When other luxury brands choose to open their first stores and flagship stores in popular business districts in first-tier cities, Taipai Siqi Group does the opposite.
Coach is gradually penetrating the sinking market.
Recently, Coach opened a brand new store in Baoji City, Shaanxi Province. This is the second Coach store in a fourth-tier city in China after Daqing City, Heilongjiang.
In this regard, Yann Bozec, president of the Asia Pacific region of Tapestry, the parent company of Coach, and president and CEO of the brand's China region, said that the store is one of the group's plans to open 30 stores in China in the next year. , some stores will go deep into third- and fourth-tier cities in China.
When other luxury brands choose to open their first stores and flagship stores in popular business districts in first-tier cities, Taipai Siqi Group does the opposite.
Will this expansion strategy dilute the value of the affordable luxury brands under the Taipaishi Group?
Tai Pei Siqi "falls
out of favor" in first-tier cities, and fourth-quarter results are mixed
According to consumer Cai Yi, a few years ago, Coach stores could always be seen in major department stores in Beijing, and they were usually in a more conspicuous position on the first floor of the mall.
With the passage of time, some Coach stores that once occupied the "C position" gradually faded out of people's field of vision. For example, Galeries Lafayette in Beijing, the Coach store that has been in since its opening has been replaced by the famous Canada Goose store.
Many stores of Kate Spade, which also belong to the Taipai Group, have also been silently replaced by affordable luxury brands such as Sandro, which have become popular in recent years.
Although Coach opened a brand concept store in Beijing's Sanlitun South District in July this year, the brand is also migrating to discount stores.
The Beijing News Shell Finance reporter found that the brand currently has 5 outlet stores in Beijing.
The financial report shows that in the fourth quarter of the 2022 fiscal year ended July 2, the turnover of Taipai Qi Group was basically the same as that of the same period of the previous year, an increase of 7% compared with the same period in the 2019 fiscal year before the epidemic, and the annual sales increased by 15%. %, with a gross profit margin of 69.6%.
Among them, Coach’s revenue in the fourth quarter increased by 8% year-on-year to $1.21 billion, operating profit increased by 3% year-on-year to $352 million, and annual sales increased by 18% year-on-year to $4.92 billion, with an operating profit margin of more than 30%.
According to the financial report, this is mainly due to the continued sales of various handbag products after the price increase.
It is not difficult to see that the above-mentioned performance is a "good news" for Taipei Siqi Group, but the Beijing News Shell Finance reporter found that the group's sales in the Chinese market in the fourth quarter of fiscal year 2022 fell sharply by 32%. %.
Joanne Crevoiserat, the group’s chief executive, pointed out on the conference call that the group’s overall performance in the Chinese market in the fourth quarter has improved, but it has not yet fully recovered, and a 15% decline is expected in the first quarter of fiscal 2023.
Previously, Joanne Crevoiserat also said that China is the key to the entire luxury goods industry. "The resilience of Chinese consumers has been confirmed in the past two years. Once the epidemic prevention and control is stabilized, they will re-buy luxury goods."
Brand sinking is not a bad thing, dislocation competition also has potential
In fact, brand sinking is not a bad thing for Coach or the brands of the entire Taipaishi Group, and this move can also become a concrete manifestation of the brand's deep exploration of consumption potential.
From Louis Vuitton to Gucci and Burberry, these established luxury brands have mature markets in first- and second-tier cities such as Beijing, Shanghai, Wuhan, and Xi'an.
In contrast, constrained by factors such as economic output, consumer preferences and population size, third- and fourth-tier cities have been undervalued, and many brands believe that these cities lack luxury shopping centers that match their luxury brand positioning.
Compared with the price of tens of thousands of yuan for luxury brands, the prices of brands under Taipaiqi Group are lower.
The Beijing News Shell Finance reporter noticed that the sales price of Coach handbags did not exceed 10,000 yuan, and the price of Kate Spade's handbags was 1,000 to 5,000 yuan.
According to the monitoring of the China National Commercial Information Center, in China, the market share of leather luggage brands with an average price of 3,000 yuan to 5,000 yuan is growing rapidly.
Yang Baoyan also publicly stated: "We already have many customers from third- and fourth-tier cities, and I believe there is a cluster there that allows us to expand our scale. At the same time, the group also wants to be close to the customer's location."
In this regard, Zhou Ting, dean of the Yaoke Research Institute and a luxury goods expert, believes that the luxury market mainly meets two needs, that is, the life necessities of high-end consumers and the consumption upgrade of mass consumers. The main purchasing power of the brand is obviously the latter.
Zhou Ting said that compared with high-end luxury brands, Coach has adopted a dislocation competition model.
The so-called dislocation competition, the first is the dislocation of customers, which is more aimed at mass consumers; the second is the dislocation of products, which pays more attention to practicality than many luxury brands, the price is relatively lower, and the cost performance is higher; the third is channel dislocation, in the third and fourth tiers. The layout of more stores in the city is a manifestation of channel dislocation, and it also shows that the third- and fourth-tier markets have become the focus of the next competition for many brands, with huge potential.