Customers are increasingly inclined toward discrete luxuries.
Signs of stress have been detected among many luxury brands from Beijing to Paris as luxury houses become too ubiquitous, especially in China.
In times like these, in which the rich are getting richer, it is only natural that signs of stress start to arise within many luxury brands ranging from Beijing to Paris. Due to a number of factors, luxury brands will find it increasingly difficult to reach those who possess a growing concentration of wealth in the world.
According to a new study by the Boston Consulting Group, China holds 4,000,000 millionaires, ranking behind the United States, which has 7,000,000. In recent years, Chinese consumers have been responsible for about 30 per cent of luxury purchases worldwide. But lately China has been experiencing a decline in the sales of luxury goods, due to, among other things, the global slowdown in the economic growth rate.
The rich in China seem to be getting tired of prices there, and are increasingly sensitive to cost. For years, luxury brands sold their items in Hong Kong and China for between 25 per cent and 40 per cent more than in Europe. But now, the Chinese are beginning to demand American-style discounts. Sales for the luxury sector in China fell 11 per cent to about 25,000 million dollars in 2014, according to the Fortune Character Institute, but luxury purchases made abroad by Chinese consumers rose 9 per cent to 81,000 million that same year.
The top 100 luxury brands in the world fared well in China throughout 2013, they raised 214,000 million in sales, according to research by Deloitte Touche Tohmatsu Limited. Now, brands such as Louis Vuitton, Gucci and Prada are fighting to stay in the continent as they are experiencing a very similar problem to what Burberry had, “they have become too ubiquitous for their own good”, according to the Financial Times. Customers are increasingly inclined toward more discreet luxury goods, and have moved past adorning their fortunes with flashy logos.
The top 50 luxury brands in the world, only sell online to 45 per cent of the main luxury markets, and less than half of the brands have online platforms in Brazil, Russia, India and China.
“The global market has developed a great expansion in the consumption of luxury goods, and the countries that did not consume them before, now do,” said Rurik Bradbury, Marketing Director at Trustev, an Irish company specializing in preventing fraud in online shopping.