Luxury, it really can't be sold anymore.
Recently, the luxury brand Gucci closed two stores in Shanghai Rui Ou Department Store and New World Daimaru Store. Since last year, Gucci has closed six stores in Chinese mainland.
You must know that the number of Gucci stores in China once exceeded 80, which is the luxury brand with the largest number of stores in China. In 2021, the sales volume of Gucci's directly-operated store in Taikoo Li Chengdu will reach the first place in the world.
Once, the phenomenal single product Bacchus bag was sold out in seconds. Now, no one cares about selling at a 5% discount on the outlet counter, and it has fallen to a 3% discount in the second-hand market.
According to incomplete statistics from Lianshang.com, so far in 2024, the six top luxury brands have closed 14 stores in the Chinese mainland market (including the removal of fences).
Source: WeChat public account New Retail
In 2022, you are still catching up with me, and the high-end luxury brands with both revenue and profits hitting a record high, why are they suddenly "cool"?
Is the winter of luxury really coming?
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In fact, since 2024, the sales of luxury goods in the entire Chinese market have been quite weak.
Burberry's retail sales fell 22% year-on-year in the three months to the first half of 2024, with Chinese mainland shrinking 21%
In the third month to December 32, 2024, sales in Greater China fell by 18% for Cartier's parent company, Richemont
In fiscal 2024, Zegna Group's revenue in China plummeted by 14.5% year-on-year to 509 million euros, making it the only negative growth region in the group's global market
……
The background here is that the global luxury market is not very good. According to a report released by the consulting firm Bain & Company and the Italian Luxury Manufacturers Association, global personal luxury consumption is expected to decline by 2% in 2024, and the number of luxury consumers has decreased by about 50 million in the past two years.
However, the decline in China appears to be particularly pronounced, well above the 2% mark.
According to the "Brand Tendency Report of China's High-net-Worth Individuals" released by the Hurun Research Institute, the average annual consumption amount of high-net-worth families will decrease by 300,000 compared with 2023. In the consumption structure, health and wellness accounted for 67%, ranking first, and the willingness to spend daily luxury goods fell by 14%.
So, is the purchasing power of China's middle class declining? All things considered, this may not be the case.
For example, while consumer goods are not selling, high-end outbound travel of 100,000+ per capita is becoming more and more popular. In the Spring Festival of 2025, China's outbound travel orders will increase by more than 30% year-on-year, but the growth rate of orders for traditional popular outbound travel destinations represented by Japan and Thailand will only be 15%~20%, while the number of orders for ultra-long-distance niche tourist destinations represented by Antarctica and South America will soar by 200%.
The Antarctic during the Spring Festival holiday is as hot as the Spring Festival. I originally wanted to let myself go at the end of the world, but when I looked up, I saw that it was all fellow countrymen.
It turns out that many people are not "out of money", but do not want to spend money to "supply" luxury goods.
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In fact, many middle-class consumers who are "more excited than action" in luxury purchases are turning around and pouring into Sam and Fat Donglai.
In 2023, Sam's China's sales have reached 84.3 billion yuan, and it is likely to exceed 100 billion yuan in 2024. In 2024, Fat Donglai's sales will reach 16.964 billion yuan, a year-on-year increase of more than 50%.
Why are luxury goods abandoned, but Fat Donglai and Sam are favored? Compare and you will understand:
In Fat Donglai, a down jacket with 90% goose down content is priced at 499, and the purchase price is transparent, and only 3 cents is earned for a piece. And CANADA GOOSE, known as the "life-saving artifact", a down jacket that costs as much as 15,000 yuan, the filling is not goose down, and the down content is only 80%.
Source: Internet
In Sam's, a Volcom ski suit with a tag price of more than 2,000 yuan is only 549 yuan, and 300 yuan can win Huang Yimei's jacket of the same style. On the other hand, luxury goods are bucking the trend in rising prices. Hermès will raise prices between 6% and 12% in 2025, LV will raise prices ten times in the past three years, and Chanel will raise product prices twice in 2024.
Between the "affordable big brands" that continue to compress premiums and the luxury goods that "rise to survive", many middle-class consumers "tighten their wallets" and choose real materials that can be seen and touched without looking back.
This is undoubtedly a change of the times, and luxury goods that cannot be adapted may become the tears of the times.
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In fact, in the midst of the wailing of the luxury market, there are still a few luxury brands that have sprung up and stepped on the pace of the times.
According to Fashion Business News, Loro Piana, a top Italian luxury brand founded in 1924, will sell 1,000 handbags per month in China in 2023 with a price of between 12,500 yuan and 47,000 yuan, and hot colors will need to wait for at least three months.
This means that this handbag alone has 20 million sales in a single month.
Why is it the same luxury, but "the same expensive is not the same life"?
As the world's largest cashmere manufacturer and wool buyer, LP is known as the "Rolls-Royce of cashmere". The unassuming big logo design, with exquisite handicrafts and personalized accessories, has struck the hearts of consumers with the "luxury and shame wind".
Behind the popularity of this "quiet luxury" is the change in consumption concepts.
When the Internet celebrities who show off their wealth are banned one after another, the chain of contempt for luxury goods has been quietly reconstructed. Luxury jewelry covered with logos are photographed on social media, and there are no longer tens of thousands of likes, which only attract the ridicule of the "nouveau riche".
For a time, the printed Lv and Gucci were complained about as outdated "street bags", while the low-saturation shirts with "quiet luxury" became a sign of "real rich". Even Hermes silk scarves have to be tied to Uniqlo canvas bags.
"You get what you pay for", "You can buy expensive, but you can't buy expensive". In this way, the price does not exceed 20,000 yuan, and Loro Piana, which uses mulberry silk and cashmere, is "reasonable" and expensive.
除了低调奢华的Loro piana,逆势崛起的还有活泼前卫的Miu Miu。
Sales in Miu Miu increased by 93% to EUR 530 million in the first half of 2024, while sales in the Asia-Pacific region, including China, increased by 16% year-on-year to EUR 376 million in the first quarter.
At a time when brands such as Chanel are losing customers, Miu Miu grabs the market with a price that is about 30% lower and a style that rebels against the classics. Y2K style, low-waisted miniskirts, crop tops and other elements cater to the needs of Gen Z in pursuit of individuality.
In addition, many domestic products have also taken the opportunity to awaken and seize the market.
Guanxia, a domestic niche fragrance brand, has a repurchase rate of up to 60%, quietly replacing Jo Malone as the new favorite of urban living rooms. The Xiaomi SU7 speeding on the streets has made Porsche owners look sideways. Rolex watches are no longer the ticket to high-end clubs, but Huawei's gold smart watch has become a "social password" at the conference table.
On the one hand, the "old money" pursues the ultimate in quality, and on the other hand, the "upstarts" are fanatically pursuing the trend of personality, and the battlefield of luxury goods is becoming more and more lively.
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How to understand this consumption trend?
Lei Jun, the "richest man in 1 hour", once said: In addition to the luxury goods that do not understand, the competitive strategy of almost all companies is cost-effective.
Pinduoduo, which was once ridiculed as the "poor version of Taobao", once surpassed Ali in market value. "Grandpa-level App" 1688 surpassed Douyin and WeChat in one fell swoop and topped the free list of the Apple App Store. Starbucks, which has cut prices in disguise, still has mediocre sales, but Luckin, which has 9.9, has maintained countercyclical high growth.
Looking at it now, I'm afraid that even luxury goods can't escape the curse of "cost performance".
History is always strikingly similar, the "king of cost performance" Uniqlo in Japan "lost 20 years" against the rise, today's Chinese consumer market, seems to be playing the same script.
Cost performance is no longer a compromise choice, but a contest between quality and price.