China Being Blamed for Diminishing Sales in Luxury Market

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Diminishing Sales

Luxury brands have always had a home in China, that is until they have started to see diminishing sales. They have found that Chinese shoppers are more than willing to pay for the quality goods that they are offering. However, as of late, luxury brands are seeing some diminishing sales across the board, and China is being blamed for these sales dropping as they have. Almost all the luxury brands that are seen in China are posting less than stellar sales records. For example:

  • Burberry posted sales that were not at all what they expected
  • Remy Cointreau stated that sales have declined by 9%
  • Diageo saw a $411.5 million hit in China
  • Prada saw their profits drop this year with a 28% decrease in sales

Even luxury car brands, watches and spirits are taking a hit in the Chinese market.

Why Luxury Brands are Seeing Diminishing Sales?

There are several ideas out there about why luxury brands are struggling in the Chinese market. Many of the luxury brands are finding that with China cutting down on corruption in the government, they are seeing a huge decrease in the number of luxury goods that are being purchased. While others blame the numerous counterfeit products on the market. However, what is clear is that these luxury brands are involved in a recession that is specific to their product.

The economic slowdown throughout China is having its toll of the luxury brands. Another issue that is being faced by luxury brands is the changing concept of luxury. Many brands that were once thought of as the top of the line in luxury are now being looked down on by the elite of China. For example, Louis Vuitton is now considered a brand for middle class citizens, rather than a luxury brand. In fact, the founder of an elite Chinese etiquette school by the name of Sara Jane Ho stated:

“I can’t buy Vuitton, I’ve seen it too much, it’s a brand for secretaries.”

Due to this Vuitton has even said that they are looking at their sales approach, and there may be some temporary closures of stores as they work to get the name brand back into the spotlight of luxury brands.

Will Luxury Brands Make a Comeback?

So are luxury brands going to go back to their label of being the best at what they have, and the one product that everyone needs. In the case of Vuitton, it is going to take some time in order to redevelop their sales strategy and brand in China. However, there are no limits on what these luxury brands are going to be able to do.

The key to making it in China is that the companies have to offer something that Chinese consumers believe that they cannot live without. For luxury brands, this means showcasing why their luxury product is the best of the best and why it is needed. Only then, can luxury brands start to see their brand image getting ranked higher by Chinese consumers.

About Author

Social Brand Watch (SBW) is a collection of experts in digital, mobile and social media in China. SBW was created to complement Resonance's China Social Branding Report, a bi-weekly report focusing on modern marketing methods of the world's top brands in China.

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