Source of this article: Times Finance Author: Zhou Jiabao Intern Zhang Xinying
Since the beginning of 2022, luxury brands have risen.
Image source: Visual China
On February 16, luxury brand LV Louis Vuitton ushered in the first round of global price increases in the Year of the Tiger, and the prices of many classic handbags rose by 20%. LV has said that the price adjustment is to cope with the increase in the cost of raw materials, production, international logistics and changes in the global business environment such as inflation.
"It really went up, but fortunately the price was hoarded before the price increase." On the eve of the price increase, Mengyu was very happy, because before approaching zero, she decisively won two popular packages of LV, and after starting to start, she looked forward to the price increase, wanting to see how much money she could "save" this time.
Overnight price increase of 54%, "the fund can not run LV"
"Earned 1000!" "I'm connected to two blacks and reds." "It feels like you've made a hundred million." Social platforms show that from the night before the official price increase of LV handbags, many people have "surfed" on the LV official website, some want to take advantage of the price increase to buy a new bag, and some simply want to see how much the "body value" of their bag has risen.
As early as a month ago, the news that LV brand products were about to increase in price on February 16 spread. In the early morning of this day, with the change of the price number of the official website products, a wave of bag drying frenzy was also set off on the social platform, some people expressed the joy of successfully "chopping hands" before expressing the price increase, and some people were lost because the bags they bought were not among the price-increasing products, as if they bet on the wrong treasure.
On Valentine's Day eve, there are more people queuing up at the LV store in Taikoo Hui Guangzhou than at any luxury store in the mall. A salesperson told Times Finance, "Valentine's Day is one reason, another reason may be because of the LV price increase news, our group at this time of year, about 5%. ”
But in fact, the price adjustment of the LV brand this time is somewhat unexpected, taking the brand's leather goods category as an example, only a very small number of handbag goods have not been adjusted, and the amplitude is not 5% as the above personnel said. According to incomplete statistics, most of the commodities generally rose between 10% and 20%, and some commodities rose as much as 54%.
According to times financial observation, some popular classic styles have risen a lot. Among LV monogram classic old flower products, the Néonoé handbag (commonly known as the "bucket bag") rose from 14,000 yuan to 15,000 yuan, the classic Neverfull handbag rose from 12,000 yuan to 14,400 yuan, the price of the On the go small handbag increased by 2100 yuan, and the large size increased by 1600 yuan. Another Mini Pochette Accessories (commonly known as "little mahjong bag") products rose 54% from 3500 yuan to 5400 yuan.
It is worth noting that some relatively high-priced commodities have also risen by as much as 20% in this price adjustment. Coussin medium handbag price increase before the price increase of 30,000 yuan, after this price adjustment, the price soared to 37,000 yuan, an increase of 23%; and Capucines series of handbags generally increased by 7500 yuan -9500 yuan, the increase of nearly 10,000 yuan let many consumers call surprise.
"Off the spectrum, I looked at the two LV I bought last year, one rose by 2400 yuan, and the other rose by nearly 1000 yuan, and the result was that the fund lost so much." At 2:30 a.m. on February 16, netizen Zhizhi posted such a dynamic.
"Price increases are a reflection of demand", and China is expected to become the largest luxury market
"In the past two years, the price increase of luxury goods is definitely different from the previous price increase, in previous years, in order to cope with the rise in inflation and cost problems, the price increase was about 5%, but the price increase in the past two years was as high as 20%."
Tang Xiaotang, an independent analyst at No Agency, analyzed Times Finance that in addition to responding to the rise in inflation and raw material costs, luxury goods are also increasing in order to ensure or enhance the brand's profit margin and profitability.
This is not the first time LV has increased its price during the epidemic, in May 2020 and January last year, LV made price adjustments, and the increase in commodity prices was also directly reflected in the group's performance.
According to the data, as of December 31 last year, LVMH Group's revenue increased by 44% year-on-year to 64.2 billion euros (about 461.7 billion yuan), an increase of 44% over 2020, an organic increase of 36%, and an increase of 20% over 2019, an organic increase of 14%, surpassing the pre-epidemic level.
The fashion and leather goods division of lv brands has achieved record revenue and profitability. The division generated revenues of €30,896 million (222.2 billion yuan) last year, up 42 percent organically from 2019, and profit from continuing operations surged to €12.84 billion from €7.34 billion before the pandemic in 2019. In the report, the Group named this as being driven by the two major brands LV and Dior.
Image source: Corporate Announcement
LV is also not the first luxury brand to raise prices this year.
In January, another luxury brand, Hermès, raised prices with CELINE, a brand in the LV group. According to media reports, the price of Hermès' popular handbag Lindy rose from 59,600 yuan to 65,300 yuan, while the brand accessories rose by about 10%; Celine's diagonal cross wallet, which was originally priced at 6400 yuan, rose to 8900 yuan again in January this year after the price increased to 7400 yuan at the end of last year.
Why are luxury brands able to raise prices boldly?
"Price increases are a reflection of demand." Tang Xiaotang believes that one of the reasons why luxury brands are fearless and bold in raising prices is that luxury brands have stable customer needs.
First of all, behind the demand is a stable source of customers, "luxury customers are mainly affluent people, they are slightly less sensitive to prices; secondly, in the global inflation environment, the assets of the rich class have risen, so the price increase will not have an impact on their spending power." In addition, the more high-end brands, the less sensitive their customer base is to price increases, especially LV and Hermès, which are in the first echelon of the luxury industry.
Bain Consulting shows that even though the world is still in a state of epidemic in 2021, the total size of the luxury market has increased by 13%-15% over the previous year to 1.14 trillion euros.
In addition, during the epidemic period, experiential consumption scenarios such as tourism have shifted to luxury consumption. "The lack of experiential consumption such as tourism has also transferred some experiential consumption capacity to luxury consumption." Therefore, in the financial report data, we can see that the united states and China, which export the tourism market, have seen a very considerable increase in luxury consumption during the epidemic. Tang Xiaotang said.
Bain data shows that 90%-95% of personal luxury consumption in 2021 will occur locally, while China is expected to become the world's largest luxury market with a market share of 25-27% by 2025.