LV walks off the altar luxury goods usher in a new pattern

Lvmh Group, as the world's largest luxury goods group, is suffering from declining performance. The louis vuitton brand that once held up half the sky of the group is also leaving the altar and gradually being abandoned by domestic high-end consumers. From the love of a luxury brand to be abandoned by the domestic high-end consumers, why does louis vuitton suffer in the country?

Lvmh Group's performance hits Waterloo in China

The reporter was informed that the world's largest luxury goods group lvmh (Moëtney Hennessy Louis Vuitton Group) recently released its second-quarter earnings report. The financial report showed that the actual growth rate in the second quarter was only 1.3%, a sharp drop from the first quarter's 6%, including louis. The year-on-year sales growth of the fashion leather goods division of vuitton (Louis Vuitton) fell by 75% compared to 10.7% in the first quarter.

At the same time, the first-half operating profit margin of the lvmh Group shrank to 18% from 19.8% in the same period last year, with a net profit of 1.509 billion euros.

Due to the significant impact of declining performance, the lvmh Group's share price was hit hard, falling 7.2% last Friday, setting the biggest one-day drop since 2009. Perhaps affected by lvmh Group, its rival Richemont shares fell 2.27%, British Burberry Group shares fell 1.59%, the French Kaiyun Group shares fell 4.93%.

It is reported that the income of the lvmh Group in the United States and Asia (excluding Japan) maintained a momentum of growth. The US’s performance in the second quarter was better than that of the previous quarter. The company’s management pointed out that this decline in performance was mainly due to the shrinking Asian market, including the Chinese market. The weakening of demand has become the reason why brand performance cannot be ignored. However, according to statistics, the Asian market including China in FY2012 was the largest market for the lvmh Group, which accounted for 28% of total revenue.

In this regard, the group's chairman and chief cernardarnnault openly told the media that the group has a strong brand strength and resilience, which allows them to show good adaptability in the economic and financial environment full of uncertainty in the first half of the year. He is full of confidence in the Group's performance in the second half of the year, whether it is expanding market share in the traditional market or emerging in new fields full of potential.

Decline in brand value leads to abandonment of high-end consumers

The reporter read the financial report and found that for the group's sales and profit targets failing to meet market expectations, the company’s response was due to the decrease in the number of shoppers in Hong Kong, China, especially from the decline in the number of mainland tourists.

The reporter found that in the shops of louis vuitton in the Mainland, the scene of invigorating people within a few years ago has ceased to exist, and the grand occasions of big bag purchases are gone forever.

From its official analysis and market phenomena, it is not difficult to see that domestic consumers are gradually moving away from the louis vuitton brand. Why is it that consumers have been obsessed with brand abandonment in just a few years?

In this regard, industry experts said that louis vuitton brand is an early entry into the Chinese market luxury brands, to meet the psychological needs of consumers to show off their wealth and show their self-value, and its logo models quickly become the classic models of consumers competing to buy. And at the time, the market competition was not sufficient, and there were fewer brands available to consumers, which also provided fertile ground for louis vuitton's rapid development in China. However, as consumers continue to upgrade, and louis vuitton brand's business strategy continues to sink, many consumers in first-tier cities choose to gradually away from the louis vuitton brand everywhere.

The lvmh Group and richemont Group's expansion in China during the 2011-2012 period can be astonishing, especially louis vuitton. However, from the pace of its expansion, it can be seen that the brand began to sink into the second-tier and third-tier cities, and even the fourth-tier cities, gradually escaping from the first-tier cities.

In response, Zhou Ting, dean of the Institute of Wealth Quality, said that the rapid development of the Chinese luxury goods market in previous years produced some bubbles, but the brand did not correctly realize this, and chose to continue to sink and accelerate staking their claims. . Although in the financial report for a period of time saw a beautiful figure, but everywhere shops, so that louis vuitton brand value greatly reduced. The scarcity and preciousness of luxury goods have been difficult to manifest in louis vuitton. This will inevitably lead some high-end consumers to choose to stay away from or even abandon the brand.

Relevant information shows that the total consumption of the domestic luxury goods market during the Spring Festival this year is 350 million US dollars, compared with 830 million US dollars last year, and it has dropped by as much as 57.8% in two years, which is also the lowest point in history in ten years.

In this regard, the industry sources said that the domestic luxury goods consumption is subject to great fluctuations in the policy, but also can not be attributed to the impact of the policy, quality, service, spreads and other criticisms are also the reason why the people do not want to consume luxury goods in the country. According to the survey data, when selecting a luxury brand, users are most concerned about the product's work and quality accounting for up to 72.2%, and the product's price/performance ratio of 54.5%.

Zhou Ting told reporters that as consumers matured, the future of domestic luxury goods will usher in a "niche" and "mass" pattern. Those top luxury brands are favored by high-end people due to the scarcity of materials, crafts, and designs, which will usher in niche luxury market opportunities. Nowadays, luxury brands common in the market need to use popular strategies to get closer to consumers, thereby increasing market share. For example, a large number of social media are used to communicate effectively with mass consumers, and brands are implementing people-friendly strategies in pricing.