In April, international luxury brands set off a new round of "price cuts" in China. It is reported that in response to the national value-added tax concession policy, the retail price of many Chinese mainland goods has been adjusted since April 1, a decline of about 3%, including Gucci, LV and other well-known luxury brands.
According to the Economic Daily-China Economic Net Fashion Channel, on March 21, the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs jointly issued the "Announcement on Deepening the Policies Related to Value-Added Tax Reform", starting from April 1 this year, VAT The taxpayer's taxable sales behavior or the tax rate of imported goods and the tax rebate rate of overseas passengers' shopping and tax refund items have all declined to varying degrees.
Luxury brands cut prices more than content?
It is understood that LV has lowered the price of China's official website at the end of March, a decline of about 3%. On April 1, Gucci cut the price of the Chinese market by about 3%. In addition to price cuts, consumers are more concerned about how much it has fallen. For example, after Gucci’s price cut, will the official price in China be closer to the European price? Some media compare the Gucci and LV parts of the best-selling handbags in China. , the purchasing channel and the price of the foreign official website. It was found that even with a 3% decline, the official price of the two brand handbags in China is still higher than the official European price and purchasing channels.
Take Gucci's hot-selling handbag as an example. The official price of China is 17,900 yuan, and the price is 17363 yuan after 3% price reduction. The price of this handbag in the European official website is 1,790 euros, about 13484 yuan. The official price difference is more than 3,800 yuan. It can be seen that the selling price in the Chinese market is significantly higher than in the European market.
The LV, which also cuts the price by 3%, also has a high price in the Chinese market. The average price difference is between 2,000 yuan and 3,000 yuan.
In this regard, some industry experts said that the price reduction of luxury brands is actually larger than the content. In fact, it only makes a publicity for their own brands, and also conveys the sincerity of “reducing the difference between the Chinese market and the European market”.
Can price cuts boost the domestic luxury market?
According to the "2018 Bain Company Annual Luxury Report", from a global perspective, the proportion of Chinese consumers' total spending on luxury goods to the global total has been increasing, and Chinese consumers have become the main driving force for the growth of the global luxury goods market. One. Therefore, more and more international luxury brands are paying more attention to the market pricing strategy in China. From the perspective of lowering the domestic selling price, the reduction of the price difference between domestic and foreign stores will make more consumers willing to spend shopping in China. The price factor will directly lead the luxury consumer group back to the specialty store, which will promote the domestic luxury market. Warm up.
Zhou Ting, a luxury goods expert and guest researcher, believes that global price integration has become a trend. The price cut is only a form, but it is indeed an effort by the brand to achieve global price consistency. By cutting prices, the brand will slowly release a signal that the domestic and international spreads are shrinking, thus promoting consumption backflow. Zhang Peiying, an honorary consultant for the Luxury China Alliance, believes that the 3% decline does not actually have much impact on the real luxury buyers. The spread between Europe and China is a differential pricing strategy for brands to adapt to local conditions. From the perspective of luxury pricing strategies, the differential pricing of different countries will always remain at around 20%.
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