Valentino Growth Lackluster Is Being Sold And How To Seize Growth Opportunities Is Still Being Explored.

The luxury market is still growing rapidly, but how to seize the opportunity, Valentino is still exploring.

Stefano Sassi, chief executive of Italy luxury brand Valentino, recently revealed that its sales in 2018 increased by 3.4% to 1 billion 200 million euros, compared with 1 billion 160 million euros in 2017, at the Altagama consumer and retail insight conference held by Boston Consulting Group.

He said that although Valentino did not grow at our usual pace, the Valentino showed a positive trend in 2018, and stressed that the group still had confidence in achieving strong growth.

In addition, Valentino showed positive trends in all markets in the first quarter of 2019, but Macao and Hongkong slowed down, but were offset by the growth of sales in the mainland of China.

He added that Chinese consumers now spend less on travel and choose more in the local market.

It is worth noting that since April 1st this year, the domestic value-added tax rate has been reduced comprehensively, of which 16% of the original applicable tax rate has been adjusted to 13%, and the corresponding cross border value-added tax has also decreased.

Some analysts pointed out that with the gradual narrowing of the domestic and international market price differences, more and more luxury purchases will take place in the mainland market.

Stefano Sassi said that its casual wear has not shown any signs of weakness for the men's clothing department, which is increasingly vulnerable to rumors.

He further explained that when the brand first entered the field of men's clothing business, it was inspired by the elegant tone of the brand women, but it was actually the direction of failure. Then Valentino turned to casual men's clothing. In 2016, it launched the sports shoes like Rockrunner, which are popular among male consumers.

Stefano Sassi complements Chen. Generally speaking, formal clothing accounts for only 4% of the sales of men's clothing, 50% of accessories, and the rest is clothing and casual wear, and emphasizes that the concept of formal dress has been abandoned. Next, Valentino will still strive for leisure series, and the brand will never go back.

At the meeting, Boston consulting BCG released the global consumer insight report on luxury goods. The study points out that 74% of respondents believe that they will buy casual wear.

Thanks to the growing importance of sustainable development by consumers and the increasingly successful cooperation between luxury goods and artists and street brands, the limited series and retro series are rising, while the luxury secondary market is currently worth 22 billion euros, with an average annual growth rate of 12%.

Nicola Pianon, senior partner and managing director of Boston consulting, emphasizes that millennials and Chinese consumers prefer Italy made products to luxuries made in France.

In addition, social media and KOL influence are still the main force affecting consumers' purchasing decisions, and more and more consumption channels are happening online.

According to the global luxury consumer research report released by the Altagamma consumer and retail insight conference, as of 2018, there were 425 million luxury consumers in the luxury goods market and spent about 92 billion euros.

By 2025, the market value of luxury goods will reach 1 trillion and 300 billion euro per year by 4.6%.

Between 2018 and 2025, personal luxury goods will grow by 3%, of which accessories and cosmetics will become engines of growth. By 2025, the millennial generation will account for 50% of the personal luxury market.

By then, Chinese consumers will account for 40% of the consumption of luxury goods.

In this regard, Stefano Sassi also summarizes three main trends.

First, the loyalty of consumers is getting lower and lower.

Second, brands must act quickly to adapt to changing trends.

Third, the brand needs to better carry out marketing and communication activities through digital revolution. Through more communication with consumers, consumers can understand the value and DNA of brands and stand out from many competitors.

As a matter of fact, Valentino, who is aware of the fact that marketing alone is not a permanent solution, has made a corresponding layout in marketing strategy and product mix to capture the minds of consumers.

Before the autumn and winter series was released in Tokyo last November, Valentino collaborate with Japanese origami artists Kyohei Katsuta and Satoshi Kamiya, Japan's famous brand Yohji Yamamoto and Doublet, and set up a concept store called VLTN TKY to create freshness for consumers and preheat Tokyo's big show.

Valentino is also making great efforts in the Chinese market.

The brand takes the lead in choosing to conform to the trend of star and KOL influence enhancement, and cooperate with the popular traffic stars.

In 2017, Valentino announced that after 90 million artists Zhang Yixing was the first brand ambassador of the Chinese market through the official account of micro-blog, and then announced in January this year that he was the first spokesman for men's clothing in Greater China.

At the same time, in the mainland market with online channels as the main consumer places, Valentino also seized the luxury marketing hotspots of Tanabata. In July 23rd last year, the Tanabata series, which was launched by Ambassador Zhang Yixing of China, was released on the WeChat Mini program entitled "VALENTINO Tanabata limited series" two days later, and some products sold out on the first day.

Some analysts believe that the use of WeChat small program that is to use the characteristics of the light platform, with the unique Chinese Tanabata Festival as the incision, luxury brands can "flash" in the form of maintaining brand image at the same time to touch a wider range of consumers.

The "limited" word stimulates the consumer's nerves. The rise of the festival's gift giving and self reward culture in the Chinese youth market provides the soil for the Tanabata marketing.

In order to seize the new growth point of the cosmetics and perfume market, the brand reached a long-term cooperation agreement on cosmetics and perfume in May last year with L'OREAL, the world's largest makeup group, and came into effect in January 1, 2019.

A new PWC study shows that the global cosmetic industry will also grow further in the future, the annual compound growth rate will reach 5%, and the annual sales volume will exceed 500 billion euros by 2021.

However, some analysts believe that for Valentino, accessories business is still a big short board, but it is also an opportunity for the future.

According to Research Cosmos, by 2025, the luxury handbag Market will grow at a CAGR of 8%.

Only rely on explosive shoes can not pull the brand to achieve strong growth, while the high fashion price is too high and timeliness, not like Louis Vuitton, Gucci, Dior has many kinds of signature hot selling handbags, leading to Valentino can no longer be the first tier of luxury goods in a firm foothold.

Rumors about changes in the ownership structure of Valentino, Stefano Sassi, said that it was related to the problems faced by Mayhoola funds of major shareholders and investment companies of Qatar Royal holdings.

According to the sources at the beginning of the women's wear daily, the Mayhoola with Valentino, Balmain and Pal Zileri may want to keep distance from the luxury sector after the sale of the British fashion brand Anya Hindmarch. It is reconsidering the investment and positioning of the group in the fashion industry, and hovers in the two choices of leaving the fashion industry and further increasing investment.

It is reported that the valuation of Valentino is currently around 25-30 billion euros.

The source further pointed out that the person in charge of Mayhoola has realized that there is no structural strategy in its investment, and Stefano Sassi may be responsible for supervising all Mayhoola fashion brands for a period of time, because he is unofficially involved in the operation of brands including Balmain and Pal Zileri.

Last year there were rumors that Gucci's parent company Kai Yun group was negotiating with Mayhoola on the acquisition of Valentino.

The industry is generally optimistic about this acquisition project, because the Valentino and Gucci target market and consumer groups overlap, Valentino will mean that the group has another trump card to lock consumers, ease the industry's Gucci style similarity and lead to consumer fatigue.

At the same time, the two sides can play a huge synergy in production and marketing.

According to the first quarter performance report released this week by Kai Yun group, Gucci has entered a stable period.

In the three months ended March 31st, Kai Yun group's revenue continued to be driven by core brand Gucci performance, up 21.9% to 3 billion 785 million euros, while luxury sector sales recorded an increase of 21.7% to 3 billion 648 million euros.

During the period, Gucci sales increased by 24.6% to 2 billion 326 million euros, and the growth rate slowed sharply compared with 37.9% in the same period last year. The growth rate also slowed down. In the fourth quarter of last year, the growth rate was 28%. After the announcement of the earnings report, dragging open the cloud group, the stock price dropped by about 5% on Friday, and the market value evaporated 3 billion euros.

Some analysts say that consumers have entered the fatigue period for Gucci. If Kai Yun group can not advance the next growth point with explosive force, then the peak period of the group has passed.

In this sense, Valentino is a very suitable target for Kai Yun group.

Fran ois-Henri Pinault, chief executive of Kai Yun group, admitted earlier that after Gucci successfully entered the 8 billion euro club, Kai Yun group will start looking for new acquisition targets, and stressed that Kai Yun group will become the most influential luxury group in the world.

Jean-Marc Duplaix, chief financial officer of Kai Yun group, revealed that the cash flow of Kai Yun group in 2018 has reached 3 billion euros.

The uncertainty of the millennial generation has increased the uncertainty and risk of Valentino's future development. Even the luxury giant Kai Yun group can not avoid it.

Compared with Mayhoola, Valentino seems to be able to go further under the escort of Kai Yun group. For the latter, it can be regarded as a safety card.