Fashion is a circle. What is scarce is fashion.

Click here to add picture caption.

Business insight Author/Liu Run finishing/Yu Xintong

this isWeChat official account, Liu RunDedi811An original article

Click here to add picture caption.

China consumers have always been the main consumers in international clothing, fashion and luxury goods industries. According to McKinsey’s prediction before the outbreak, by 2025, China’s luxury consumption will account for 40% of the world’s total.

However, since the outbreak of the epidemic at the beginning of the year, clothing, fashion and luxury goods have become one of the most seriously damaged industries, and their income has plummeted by 32% in three months.

Click here to add picture caption.

During the epidemic, everyone’s income has decreased, but they still have to eat three meals a day, and they still have to pay back their car loans and mortgages. At this time, reducing the expenditure on non-essential items has become the choice of most people.

Therefore, the serious losses of international fashion and luxury brands are caused by the epidemic.

Is that so?Yes, but not comprehensive.To find out the real reasons for the decline of international fashion and luxury brands in China, we need to trace back to three core factors that affect brands:National cultural potential, social and economic trends, and consumers’ understanding of brand value.

1. National cultural potentialThe rise of China brand makes international fashion and luxury brands meet strong competitors in China market.

As early as 2012, Li Ning rose suddenly; In 2019, Anta appeared on the global Top 20 fashion industry list; Xiaomi home is very popular; The perfect diary is all over the internet.

China brand is setting off an unprecedented upsurge of domestic products. Is the overall rise of China brands because the quality of these brands has been greatly improved? Sure.But there is actually a deeper reason behind the rise of domestic products-the increase of "national cultural potential".

What is the national cultural potential? National cultural potential energy is a big box beyond corporate brand.A country’s economic growth and national strength increase, which brings a sense of national self-confidence, and the country’s cultural potential will also increase, eventually giving the brand a subtle influence.

Simply put, when China was strong, the whole world drank tea; When the west is strong, the whole world drinks coffee. We always want to learn from those powerful people and think that the cultures of those powerful countries are excellent. This cultural Excellence will be reflected in the products they use, lifestyle, food, clothing, housing and transportation, which is called national cultural potential.

Back to fashion luxury brands. Europe, where big names gather, once had a strong cultural potential for China. An ice silk T-shirt of Montague could sell for thousands of dollars earlier, but at that time, everyone’s monthly income was about 100 yuan, and almost one year’s salary could buy a T-shirt, but this is the representative of fashion.

Now, the rapid development of China has brought full national pride, and wearing the four characters "China Li Ning" has become a new generation of national fashion.Therefore, we should realize that the rise of China brand is actually a manifestation of cultural self-confidence, which is a great advantage.

In addition to the improvement of quality and design sense, the support of the national cultural potential behind the new domestic products is the first core of its rise. With the blessing of national cultural potential, domestic products are gradually emerging, thus reducing consumers’ demand for international brands, which is the first reason for the decline in the income of international fashion and luxury brands.

2. Socio-economic trends

The second influencing factor is the epidemic and the subsequent economic downturn. San Pu, a Japanese sociologist, exhibited in The Fourth Consumption Age.,Compared with the "third consumption era" characterized by high consumption, the "fourth consumption era" characterized by reducing unnecessary consumption is proposed.

The rise of Uniqlo and MUJI is the best embodiment of "the brand of the fourth consumption era".

Uniqlo is to fill a big warehouse with the simplest clothes and then make standard models at extremely low prices. Muji means to remove the value brought by brands and trademarks, only pay attention to the quality of products and return the premium brought by brands in the past to users.

Low-cost "anti-brand" strategy made Uniqlo and MUJI very popular in the 1980s when Japan’s economy was in a downturn. Similarly, the outbreak of the epidemic has also accelerated the transition of China from the "third consumption era" to the "fourth consumption era".

The economic downturn caused by the epidemic has accelerated the reduction of "unnecessary consumption" represented by luxury goods.Digging into the economic logic, we can use "elasticity of demand" This concept to analyze.

Necessities such as oil, salt and grain are products with low demand elasticity; Leather bags and jewelry, which can be bought or not, are products with high demand elasticity.

Every time we encounter an epidemic or economic recession, it will lead to a rational return of consumers.Everyone began to spend cautiously, giving up self-ostentatious shopping and returning to simple basic needs. The mainstream market should return to products with low demand elasticity.

Basic models, excellent quality, easy to use and cheap are all fighting in areas with low demand elasticity. At this time, users are no longer willing to pay higher prices for big brands or sense of design.

Therefore, improving the quality, reducing the price and meeting the basic needs of users in a cost-effective way will become a huge opportunity in the "fourth consumption era".Under the influence of the epidemic, consumers return to rationality and reduce unnecessary consumption, which is the second reason for the decline in the income of international fashion and luxury brands.

3. Consumers’ understanding of brand value

The changes in consumer groups and consumption concepts in China have also brought great challenges to international brands. China’s main consumer army gradually shifted from the post-70s and post-80s to the post-90s and even the post-00s.

Compared with before, the new generation of consumers pay more attention to materials, design and details, rather than the brand itself. "Only the big names" and "only the expensive ones" have become the past tense, and "low-key with connotation" and "minimalist separation" have begun to rise.

Why is this happening?Because consumers’ understanding of the value conveyed by big brands has changed.A new generation of consumers no longer need to show themselves through luxury brands.

They display in more diverse ways, which can be displayed by where to play and what to eat, rather than by wearing a famous watch and carrying a LV. Showing yourself can be traced back to the most basic needs of living things-Survival and reproduction. Reproduction also has a very important demand, that isShow your advantages to the opposite sex.

For example, men carrying a famous watch and women carrying a LV bag are all "showing off" their "comparative advantages". So, what is the purpose of "showing off"? It shows that the basic needs of survival and reproduction can be met. The subtext is that I am rich and capable. If one day we get married and have children, our lives will be guaranteed and I can afford to raise children.

I once had a friend who liked to wear Patek Philippe watches. I asked him why he liked it, and he said that he especially liked its mechanical beauty. "No one can own Patek Philippe, just keep it for the next generation." It is exquisite in quality and particularly tall. He really thinks so.

However, in fact, his subconscious mind is still a kind of "showing off" psychology, but he will definitely go on the rampage if I say so. Although everyone will not say this clearly, or they don’t realize the real purpose of "showing off", it is the basic human need written in the subconscious.

However, if there are other ways to show their "comparative advantages", famous brands and big names are not important.Zuckerberg, for example, is absolutely rich, but when you open his closet, it’s all gray pullovers.

Why doesn’t he wear famous brands? Because he doesn’t need to show his "comparative advantage" through these big names, he just needs to say that my name is Zuckerberg, and this "comparative advantage" has already crushed you.

But you have to understand that both Patek Philippe and Zuckerberg are actually behind the demand of "showing off", just in different ways.

But as ordinary people, we don’t have Zuckerberg’s capital, so what do we "show off"?

A new generation of consumers find it boring to show big names in the past, and "low-key and meaningful" and "minimalist separation" have become popular. When others see that my home is minimalist and there is no logo on my clothes, it is a new type of "showing off". It shows my aesthetic beyond the mainstream of the past, showing that I am a unique, deep and stylish person.

So it’s not that the new generation of consumers don’t pay attention to the brand, they just show themselves in another way.The change of consumers’ understanding of brand value is the third reason for the decline in the income of international fashion and luxury brands.

The last words

The reason why international luxury brands encounter the cold winter is not only the influence of the epidemic.National cultural potential, social and economic trends, and consumers’ understanding of brand value together constitute the three core elements that affect the brand.

China’s cultural potential energy is generally on the rise, and national self-confidence is rising, laying the foundation for the rise of domestic brands; The economic downturn caused by the epidemic has accelerated the rational return of consumers in China; The emergence of new methods for a new generation of consumers to show themselves has promoted the formation of new consumption characteristics of "light brand and heavy quality".

So, is the "expensive" of big-name luxury goods unimportant?Expensive is also very important, expensive will bring scarcity, and scarcity will bring display.

It’s just that there are a few people who show "low-key and connotation" now, but if everyone is low-key and minimalist, then minimalism will become tasteless and worthless.This is why people always say that "fashion is a circle", and what is scarce is fashion.

Whether you choose big-name luxury or minimalist style, the circle of fashion will continue to turn under the impetus of three core elements. It doesn’t matter what you choose. Understanding the business logic behind each choice, constantly cultivating your thinking and enhancing your own value is your best brand display.