Source: Photo.com
On April 16, local time, LVMH, the world's largest luxury group, announced its first-quarter performance report. First-quarter revenue fell 2% year-on-year to 20.7 billion euros ($22 billion), slightly below analysts' expectations of 21 billion euros ($22.3 billion).
With the exception of Japan, sales in Asia fell by 6 percent, but global demand for LVMH fashion and leather goods from Chinese buyers increased by around 10 percent, while sales in Europe and the United States increased by only 2 percent.
A significant proportion of Chinese buyers' contribution remained in Japan. Organic revenue in Japan grew significantly by 32%, beating expectations of 14.7%.
At present, the depreciation of the yen has reached its lowest point in almost 34 years. As of 15 o'clock on April 25, 1 yuan is about 21.4757 yen.
Jean-Jacques Guiony, chief financial officer of LVMH, said in the earnings conference after the release of the first quarter of 2024 that globally, although the number of Chinese consumers increased by 10% year-on-year, it is "the most difficult to predict" group of consumers, and it is also difficult to predict where Chinese will go shopping in the future.
"Relative to the world, we are the most developed country in the self-media, and our lifestyle and education are very sufficient. Chinese consumers are the most rational, more personalized and diversified, and the most disloyal, which is what luxury brands call 'the most difficult group of consumers'. Zhou Ting, an expert in the luxury industry, said, "Winning China is a fact that all luxury brands have to face, so no matter how difficult it is for Chinese customers to grasp, China is still the most important market for luxury brands." Zhou Ting said.
The group's operation and geographical distribution characteristics are obvious
After the gradual commercialization of the old craftsman brand, the brand is acquired and the matrix is formed, and the group operates; The business of the luxury group focuses on luggage and leather goods, clothing and eyewear, jewelry and watches, writing instruments, cosmetics and skin care, wine and beverages and other boutique retail.
From the perspective of the development of luxury groups, from the 19th century to the beginning of the 20th century, the first batch of contemporary French luxury brands (Louis Vuitton, Cartier, Hermès, etc.) emerged, during the two world wars, Chanel, Prada and other brands rose, in the 80s and 90s of the 20th century, luxury brands began to expand globally, and the group trend began to appear, around 1987-1988, LVMH, Richemont, and Tiffany were listed, and the process of brand mergers and acquisitions in the industry accelerated.
Note: 1) The rankings are based on the luxury goods turnover of each company in the 2017 fiscal year ended before June 2018, and the table shows the sales data of each group/company in 2019. 2) Luxottica is 2018 data, and the group was acquired by EssilorLuxottica in March 2019.
Top 10 brands in the list of luxury brands by value
According to Kantar, the world's leading evidence-based insight and consulting firm, Louis Vuitton ranked first with a brand value of $51.777 billion, followed by Chanel, Hermès, Gucci, Rolex, Cartier, Dior, Yves Saint Laurent, Burberry and Prada.
Forecast for the size of the global luxury goods market
In recent years, with the steady increase in the number of middle-class families, daily necessities are no longer the goal pursued by people at this stage; It's about design, quality, and experience. In July 2020, Burberry announced a partnership with Tencent to open its first social retail store for Chinese consumers in Shenzhen. Spanning approximately 539 square metres and featuring 10 rooms, the store offers a variety of interactive, personalized retail experiences. All of these actions will contribute to the recovery of global luxury goods. According to FortuneBusinessInsights, it is expected to rise to $352.8 billion in 2027 at a CAGR of 4.6% from 2020 to 2027.
Looking forward to the future, Zhou Ting, an expert in the luxury industry, suggested: firstly, luxury goods should be close to Chinese consumers, establish a wider service network, make full use of digital means, link to stores and homes, and open up offline and online; secondly, it is necessary to fully tap the potential of Chinese culture and use Chinese elements to develop more products that Chinese customers like" At the same time, luxury goods should further respect and attach importance to Chinese consumers, cancel unreasonable sales policies such as distribution, and further strengthen lifestyle education, strengthen content operations, and lead the trend of consumption. In addition, it is necessary to continue to maintain the high-end brand, further enhance the brand image, and avoid the popularization strategy to reduce the brand value.
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For more research and analysis of this industry, please refer to the "Analysis Report on Market Prospect and Investment Strategic Planning of China's Luxury Industry" by Qianzhan Industry Research Institute.
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