LV Should Close 8 Of Shops To Break Through.

Some commentators say that with the growth of e-commerce, especially the recent development of mobile commerce, more and more Chinese consumers prefer overseas shopping.

Is it really necessary for Louis Weedon to set up 80 stores in China? Or do they need to set up better quality stores to support their global shopping network and multi-channel service platform? In this way, you can get the same turnover even if you only need 15 stores.

With the change of new shopping mode and consumer taste, the overall growth rate of the industry will slow down, and many companies that have been expanding have begun to slow down the pace of opening stores or to close their business outlets with poor performance.

Analysts say the process is likely to accelerate.

According to SmithStreet SolutionsCEO Franklin Yao of Shanghai consulting company, there is no doubt that for a luxury enterprise, wave after wave of economic pressure is unlikely to improve in the short term.

He said: "in China, we have not found any economic impact will be beneficial to luxury brands.

To change this situation, unless there is a miracle. "

Yao believes that many enterprises are cutting costs, and in the past 5 to 10 years, as a part of China's middle class consumer reorganization plan, Chinese stores will also be closed.

The number of middle class consumers has increased by tens of thousands, and is increasing year by year. They are also the hope of luxury brands, and their purchasing power is expected to match the elite consumers. However, due to a series of influences such as the Chinese government's anti-corruption policy, stock market turbulence and currency devaluation, they are suffering a great blow.

"This is a huge consumer group," he said.

Of course, their per capita expenditure is not as good as that of elite consumers, but their number is excellent.

Luxury brands must be more patient and consider long-term interests.

In the short term, the performance of the consumer group may not be satisfactory.

He added: "because a large number of people will rush into the middle class group, the long-term benefits of brands will be greater than that predicted by us three years ago."

As for store closures and budget cuts, Yao believes that brand strategies need to change with the changing environment of luxury consumers in China, which will not have a negative impact on brand growth potential.

According to the Bain & Co report, last year, on the basis of the current exchange rate, China's luxury business turnover decreased by 1% compared to 2013, reaching 115 billion yuan (18 billion US dollars).

Last week, after the collapse of the stock market in China and the world, there was only a fear of business development in the world's most populous countries.

According to HSBC analyst ErwanRambourg, between from August 10th to 24th, the 16 leading enterprises in the luxury goods industry including LVMH, Richemont, Herm, s, Swatch, Burberry, Moncler, Christian Dior, Kering and Kering lost 15.9% of the value of their shares.

Gucci has been flat this year. As of the end of last year, the brand has 63 stores in China.

According to the annual report of Kai Yun group of the parent company, "the expansion speed of Gucci has slowed down, and the brand will pay more attention to the integration of the existing infrastructure, especially in the mainland of China."

In 2014, Prada actively continued to expand in China, and even opened new stores in the western part of Xinjiang.

The brand had planned to add 10 stores to the end of 2014, bringing the total number of stores in China to 60.

Analysts said that due to the 4% decline in China's turnover, the poor performance is likely to lead to a reduction in its opening plan in the two or three tier cities.

In addition, overseas consumption is increasing, and the consumption environment of Chinese luxury goods has changed. Now people are more willing to buy experience than a specific handbag product. Shaun Rein, managing director of CMR China, points out that the expansion of the two or three tier city stores can not continue to be the main reason why brands need to reconsider the number of stores in China.

Meanwhile, according to Rein, the number of other brands closed in China is 30% to 50%, and stores are being reorganized in major tier cities.

He said: "many luxury enterprise plans are very unrealistic.

They saw the rapid growth potential of the market here, so they blindly opened the business site without considering the feasibility of location economy.

Too hastily, whenever any shopping center opens, the brand will jump in.

And because Chinese consumers will never continue to consume, these stores will soon go bankrupt.

But many luxury brands are blind to this because they have the advantage of free rent or low rent for the first two to three years.

Now, when they have begun to pay rent, it is clear that the damage is more than beneficial.

Like Rein, RTG consultant partner and CEOAngelito Tan believes that the current dilemma of the brand is not much related to external factors such as the government's anti-corruption policy, but more because of the failure of brand strategy.

He said: "although the traditional high-end brand is bound to be affected by the external environment, it is totally misleading to say that external factors are the main cause of the impact.

In my view, the influence of this factor is exaggerated.

The decline in revenues and profits is also related to the untimely strategy of the brand.

Managing director of CR retail consulting company

Added: "by talking with retailers, it is surprising to find that many new entrants do not take these problems into consideration.

They believe in a myth that if retailers open shops similar to those in other markets, consumers will flood.

The truth is not always the case.

Small luxury brands, such as Lanvin, Givenchy and Stella McCartney, are adopting a more slow and stable way to fill the vacancies in the Chinese market.

Analysts say that as consumers start to stay away from overexposed luxury brands, their expansion will increase, especially in the first tier cities.

Rein said: "luxury brands are not dying, they just need to be changed.

As the economy slows, luxury sales will fall, but they will not continue to plummet.

However, you will still see some poor brand performance data, because consumers are away from them and are looking for newer, more subdivided, more approachable luxury brands, some of which are local luxury brands in China.

In an investor record, Exane BNP Paribas believes that a moderate depreciation of the renminbi will have a low single digit impact on the profits of luxury brands.

But on the other hand, referring to the demand for luxury goods in China, it suggests that people should distinguish their nationalities from their geographical location by looking at things.

Luxury sales in China have declined, but the purchasing power of Chinese consumers worldwide is still strong. The report says that this is mainly driven by the middle class crowd, who is a big fan of luxury goods.

Avery Booker, a luxury consultant in China, believes that the key problem is that the brand is not able to grasp the characteristics of the pformation of Chinese luxury consumers, or fail to carry out the right marketing under the circumstances of the pformation.

He explained: "when you see the performance of Chinese employees like Prada in their normal market performance, they have not changed the market strategy in the past two years.

They are continuing to operate these existing stores and carry out the same marketing activities.

They use similar bloggers and KOL.

The key is that new consumers have formed a completely different style from the older generation in the past two years, and traditional marketing has been ineffective. "

The change of age is the opportunity for small luxury brands, and they are more popular among young consumers.

According to the annual report of Kai Yun group of parent company, the annual performance of Saint Laurent Greater China is 42.6% higher than that of last year.

Hermes is also looking for opportunities to open stores in China. According to Florian Craen, chief executive vice president, the company plans to add 1 to 2 Chinese stores in 2015.

The company CEO Axel Dumas said last week that he still optimistic about the Chinese market, which coincides with the previous Salvatore Ferragamo CEO Michele Norsa.

In the future, plans to continue to open stores in China, such as Michael Kors, Tory Burch and Coach, are looking for opportunities to use Chinese consumers to promote growth.

But the situation in mainland China is obviously different from that in Macao, Hongkong. Brands at all levels are complaining about the high rent.

Last week, fashion headlines reported that Coach announced that it would close the flagship store in Queen's road in Hongkong, and the brand has 21 other stores in Hong Kong.

Although some companies will cut stores, analysts believe that this is only a short-term phenomenon, not from the stock market crash, but more to consumers.

Relevant.

Luca Solca, a bank analyst in Paris, France, said: "because Chinese consumers are more willing to buy luxury goods outside the mainland of China, brands may want to continue to narrow the domestic retail network.

I think this is the most likely measure for the brand.

Reducing brand support and communication channels will not cause too much damage to consumers, because brands want to maintain their image in the minds of customers, and no matter where they buy.

He added that reducing the number of stores would be based on "extreme moderation".

He said: "you will never know the next step of the currency. For example, if the RMB devaluation further, more Chinese will go shopping in China, and then you will need the physical stores to serve them."

Tan agrees: "I don't think brands will continue to close Chinese stores.

Smart brands have a better understanding of the trend of consumers and Chinese consumers. At the same time, China's vested interests are taking further measures to promote domestic consumption. Combined with two factors, I think domestic consumption potential is still very strong.

The Chinese luxury market is still active.

The Chinese government, while reducing tariffs, stipulates that the customs should stop importing parallel prices.

This means that the brand price will be closer to the international level, thus promoting domestic consumption.

Even so, China's tourism industry is still promoting the luxury sales in Japan, Korea and Europe and the United States.

According to Barclays Global Blue data analysis, in July, the growth of China's consumer tourism consumption accounted for 27.5% of total European tourists, while global tourism consumption grew by 31.9% during the same period.

The European Visa Office statistics show that in July, the consumption of illegal nationality visa holders in France amounted to 1 billion 300 million euros ($1 billion 420 million).

It increased by 10% compared to July 2014.

Among them, Chinese passport holders grew the most, up to 83%, followed by the United Arab Emirates (78%), and the United States (28%).

As a result, the consumption of Chinese consumers in France jumped from twelfth to sixth.

Before, the company took a wait-and-see attitude toward China's recent economic turmoil. Whether these turbulence will affect long-term luxury consumption is still unknown.

Dumas said it is too early to comment on the impact of the depreciation of the renminbi and the fall of China's stock market on business.

He said, "will the Shanghai stock market have a negative impact on consumer confidence? Not necessarily, we need to be vigilant against market dynamics, but so far, China's performance in the bail outs is still acceptable.

Similarly, the response of Hermes is relatively successful.

"

Solca, an analyst at Bank of Paris, said he would pay close attention to China's development.

Luxury companies should adopt a soft landing policy.

"Hard landing" may have a very serious negative impact, and may even lead to a global recession.