When will luxury consumption pick up? A huge increase of 4,100 yuan overnight, Van Cleef & Arpels' price increase triggered a buying spree. Is luxury consumption recovering strongly? 01 Van Cleef & Arpels' price increase triggered a buying spree Every day, people say that luxury goods are not selling well, but another luxury brand has raised prices against the trend. "New Product Finance" noticed that according to media reports such as "Daily Economic News", the French luxury brand Van Cleef & Arples (Van Cleef Arples) raised its prices by 5% to 11%, which actually triggered a wave of global buying sprees. Not long ago, the market heard that Van Cleef & Arpels was going to raise its prices, and soon there were scenes of people queuing up to buy at Van Cleef & Arpels stores in many cities around the world, including Beijing, Hong Kong, Sanya, and Osaka. There were also scenes of people queuing up to buy at Van Cleef & Arpels stores on social media, just like the scenes of people queuing at subway stations with concentrated traffic in first-tier cities during peak hours. Some consumers queued in the rain for more than 2 hours, and the clerk suddenly announced that only appointments and the first three people would be accepted to enter the store today. There were also consumers queuing for 5 hours, and I cried. The surprising scene is that there are people holding their children to line up early in the morning, and some people run into the Van Cleef & Arpels store in the mall at the speed of a 100-meter sprint, just to get the third place in line. The rush to buy luxury goods caused by the price increase is still so interesting. Consumers who buy them are very happy, and consumers who can't buy them are naturally full of disappointment. On May 31, a consumer told the "Daily Economic News" that when I woke up, the bracelet I liked had increased by 4,100 yuan. She was still asking Van Cleef & Arpels jewelry whether the price would increase the night before, but she didn't expect to see the bracelet she was struggling with in the morning. Van Cleef & Arpels is also very arrogant. When the reporter asked the relevant staff of Van Cleef & Arpels as a consumer, the staff said: We are raising prices for all categories this time. Van Cleef & Arpels Jewelry, founded in 1906, is a brother brand of Cartier and a luxury jewelry brand with a century-old history. Interestingly, the high price of the Van Cleef & Arpels brand is quite ordinary in terms of product materials. Van Cleef & Arpels has a red chalcedony bracelet called "Five-flower Four-leaf Clover", which is now priced at 40,800 yuan. The main materials are 18K gold and red chalcedony, which are not precious metals or rare gems, but many people still buy them. The price increase of Van Cleef & Arpels has triggered a rush to buy. Such a scene is indeed rare, not to mention that it is a luxury brand. Some netizens commented in confusion, saying that it is not free, so why do people rush to buy Van Cleef & Arpels and rush to get free eggs. 02 Ice and Fire in the Luxury Market In the current consumer market, there has been a popular view in the past one or two years, that is, the middle class has abandoned luxury goods, and luxury goods are becoming increasingly difficult to sell. There is even a view that: luxury goods are difficult to sell will become the new normal. The current global luxury industry does present a scene of ice and fire coexisting. It can be said that some people are sad and some are happy. The sad side is that luxury goods are not selling well, and more than one company is not selling well. In April this year, the first quarter report of 2024 released by Kering Group, a world-renowned luxury group, showed that sales fell 11% year-on-year to 4.504 billion euros, and the sales revenue of the core brand Gucci fell 21% year-on-year to 2.079 billion yuan. In addition, the sales performance of brands such as SAINT LAURENT and Bottega Veneta also declined to varying degrees. In the Asia-Pacific region, including China, the sales of the main brand Gucci fell 28% year-on-year in the latest financial reporting season, becoming the region with the largest decline. Kaiyun Group made the latest forecast that in the first half of 2024, the group's recurring operating income will fall by 40% to 50%. Another luxury giant LVMH (Louis Moët Hennessy) is similar to Kering Group. In the first quarter of 2024, the group's revenue from many businesses did not meet expectations. Organic sales in the Asian market, excluding Japan, fell 6%, becoming the only region with negative growth during the reporting period. Hermès Group is having a better time, but its growth in the Chinese market also seems to be slowing down. Another example is that the Danish jewelry brand Pandora's sales in the Chinese market have plummeted. In the first three months of this year, Pandora's sales in the Chinese market fell 17% year-on-year to 110 million Danish kroner (about 15.873 million US dollars). However, the luxury market also has a hot side. The latest luxury price increase that triggered a buying spree is the aforementioned Van Cleef & Arpels. In the current market consumption environment, there are still luxury brands that sell well. With the continuous advancement of Hainan's offshore duty-free policy, Hainan's luxury shopping has become more and more attractive in the Hainan market, especially during holidays or golden weeks. DFS, a luxury travel retailer under Louis Vuitton of France, plans to build a seven-star luxury and leisure and entertainment resort DFS Difeishi Yalong Bay project in Sanya, Hainan by 2026. If you want to say which country's luxury goods are selling hot now, it must be Japan. Now all major luxury stores in Japan are foreigners. The growth in Japan's luxury sales is attributed to the contribution of Chinese tourists to Japan, and the depreciation of the yen is the key to Chinese tourists' shopping in Japan. Compared with Europe, prices in Japan are about 10% cheaper, while compared with prices in the Chinese market, Japanese luxury goods are 20% to 22% cheaper. As reported by Tencent News Prism, buying LV "gets free air tickets", Tokyo luxury stores are crowded with Chinese. 03 Is luxury consumption recovering strongly? This time, Van Cleef & Arpels' price increase triggered a buying spree. Is luxury consumption recovering strongly? Luxury goods prices increase every year, and some brands increase prices twice a year. For example, Chanel's revenue in 2023 increased by 16% to US$19.7 billion, a slight slowdown from the 17% growth in 2022, and operating profit increased by 10.9% to US$6.4 billion. During the period, all categories of Chanel achieved double-digit growth. One of the important reasons for Chanel's good performance is the continued price increase. Chanel's Chief Financial Officer Philippe Blondiaux said that the price increase policy drove sales growth by about 9%. Chanel raised the global prices of some of its products in March this year. Although consumers are dissatisfied with the brand's price increase strategy, Chanel will continue its policy of raising prices twice a year. In the past one or two years, the consumption of China's luxury goods market has shown many obvious changes, and China's luxury consumption has many unique features. Many young people no longer blindly pursue luxury brands as they did in the past. The price increase of luxury goods is also a double-edged sword. Some luxury brands can promote sales by raising prices, while some luxury brands may not be effective by raising prices. After many luxury giants have experienced rounds of price increases, a considerable part of China's luxury consumption income comes from potential consumer classes. These consumers will think that it is an excessive price increase and will discourage some consumers. China's luxury consumption has also shown trends such as niche and diversification. Some high-end niche brands and new luxury niche brands launched by top designers have become new favorites. The rise of some Chinese high-end brands has also attracted some consumers. Of course, Chinese luxury consumers are no longer so easy to fool. The smarter and more rational they become, the more they will naturally abandon luxury brands with excessive brand premiums and no value retention. For example, the prices of products from brands such as Pandora and Swarovski do not match their value. They are expensive and do not retain their value. When many consumers become rational, they will not buy them again. Where luxury goods are cheap, consumers are willing to go there. Just like the news that Chinese consumers are buying Japanese luxury goods has been frequently reported recently, the biggest attraction is the low price. The luxury industry has its own particularity and will continue to increase in price, but at least the luxury consumption market in China is accelerating. Price increases will have different effects on different brands, and price increases are not a panacea. In the long run, luxury prices will continue to rise, and different luxury brands will maintain different rhythms, but consumers will become more and more savvy. The prospects of China's luxury market are still optimistic, but China's luxury market will show a general trend of more diversification and accelerated grading in the future. Some brands will continue to be popular, and some brands will be neglected. Whether the luxury industry can rebound strongly in the future is closely related to the global macroeconomic situation and the actual market consumption situation in various countries and regions.