Since ancient times, luxury goods have been very sought-after, especially harvesting all kinds of bags, shoes and clothes of rich women.
But I don't know when the luxury market has also ushered in a "cold winter", although it will not affect the normal operation of the brand for a while, but if it goes on like this, there will be a day when it will not be able to last.
In particular, the Gucci brand (Gucci), the "popular fried chicken" that once made the world's middle-class ladies flock, plummeted 25% in revenue in the third quarter, and even fell to the situation of outlet discounts.
Bacchus bags, which were once hard to find, are now stacked on the shelves with a 50% off label, and consumers joke that "I will never buy Gucci again, it's too cheap." ”
From "altar" to "stall"
2015年,时任Gucci CEO的Marco Bizzarri与创意总监Alessandro Michele联手,用复古印花、动物图腾和大胆配色让品牌焕发第二春。
In just a few years, Gucci's revenue soared from 3.8 billion euros to nearly 10 billion, becoming Kering's cash cow.
However, in order to expand rapidly, Gucci began to promote classic models at low prices through live streaming and outlet channels.
The 1955 handbag, which was originally priced at tens of thousands of yuan, was sold at half price in the outlet.
The special Bacchus bag frequently appeared in the live broadcast room, and was shouted by the anchor as "the lowest price on the whole network".
This strategy boosted sales in the short term, but caused the brand's high-end image to collapse quickly.
According to the data, more than 60% of consumers choose to buy Gucci products at Ole, and even form a shopping habit of "looking at the counter and placing an order at the outlet".
A consumer who has bought Gucci many times admitted: "Now when I go out with Gucci on my back, my friend's first reaction is to ask where to buy the discounted model, instead of praising the style for looking good." ”
When the brand is bound to "cheap" and "out of season", middle-class consumers naturally turn away.
In the third quarter of 2024, Gucci's direct retail revenue plummeted by 25%, and the wholesale channel fell by 38%, becoming the "main culprit" that dragged down Kering's performance.
The dilemma behind the "low price trap".
Gucci's predicament is not unique.
Even LVMH's revenue fell 3% in the third quarter, and in Asia, excluding Japan, it fell by 16%.
Although the core brand LV did not release specific data, analysts pointed out that its growth has slowed significantly.
The decline of these giants has made the entire luxury industry collectively anxious, and consumers no longer pay for vanity, but have begun to consume rationally.
Over the past decade, luxury brands have managed to shape their products into "status symbols" through frequent price increases, hunger marketing, and celebrity endorsements.
However, a new generation of consumers, especially the Chinese middle class, is gradually abandoning "logo worship".
They value practicality, value for money and sustainability.
The rise of outdoor brands Arc'teryx and lululemon, and the popularity of affordable luxury brands Longchamp and Ralph Lauren all confirm this trend. A consumer engaged in the financial industry bluntly said: "It is better to spend 30,000 yuan to buy a logo bag, than to buy a set of high-end camping equipment, which can be used for at least a few years." ”
At the same time, the wave of digitalization has exacerbated the dilution of brand value.
On social media, consumers can easily compare global prices, second-hand platforms have accelerated the circulation of classic models, and live broadcast rooms have "brought luxury goods back to their original shapes".
When the Birkin bag and the Gucci bag appear on the same screen, the former maintains a sense of mystery due to scarcity, while the latter appears to be "cheap" due to frequent discounts.
What's even more ironic is that even Hermes was briefly sold at Costco in the form of "no distribution", triggering a rush to buy.
This contrast shows that scarcity is the ultimate moat for luxury, not a marketing gimmick.
Don't be an Internet celebrity, just a legend
While Gucci struggled in Ole, Hermès delivered a stellar report card: revenue growth of 11.3% in the third quarter of 2024 and a cumulative increase of 13.8% in the first three quarters.
It is also a luxury, why can Hermès be "alone"?
The answer lies in two key words, handicraft and hunger.
Hermès never follows trends.
In its workshops, artisans spend years polishing a Birkin bag, with every stitch following a centuries-old tradition.
In its stores, store staff reserve new products for VIP customers, rather than rushing to sell inventory.
This "anti-efficiency" business model has made Hermès synonymous with "timeless classics".
In contrast, Gucci and LV launch dozens of new collections each year, rely on collaborations and pop-up stores to create buzz, and end up in a cycle of "outdated styles that don't sell".
What's more, Hermès understands the truth that "scarcity is precious".
The annual production of popular bags is strictly controlled in the tens of thousands, and consumers have to queue for years or accept the "distribution" rules.
This artificially created scarcity has made Hermès products at a perennial premium in the second-hand market, and even become a hard currency.
Gucci, on the other hand, opened up its supply to boost sales, resulting in a high degree of overlap between counters and outlets.
When consumers find that they "buy early, lose early", brand loyalty is naturally gone.
The fall of Gucci is a wake-up call for the industry.
In an era where consumers are becoming more rational, brand halo and marketing campaigns alone can no longer sustain growth. If luxury goods want to survive, they must master these rules of survival.
The contradiction between scarcity and scale, the success of Hermès proves that true luxury needs time to precipitate, not to be replicated on an assembly line.
If a brand blindly pursues expansion, it will only be reduced to "high-priced fast fashion".
With a greater focus on traditional craftsmanship, a new generation of consumers craves individuality, but Gucci has lost its core audience when it tries to appeal to younger people with exaggerated designs and collaborations.
How to find a balance between classic and innovative is a problem that brands must face.
Find the right sales channel for yourself, although online channels can reach more consumers, but the "bargaining" atmosphere in the live broadcast room is incompatible with the high-end image of luxury goods.
Hermes hardly participates in e-commerce promotions, but can maintain customers through private domain traffic, which may be a path worth learning from.
The future luxury market is destined to be a "survivor game".
Those players who are willing to slow down, return to the essence of craftsmanship, and stick to the brand value may be able to move through the cycle like Hermès.
And those brands that are obsessed with data growth and ignore the minds of consumers will eventually be swept into the discount area of outlets, becoming another legend that has fallen off the altar.
Do you have any different thoughts on this?
Resources: