics.

How can the luxury industry help itself in tough times?

Now, reducing costs has become a priority for luxury goods companies. A number of fashion and luxury groups in Europe and the United States have announced the implementation of employees' pay leave and corporate pay reduction system in order to cope with the severe challenges posed by the new crown virus epidemic.

In April 11th, Francois-Henri Pinault, chairman and chief executive officer of Kering, a luxury luxury group in France, said: "in view of the new crown pneumonia epidemic and its impact on economic activity", it will cut its fixed salary by 25% from April 1st to the end of 2020. "Francois-Henri"

Meanwhile, Capri, a luxury goods company in North America, has decided that its brand Versace, MichaelKors and JimmyChoo will be suspended from the staff of the retail sector and some employees of the company in April 11th, and the board will reduce its salary by 50%. Another American luxury group, RalphLauren, is also true.

The mobile line is the second way out for luxury brands. Whether at home or abroad, luxury electric business is all good news.

For example, the initial financial data of the first quarter of fiscal year 2020 ended in March 31st, announced by the UK luxury electronics platform Farfetch, is expected to increase by about 43%-46% compared with the same period in the first quarter of fiscal year (GMV), of which GMV of the digital platform grew by about 17%-19%. Jos Neves, founder and chief executive of the company, said that online sales channels will become the "winners" at this stage, and the epidemic is driving the growth of e-commerce business.

At home, according to the latest report released by Bain consulting agency and Alibaba, several luxury brands combined with Tmall have already opened up online and offline channels during the epidemic. Since February, Italy luxury brands such as Prada Prada, Giorgio Armani, Australian luxury brand Zimmermann, American light luxury luggage Kate Spade, Japan light luxury jewelry brand GALA have been on-line Tmall......

In addition to e-commerce, short video marketing, live broadcast with goods have become an important choice for luxury brands.

In April 10th, French luxury Dior launched a new video from its own brand ambassador Angelababy, which is different from the video that used to create luxury experience. This video will give priority to sales, and Angelababy will introduce its spring and summer products to Dior boutiques in person.

At the same time, many luxury brands have launched different forms of live broadcast in order to convey the brand idea, maintain their influence and performance.

As early as late February of this year, the Italy National Fashion Association joined hands with Tencent fashion to create a new "cloud show" mode. The Milan fashion week, including Fendi (Fendi), Giorgio Armani (Giorgio Armani), Ports (baozi) and other brands, has been broadcast live for 6 days, 6 nights and 24 hours in more than 30 top shows.

Recently, more luxury brands have joined the live force. Valentino works with singer Alicia Keys in Instagram live music performance through Instagram. Dunhill, the men's clothing brand, has also been testing the water through creative directors and artists, creative personas and actors.

    The "2019 China luxury report" released by the customer research institute has pointed out that in the future Luxury Retailing industry, the brand side will directly face consumers through its own channel or platform based third party line and offline channels. It will become a trend and become the main source of online sales of luxury brands. Out of the stage of history.

Of course, the big brands do not forget social responsibility under the epidemic. In addition to donations, many luxury enterprises are also transforming the production of masks and other anti epidemic materials as well as Chinese enterprises.

Can the self help measures of luxury brands help to reverse the depressed market?

I am afraid it is very difficult.

Under the epidemic, the rapid transfer of luxury goods to the online market will bring new growth points to luxury consumption, but because luxury consumption pays attention to offline shopping experience, the traditional offline luxury retail channel still dominates, and consumption in the short term is difficult to offset the loss of the industry.

For example, Bernard Arnaud, President of LVMH group, questioned the sale of luxury goods online, saying that all businesses are losing money. The larger the scale of business, the heavier the loss. "The reason why these websites are not profitable is because they have to offer low price goods or customers will lose."

Moreover, the lack of online live broadcast may mean a disaster for luxury goods that emphasize experience. For example, LV was not directly broadcast live on Xiao Hong's book. A four week bald white wall, a pair of LV's silk scarves tied on nails, and a LV sachet wrapped on a plastic bench, seemed to be incompatible with the luxurious experience. The final result, of course, can only be described in a bleak way. In addition, the reduction of income caused by the epidemic, resulting in a reduction in consumption, is nothing for any brand. Retaliatory consumption is not a life-saving resource for the luxury goods industry.

Gaoming, senior vice president of Rhodes Communications Group and managing director of luxury business in Greater China, said in a media interview that although there was a strong release of accumulated shopping demand for some luxury categories, the survey showed that this would not be the mainstream. Increasing the proportion of total users to reduce costs is a greater challenge for brands.

Zhou Ting, President of the Research Institute, also pointed out that if the current situation, the luxury brand will lose the first half of 2020, but the more serious is the global consumption reduction due to the epidemic and the change of Chinese consumer habits. This will lead to quite a long period of market addiction rather than the so-called retaliatory consumption.

The main reason for this is that luxury goods have long been a commodity that only a handful of noble elites can afford. It has long been "civilian" and the middle class is the main force of luxury consumption.

Once luxury brands were closely related to status, for example, Louis Widen (Louis Vuitton) and Hermes (Hermes, Cartire) were founded by the craftsmen in eighteenth Century and nineteenth Century, who were responsible for creating exquisite handicrafts for the royal family. But with the change of the times, the consumers of luxury goods have been changing. The middle class has become the main consumer group, and the decrease of the income brought by the epidemic has a great impact on the consumption of this group.

Although the layout line is hard to save the market, it is still a major trend in the development of luxury goods industry. McKinsey's "2019 China luxury report" points out that the younger generation represented by "80 generation" and "90 generation" account for 43% and 28% of the total number of luxury goods buyers, respectively, contributing 56% and 23% of the total consumption of luxury goods in China.

From this point of view, digitalization is actually the only way for the luxury industry, but the epidemic has only accelerated the process.