StockTalk(7.19): Luxury brands face challenges as China's market slows: How should they respond?
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China and North America, the two most important markets for luxury goods, have shown signs of slowing down, raising concerns for major luxury brands. Richemont, the owner of Cartier, recently announced a disappointing sales update for the second quarter, with sales in the Americas down 4% and those in Asia also frustrating. China's economy also faltered in the second quarter, prompting banks like JPMorgan and Citigroup to trim their growth forecasts for this year.
Luxury brands have invested millions to reach new customers in these markets, but rising prices, high-interest rates, and slowly deteriorating credit conditions affect aspirational luxury customers. The future of luxury companies depends on how China's recovery in domestic and tourist demand unfolds over the rest of the year.
China's recovery in domestic and tourist demand has been slower than expected. What steps will luxury brands take to mitigate the impact of these market slowdowns on their businesses?
And how will they adapt their strategies to cater to the changing preferences and needs of younger luxury consumers in China and elsewhere?
And how will they adapt their strategies to cater to the changing preferences and needs of younger luxury consumers in China and elsewhere?
Join us and share your thoughts on today's topic. Please leave a comment below to share your opinion with us. Your feedback is valuable, and we appreciate your participation.
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Moomoo SGOP : Join the discussion to win points! What is your view on the luxury industry?
Please leave a comment below to share your opinion with us. Your feedback is valuable, and we appreciate your participation.
Kopikarp : In response to a slower recovery in China's domestic and tourist demand, luxury brands are expected to raise prices, particularly in Europe, and enhance their focus on exclusive experiences to attract ultra-wealthy shoppers. For instance, Balenciaga and Chanel are opening stores exclusively for top spenders in Paris and Asia, respectively.
To cater to younger Chinese consumers, brands are modernizing their narratives and launching limited-edition products, making them feel like VIPs. As these consumers view luxury brands as social capital and a lifestyle choice, brands are leveraging social media and influencers to engage with them constantly and to offer unique customer experiences. This multifaceted strategy enables brands to justify premium prices, beyond just brand recognition, and to remain relevant in the evolving luxury market.
102785019 : Hi, may I know Malaysian need to pay Tax for Singapore Stocks Dividends? if Yes How many %?
(I.E: Foreigners need to pay 30% Tax for US stock dividends)
Gong Xi Fuck Cai ❤ : Currently inflation worldwide is so high that many customers would cut their expenses on those unnecessary luxury. So is better for those luxury companies to adept and cut cost during these period in order to survive first.
They can use cheaper thai ah gua to be their brand ambassador instead of superstar to save ads cost. Or eg Victoria secret those lesser material G-string is earning high profit margins. For luxury watch maybe they can design cheaper versions that cater for the affordable mass, or diversify their business selling toilet paper or kotex that human needs.
ZnWC : Why not do all the four suggested methods in the poll. Cut cost must be done prudently as market sentiment is very important to brand name for luxury good. The company can reduce cost by being more productive and lower material and operating cost. Layoff workers is not an option but shifting operation to a lower cost country is an option.
Perhaps the most viable choice is open up new market such as exclusively to the rich, the young and female customer. Marketing strategy is utmost important. But there'll be competition and copy-cat hence the product must be scarce and able to restore value like diamond.
Building a ecosystem of service and customer support is another way to distinguish itself from the others. Like gaming industry, acquisition and partnership may be another possibile solution.