{"id":10225,"date":"2024-07-03T01:28:21","date_gmt":"2024-07-03T01:28:21","guid":{"rendered":"https:\/\/agility-research.com\/?p=10225"},"modified":"2024-07-03T01:28:22","modified_gmt":"2024-07-03T01:28:22","slug":"%e5%b0%bd%e7%ae%a1%e9%9d%a2%e4%b8%b4%e7%bb%8f%e6%b5%8e%e9%80%86%e9%a3%8e%ef%bc%8c%e4%bd%86%e9%a6%99%e5%a5%88%e5%84%bf%e3%80%81%e8%b7%af%e6%98%93%c2%b7%e5%a8%81%e7%99%bb%e5%9c%a8%e4%b8%ad%e5%9b%bd","status":"publish","type":"post","link":"https:\/\/agility-research.com\/zh\/hermes-chanel-lv-hike-prices-in-china-despite-economic-headwinds\/","title":{"rendered":"\u5c3d\u7ba1\u9762\u4e34\u7ecf\u6d4e\u9006\u98ce\uff0c\u4f46Herm\u00e8s\u3001Chanel\u548cLV\u4ecd\u5728\u4e2d\u56fd\u63d0\u9ad8\u4e86\u4ef7\u683c\u3002"},"content":{"rendered":"\n

Luxury brands are strategically raising their prices in China amid slowing economic growth. But with priorities changing, how are consumers reacting?<\/p>\n\n\n\n

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Amid a slowing economy, plummeting consumer confidence, rising unemployment, and deflation, a handful of luxury brands have been raising their prices in China.<\/p>\n\n\n\n

French leather goods and fashion brand Herm\u00e8s raised<\/a> its retail prices in the nation between 10 percent to 20 percent, according to media reports<\/a>, as part of a global price hike that saw its bags rise by an average of 7 percent internationally.<\/p>\n\n\n\n

Meanwhile, rival French luxury house Chanel has raised<\/a> its prices between 6 percent to 8 percent across East and Southeast Asia. Fellow French fashion house Louis Vuitton also implemented<\/a> price adjustments in China from mid-February 2023, raising the price of its bags by an average of 6 percent.<\/p>\n\n\n\n

Such price rises have prompted disgruntled comments among Chinese consumers, who in the past often turned to daigou<\/em><\/a>, or overseas personal shoppers, to purchase luxury products at a discount.<\/p>\n\n\n\n

\u201cIf you bought an Herm\u00e8s early on, enjoy. If you are buying it late [now], you should just give up,\u201d wrote<\/a> user @Xingfuhuifayamiao on Chinese social media platform Xiaohongshu.<\/p>\n\n\n\n

\u201cI\u2019m already out,\u201d said another poster, user @184315347. \u201cIf I want to buy one, I\u2019ll just go to a luxury resale store.\u201d<\/p>\n\n\n\n

Polarized views<\/strong><\/a><\/h2>\n\n\n\n

Chinese consumers are tightening their belts this year as the nation continues to face economic challenges.<\/p>\n\n\n\n

Earlier this month, the International Monetary Fund forecast that China\u2019s economic slowdown<\/a> will continue over the next few years.<\/p>\n\n\n\n

While the country\u2019s economy has not reached a \u201cfull blown\u201d crisis, sputtering growth is an issue that has caused much concern amid declining consumer prices, rising unemployment<\/a> rates, China\u2019s property bubble bursting with the implosion<\/a> of Evergrande Group and other developers, and has created a ripple effect across neighboring regions.<\/p>\n\n\n\n

And yet luxury brands like Herm\u00e8s, Chanel, and even trendy outdoor tech apparel maker Arc\u2019teryx<\/a> are still raising their prices.<\/p>\n\n\n\n

The confidence of some brands to raise prices stems from several factors, says Jacob Cooke, co-founder and CEO of Canada and China-based WPIC Marketing and Technology.<\/p>\n\n\n\n

\u201cIn certain categories we are still seeing consumers pursuing so-called \u2018consumption upgrades.\u2019\u201d he says. This is when consumers are willing to spend more when product quality is a top purchasing consideration \u2014 such as in the case of vitamins or luxury items. <\/p>\n\n\n\n

Additionally, Cooke says \u201cdiscounting can undermine the status of a premium brand, whereas price hikes can elevate the brand\u2019s premium image.\u201d<\/p>\n\n\n\n

He calls it a \u201cfeedback loop\u201d whereby successful brands are able to elevate or continue projecting their premium image, without succumbing to short-term revenue pressure.<\/p>\n\n\n\n

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\u201cDiscounting can undermine the status of a premium brand, whereas price hikes can elevate the brand\u2019s premium image.\u201d<\/strong><\/p>\n<\/blockquote>\n\n\n\n

Other industry insiders, such as Max Peiro, CEO of China luxury insights platform Re-Hub, says brands have in fact been careful and strategic in taking a \u201ctempered approach\u201d to price increases over 2023, when compared with the hikes<\/a> that took place over the Covid-19 pandemic.<\/p>\n\n\n\n

Brands at the top of the pyramid can confidently raise their prices, says Peiro.<\/p>\n\n\n\n

\u201cBased on our tracking of the pre-owned market in China, the resale value of Herm\u00e8s in the secondary market remains high, while most luxury brands do not command similar high resale values on their iconic products, which could present challenges if they pursue an aggressive price hike strategy,\u201d says Peiro.<\/p>\n\n\n\n

Indeed, in the past it\u2019s been\u00a0reported<\/a>\u00a0that China\u2019s millennial consumers were prepared to spend up to 20 percent of their income on luxury purchases in 2018. Luxury items continue to be highly-coveted in status-conscious societies like China, but consumption behavior is changing.<\/p>\n\n\n\n

Evolving tastes<\/strong><\/a><\/h2>\n\n\n\n

On Xiaohongshu, some users say they have given up on conspicuous consumption altogether.<\/p>\n\n\n\n

\u201cI\u2019m not interested in Herm\u00e8s bags anymore,\u201d wrote user @Kong. \u201cI\u2019m not in the kind of social circles where I must wear certain brands or items \u2026 I\u2019d rather save money for travel and retirement,\u201d the poster wrote.<\/p>\n\n\n\n

According to research<\/a> from 2023 by Mintel, China\u2019s Gen Z consumers spent more on \u201cleisure\u201d than they did on clothing and other fashion-related purchases that year.<\/p>\n\n\n\n

\u201cExperience-led spending, from going to the cinema and visiting exhibitions to exercising outdoors, has become the mainstream way for Gen Z to resume their lives post Covid,\u201d Mintel senior research analyst Blair Zhang told<\/a> Time<\/em> magazine at the time.<\/p>\n\n\n\n

A research study conducted<\/a> by Agility Research and Strategy in late 2023 further revealed the evolving tastes and attitudes of younger consumers in the nation \u2014 Gen Z and millennial millionaires were found to prefer exclusive, rare, and limited edition items from brands rather than mass or mainstream products.<\/p>\n\n\n\n

Beyond price hikes, when implementing a pricing strategy, \u201cbrands need to consider their brand power, competitive positioning, and consumer sentiment to strike a balance that elevates the brand and maximizes growth without alienating their customer base,\u201d says Re-Hub\u2019s Peiro.<\/p>\n\n\n\n

\u201cLooking ahead, I foresee further polarization in brand performance: top brands with access to more resources and selected emerging brands with high desirability will likely outperform others,\u201d he adds.<\/p>\n\n\n\n

Key Takeaways<\/a><\/h2>\n\n\n\n