Produced by | Bullet Finance
Author | aspen
Edit | Fang Fang
American Editor | Qianqian
Audit | Ode
Recently, the first-quarter financial reports of luxury groups have been released.
According to the financial report, the overall sales of LVMH Group in Q1 decreased by 2% in real exchange terms, of which the revenue of the fashion and leather goods division where LV and Dior are located was the worst performance in the past two years. Kering's Q1 sales were down 10% on a comparable basis. As the top two giants in the luxury industry, the performance of LVMH and Kering is enough to reflect the fundamentals of the entire industry, and the economic environment is also expected.
However, the financial report is only a phased "achievement" display, and the future development trend of the industry is more reflected in the continuous "action"!
1. Under the market fluctuations, the enthusiasm for exploring the Chinese market has increased instead of decreasing
In particular, Pinault, Chairman and CEO of Kering, said: "We are all working tirelessly to ensure that Kering survives the current challenges, rebuilds a solid platform, achieves lasting growth and strengthens its position as one of the most influential groups in the luxury industry. ”
It can also be seen from the actions that even if the market environment is full of challenges, Kering still has full confidence in China, the world's second largest economy, and its enthusiasm for exploring the Chinese market has increased instead of decreasing.
As early as last year, executives of luxury goods groups began their first post-pandemic trip to China. Among them, Kering's Chairman and CEO, as the first head of a luxury brand to visit China after the pandemic, visited the Chinese market twice in a month, during which he visited the stores and shopping malls of his brands, and participated in the China Development Forum organized by the Chinese government.
Subsequently, the CEO of its core brand GUCCI also visited the Chinese market, hoping to understand the actual performance of the brand in the Chinese market, so as to formulate targeted strategies to revitalize the brand's performance in the Chinese market, which shows that GUCCI attaches great importance to the Chinese market.
Then, in March this year, Sabato De Sarno, GUCCI's new Creative Director, launched his first official trip to China with his new brand signature color, Ancora, at his debut in Milan, and became the first creative director of the three major luxury groups to visit China.
Sabato also took the opportunity to visit the campus of Donghua University to have a dialogue with future fashion creatives. While sharing a vision for Gucci, it is also connecting with the local fashion and art world, demonstrating the brand's commitment to strengthening its connection with the Chinese market and fostering cultural exchange.
Because for Chinese, red is not only a color, but also a sustenance about emotions. Based on this deep cultural connection, "Encore Red" has a strong response in the Chinese market, which is undoubtedly a "booster" for GUCCI again.
2. Going in both directions, the Chinese market provides rich soil for brands
The Wall Street Journal mentions that the luxury markets in Europe and the United States have risen sharply in previous years due to inflation. Now that inflation has come down, it is predicted that the growth rate of luxury goods in Europe and the United States will slow down this year. And the growth targets of these global luxury brands this year are largely dependent on China to take over.
A number of reports, including Bain, have pointed out that China's luxury market still has great potential for growth in the future. Currently, Chinese mainland consumers account for about 22% to 24% of global luxury spending, and this proportion is expected to increase to 35% to 40% by 2030.
On the one hand, it is China's total consumption, and with the rise of the economy, China has given birth to the world's fastest-growing high-net-worth individuals. According to the latest data from the New Fortune 500 list, the group's total wealth has surged 33-fold over the past two decades.
On the other hand, the Chinese government's attitude towards overseas luxury goods companies like Kering is mainly to stimulate domestic consumption and attract foreign investment in China, so the Chinese government will be more "open" in terms of politics and economy and trade. For example, the Chinese government has announced that by 2025, Hainan will implement an "island-wide closure", when Chinese citizens do not need to go abroad, they can enjoy duty-free shopping in Hainan, which is a long-term benefit for luxury goods to a certain extent.
Chinese luxury consumers have unique shopping behaviors and preferences, which determine the growing differences between the Chinese and world luxury markets, especially in terms of digitalization, retail environment, cultural background, and relationships with luxury brands.
GIVEN THE DESIRE TO RECONNECT WITH CHINESE CONSUMERS AND THE CHINESE MARKET, WE REMAIN EXCITED ABOUT THE NEXT PHASE OF GUCCI'S PERFORMANCE.