Canada Goose lays off 17% of its workforce, GUCCI predicts a 20% drop, this is the reality that luxury goods have to accept!
Recently, I saw two news, one is that Gucci's parent company Kering suddenly issued a profit warning, saying that the group's revenue will fall by 10% in the first quarter, and the revenue of the largest core brand Gucci may fall by 20%, mainly because of the poor performance of the Asia-Pacific market. Second, Canada Goose, a luxury down jacket brand, announced a 17% layoff, and its stock price fell 7% overnight. Layoffs will result in immediate cost savings and a simplified organizational structure. In order to boost sales, Canada goose ushered in a big price reduction in China in July last year, with a maximum of 5% off, but the price of up to 5,000 yuan still can't change the situation of reducing popularity.
According to the experience of previous years, when the performance of luxury goods is not good, the price increase can immediately reverse the performance. So since the beginning of this year, major luxury goods in China have ushered in a wave of price increases, ranging from 5% to more than 10%, thinking that it will immediately usher in the grand occasion of young people queuing up. As a result, the situation has changed, the stores are still deserted, and many luxury manufacturers finally have no choice but to say that they will meet the "headwinds" of performance. In January this year, the US media pointed out that the sales of luxury goods in the Chinese market have not yet recovered to the level of 2021.
Nowadays, there is a very popular saying among young people that "it is not that luxury goods cannot be afforded, but that it is more cost-effective to replace them". More and more young people are becoming more rational in their consumption premiums, and they no longer blindly pursue luxury goods and high premiums when buying things, but pay attention to the balance of brand, quality and price, and value for money. One noticeable change is that young people will give preference to discount channels when buying big brands. For example, last year, the revenue of offline outlets was 160 billion, a year-on-year increase of 20%, the revenue of online outlets Vipshop increased by 18.7%, and the sales of wearable categories that it is good at increased by 24% year-on-year.
In addition, the rise of domestic production is also seizing the market for luxury goods. Nowadays, young people no longer blindly trust the West as they used to, and sometimes certain luxury goods even play a role in dissuading consumers. On the contrary, domestic products are actively innovating and integrating Chinese culture into new products, which has attracted the attention of a large number of young people. For example, around the Spring Festival this year, the horse face skirt exploded on platforms such as Douyin and Vipshop, and hundreds of millions of people personally felt the heritage and attraction of Chinese culture. Behind this is everyone who is using "wearing domestic products and using national trends to emphasize their cultural identity".
I have to sigh that the trend of consumption has really changed, and pragmatic consumption has become a consensus. People no longer simply think that expensive is good, but pursue a high-quality life with less money, and "impulse consumption" has become a thing of the past. This is not good news for luxury goods, which means that the audience is smaller, but they have to accept this reality!
