Why is Alibaba the most recognized threat to the European luxury goods industry?

No one expected that Alibaba, which was rejected by the luxury goods industry three years ago, has now become the sword of Damocles hanging over the major brands.

Johann Rupert, Chairman and CEO of Cartier's parent company, Richemont Group, has already expected this. He once admitted at an event held by the Financial Times that the comprehensive Romwe Coupon Code strength of the European luxury goods industry will one day be Amazon, Google and Ali. Baba and other technology giants overtake, and more sincerely invite LVMH and Kaiyun Group to form an alliance to cope with the upcoming wave of e-commerce, but failed to attract enough attention.

Johann Rupert's predictions are not fully fulfilled, but they are also guessed in half. Today, Amazon has entered the fashion industry and achieved shocking growth, but it is still on the brink of luxury. The only one that has really entered the luxury goods industry is Alibaba. The latter launched the luxury goods e-commerce platform in 2017. Pavilion, while the Western luxury industry recognizes Alibaba as the biggest threat.

At the same time, competition among European luxury goods e-commerce has become more intense. Richemont Group spent 2.8 billion euros last year to fully acquire Yoox Net-a-Porter, the world's largest luxury e-commerce platform. Farfetch is listed in New York. It currently has a market value of 5.3 billion US dollars and is launching a new round of "luxury fashion circle." Ground movement."

More and more luxury executives are realizing that the US and Chinese technology giants who are aggressively entering the luxury goods industry will truly jeopardize the status of the European luxury goods industry.

Loss of consumer control

What worries Asian traditional luxury brands is the loss of control over consumers. Under the “spoofing” of key opinion leaders of social media and the major e-commerce platforms, luxury brands that have always been high have suddenly discovered that the market share that was firmly in their hands is being divided by “outsiders” and everything is testing Europe. The resilience of veteran luxury goods.

Going back to the luxury goods itself, that is, the rare products that a few people can buy or obtain, have high sensitivity to the economic ups and downs due to high profits and entry, mainly originating in Europe. With the expansion of the consumer population, it has now developed into A global industry.

Affected by the 2008 economic shock and the continued global volatility of the global geopolitical economy, the European luxury goods industry was once plagued by a pessimistic atmosphere. Consumers were discouraged by the Louis Vuitton handbags priced at 2,000 euros and Gucci sneakers priced at 700 euros. The stock price of the luxury goods giant has plummeted.

After maintaining relative stability for nearly 20 years, the luxury fashion industry seems to be undergoing a subversive transformation with the exit of some traders who build traditional power systems. Faced with different difficult challenges, the industry has different factions, one is a multi-brand luxury goods group represented by LVMH and Kaiyun, one is an independent luxury brand typical of Chanel and Hermes, and the third is Salvatore. Ferragamo and Tod's are examples of family-run luxury brands.

However, the real turning point is that in 2016, millennials began to enter the society and have their own economic autonomy. The luxury goods industry has changed from brand-based to consumer-led, and new competitors have emerged. Let the future of this industry become more and more unpredictable. The luxury goods industry that has passed through the winter is also undergoing a major reshuffle while ushering in a new round of growth.

Among them, the most successful development at this stage is still the two giants of LVMH and Kaiyun Group. Under the escort of multi-brand matrix, the income growth of these two groups began to recover from the second half of 2016 and led the way in the 2018 financial year. Double-digit growth was recorded in the third quarter, mainly due to the strong purchasing power of Chinese consumers.

Chanel first disclosed its brand performance last year. Its total sales in FY2017 surged 11% year-on-year to US$9.62 billion to approximately 8.3 billion euros, operating profit was US$2.69 billion, net profit was US$1.8 billion, and total turnover exceeded Competitors such as Gucci and Louis Vuitton go hand in hand. With the support of Chinese consumers, Hermes has also maintained a steady income growth, with sales in the third quarter increasing by 9.4% to 1.46 billion euros.

Family-owned luxury goods groups such as Salvatore Ferragamo, Tod's and Prada are limited by their own management and management mode, failing to respond to market changes in a timely manner. They are still in a period of transitional pains, and the sales performance that has not improved has repeatedly caused the brand itself to fall into Rumors that will be forced to sell.

In this regard, Ferruccio Ferragamo, chairman of Salvatore Ferragamo, admitted that he had contacted private equity funds and a French luxury goods group, but reiterated that he would not sell family business shares, Tod's CEO Diego Della Valle and Prada CEO Patrizio Bertelli were clear Excludes the possibility of selling a family business.

What is significant is that the family-style Italian luxury brand Missoni and the Belgian designer brand Dries Van Noten, which had never been sought to sell, changed their minds last year and were acquired by Italian private equity fund and Spanish perfume group Puig.

In addition, the US luxury goods group is also growing, the most representative Coach and Michael Kors in the past two years through continuous acquisitions, trying to accelerate the LVMH and other first-tier luxury goods group.

In May 2017, Coach spent $2.4 billion to acquire Kate Spade, a US luxury handbag brand, and later changed its name to Tapestry Group. A year later, Michael Kors suddenly announced a $2.1 billion acquisition agreement with Italian luxury brand Versace, which will be renamed the Capri Group, and earlier it bought the British luxury brand Jimmy Choo for $1.2 billion.

In the increasingly important Chinese market, investors with strong capital in their hands are trying to take a slice of the big cake of luxury goods. Shandong Ruyi and Fosun have successively won the Swiss luxury brand Bally and the French luxury brand Lanvin. It has aroused great attention from domestic and foreign industries.

In fact, with the various mergers and acquisitions, the days of the luxury goods industry being ruled by Europe have long ceased to exist, and the boundaries between countries have become increasingly irrelevant. However, some people in the industry pointed out that luxury fashion brands face three major challenges in order to achieve greater growth, that is, a new generation of consumers gradually form a personalized fashion awareness, the decline in purchasing power and changes in preferences.

According to McKinsey's latest report, after a brief recovery, the global fashion industry will slow down to 3.5% to 4.5% in 2019, slightly lower than 2018. The report also emphasizes that Brexit and the global economic slowdown will begin to infiltrate the fashion industry. In a global environment where the economic situation is not optimistic, a new round of shocks has begun to emerge, and the luxury goods industry cannot be immune to it.

New winners generated in the shock

Obviously, the latest “big shuffling” in the luxury goods industry has a wide range of influences, but the “water level difference” caused by constant shocks has also created new business opportunities for new players, especially the ones that were least valued at first. Three-party e-commerce platform.

When the luxury giants are still sticking to the offline battlefield, Europe's Yoox, Net-a-Porter and Farfetch, the US's eBay and Amazon, and China's Alibaba and JD.com have been online in the early 21st century. The first barrel of gold in the market.

After forming a more stable business model and grasping most of China's online fashion resources, in order to compete for a bigger market, Alibaba has been focusing on luxury brands since 2015, and the pace of expansion is accelerating.

According to public information, Tmall International has introduced nearly 19,000 overseas brands in 3,900 categories in 75 countries in the past four years. More than 80% of them have entered China for the first time and have become the platform of choice for international brands to enter the Chinese market.

Up to now, more than 80 brands including Valentino, Versace, Burberry, Zegna, Marni, Stella McCartney, Tod's, MCM and Moschino have been stationed in the Luxury Pavilion, covering luxury and luxury, across apparel, leather goods, beauty and wrists. Table and other categories. Not only has the platform of the world's largest luxury goods group LVMH, Tmall and Kaiyun Group's relationship has been easing, the group's third largest luxury brand Bottega Venetta officially settled on December 28 last year.

At the user end, the platform currently has nearly 100,000 high-end members with a consumption of more than one million, of which 28 luxury brands have achieved an increase in the number of consumers with an average of 6.5 million, and the largest increase in the brand has more than 30 million in consumption. The average increase in consumer brand assets of luxury brands has reached 64.9%.

However, three years ago, Alibaba was once in a dilemma of fighting alone. In 2016, Alibaba was unanimously resisted by luxury brands. In the first two days of the scheduled time, founder Ma Yun was forced to cancel the keynote speech at the International Anti-Counterfeiting Alliance (IACC) Spring Meeting in Orlando, USA. Alibaba’s membership in the International Anti-Counterfeiting Alliance has also been cancelled.

Some members of the International Anti-Counterfeiting Union pointed out in the joint letter that Alibaba’s Taobao platform has a prosperous and huge gray market, which sells unauthorized goods. It can be said that this is more serious than the problem of the fake itself. Many luxury fashion brands have long been resistant to Alibaba.

However, some foreign media analysts said that luxury fashion brands can't solve the problem of counterfeiting in online shopping in China by refusing to talk with Alibaba. If they want to solve the problem, there seems to be no better way than directly cooperating with Chinese e-commerce giants. . Robert Bachs, president of the International Anti-Counterfeiting Alliance, also suggested in the speech, don't miss the opportunity to fight against Alibaba.

Digital research company L2 pointed out in the report that luxury brands can't control Alibaba's search results. Although they opened stores on Alibaba's B2C platform Tmall Mall, some unauthorised sellers that luxury brands want to crack tend to dominate. Without Alibaba's active participation in intervention, it will be difficult to improve.

In the face of the menacing protests, Alibaba chose to face the attack. In January 2017, AACA Anti-Counterfeiting Alliance was established, and 20 brand platforms including Louis Vuitton, Swarovski, Shiseido and Gee Su were acquired. In September of the same year, AACA set up an advisory committee to provide ideas and solutions for the alliance “think tank” to “manage fakes like drunk driving”.

As of August last year, Alibaba members of the Alibaba Anti-Counterfeiting Alliance have exceeded 100, from 16 countries and regions around the world, covering 12 industries including luxury goods, jewelry, clothing and smart devices. In the past year or so, the anti-counterfeiting alliance has smashed 247 manufacturing and selling fake gangs and assisted law enforcement agencies in capturing more than 300 people, involving nearly 1 billion yuan.

Some analysts pointed out that Louis Vuitton's cooperation with AACA is undoubtedly a strong brand for luxury brands and international fashion brands. As the first luxury brand for Ma Yun platform, Louis Vuitton said that the reason for choosing to cooperate with Alibaba is Alibaba's big data, as well as the line of public security, industry and commerce, quality inspection, food and drug supervision, etc. in Alibaba's anti-counterfeiting ecology. Resources.

In an interview with Fashion Headline, Liu Xiuyun once stressed that Tmall's trust and rapid growth in the luxury goods industry is inseparable from the support of new technologies and big data, which is also a fatal flaw of traditional Western luxury brands.

For luxury brands, Tmall, which has nearly 500 million high-quality users, is tantamount to a precise transmitter. Through Tmall's data analysis of consumers in different scenarios, the luxury lifestyle is better. Understand the target customer base and turn the data into the greatest business value.

“60% of Tmall’s active consumers are less than 30 years old. They like to try new things. Innovation is very important.” Liu Xiuyun pointed out that “Tmall will communicate better with young consumers through innovation, especially It is the field of luxury consumption."

According to the data, 80% of luxury stores are currently concentrated in the top 15 cities in China's GDP, but only 25% of the affluent class that consumes luxury goods live in these cities. The mismatch between supply and demand makes luxury brands urgently need help. Online platforms like cats embrace young consumers.

Surprisingly, Alibaba's growth is not too tempting in the eyes of Gucci, whose current growth momentum is the strongest. Brand CEO Marco Bizzarri said in an interview with the Financial Times that “it’s not risky. It is better to wait, we are still in a wait-and-see state."

According to Marco Bizzarri, Alibaba and JD.com do contain most of the resources of the Chinese e-commerce market, but joining the third-party e-commerce platform will dilute the most important uniqueness of luxury brands. This is not a risky thing.

Chanel Fashion President Bruno Pavlovsky also said earlier that the brand is still conservative about e-commerce. The brand's ready-to-wear and handbag business is not considering online sales. The physical store is the best medium for luxury brands to attract consumers.

He stressed that if every item is presented directly to everyone, the luxury will lose its unique feeling and the ultimate consumer experience brought by the store. Chanel hopes that the relevant technology allows consumers to order products online and try them out in physical stores.

Some people in the industry believe that behind Gucci and Chanel's brakes on the e-commerce platform, on the one hand, in order to prevent the brand from being over-exposed, and at the same time, these luxury goods have a huge physical store size. If radical e-commerce expansion is adopted, then Entity stores will become a huge burden, and luxury brands have to be vigilant.

Dimension reduction against luxury brands

The luxury war is in full swing, and market investors are worried about whether Chinese consumers can continue to support the industry's ambitions. Alibaba, with more than 600 million active users per year, undoubtedly holds the core lifeline of the global luxury industry.

What makes the industry more vigilant is that Alibaba, which has already led, has never slackened.

While competing with the giants for online resources of luxury brands, Alibaba's goal in recent years has gradually shifted to overseas markets, and has successively acquired Pakistani e-commerce D.