普華永道：2020年中國內地及香港奢侈品市場：準備下一步行動 - （英文版）（13頁）.pdf

1、June 2020 Mainland China/Hong Kong Luxury Goods Market - “Get ready for the next wave” Understand the Importance and Uniqueness Mainland China/Hong Kong Luxury Goods Market Opportunities 2 Luxury industry and its global value chain is impacted severely by world-wide spread of COVID-19 on both demand

2、 and supply sides 10,000 5,000-1,0000 Existing infected population as of 10 April, 2020: Major markets with global rank # of size Impact on demand by sector Made in Italy, France, Spain, Germany, UK Bain Luxury after COVID-19: Changed for the good, Mar 2020 COVID-19 Outbreak ? 183 to 239 (decline of

3、 15% to 35%) Hong Kong luxury retail suffer great loss due to the protest in 2019 and recent COVID-19 with steep plunge of inbound travelers 5 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 # of inbound visitorsJewellery, watches and clocks,

4、 and valuable gifts Clothing, footwear and allied products Medicines and cosmetics Alcoholic drinks and tobacco Announcement of extradition law Mass street protest began on June 9 Shut down airport on August 9 Travel ban for Covid-19 (Retail Sales, M HKD)(# of Visitors, Thousand) Inbound travelers d

5、eclined sharply due to protest and epidemic Alcoholic drinks Watches “DING-XIANG Doctor”, Public Data Remark: *Totally 1250 Chinese including those from Hubei Province were interviewed * Positive means 2-3 months influence on economy followed by the same or higher growth than before, Conservative me

6、ans 6-12 months influence on economy followed by economic stagnation or slower growth, Negative means Long-term influence on economy along with recession 7 Besides 1.4 billion population, China has a younger, wealthier and more digital empowered group of luxury consumers Young generation and wealth

7、are the main growth drivers They show different values and attitude Heavily social and trend dependent Digital and new tech savvy Source: BCG 2019 True-Luxury Consumers / ALTAGAMMA, McKinsey China Luxury Report 2019, Morgan Stanley Research, Credit Suisse Global Wealth Databook 2019 Individualised a

8、nd self-expression Top luxury brands now have huge dependency on Chinese consumers 32% 35% 37% 37% 44% 42% 10% 17% 16% 17% 11% 17% LVMH Kering Prada Hermes Richemont Burberry Contribution to global sales by Chinese consumer Contribute to Mainland China sales by Chinese consumer 8 7.0% China China al

9、so has more share of Top 10% wealth population in the world 6.6% World China luxury consumers are much younger World Millennials Gen-Z China Post 80s Post 90s Members of top 10% global wealth as % of total population in 2019 Digitalisation shifts consumer behaviour in China while new Omni- channel o

10、perating model is critical for future success Embrace irresistible KOL and livestream trend in China Redefine supply chain network and digitalize value chain No. of new livestream merchants on TMALL in Feb 2020 is 8 the amount of Jan 2020 MAKE UP FOR EVERs 1stweek livestream on Tik Tok realised over

11、 30 ROI in Mar 2020 LV pioneered livestream on Red with 15K participants to start with While beauty products has proven its success, other segments still need to think more on how to find proper platform and KOL strategy to balance brand identify and traffic Source: Public Data9 Value chain restruct

12、uring / supply chain network reinvention are cast in the spotlights Aware Seamless O2O Experience Rising demand in lower tier cities now shifts business centre of gravity in China Customers expect higher delivery service level and seamless Omni- channel experiences Relocation of business activities

13、involves integrated transformation covering finance, tax, operations, labor, legal etc. Sophisticated planning is critical to the success Deepen eCommerce and enable O2O customer engagement Numbers of luxury brands across sectors go live their flagship stores on TMALL and JD.com during Q1 2020 such

14、as Alexanderwang, Cartier, Delvaus, Giorgio Armani, Kenzo, and Prada In 2019, GMV of luxury goods on TMALL increased by 70%, while overall luxury goods market size in mainland China increased by 30% 70% 30% TMALLOverall LV launched new collection via virtual pop-up stores based on WeChat mini-apps t

15、his Mar. They can also identify and follow up with more potential buyers With supportive moves from government, local consumption behaviour during Labour Holiday indicate strong signal of retail market recovery 10 Government initiate shopping festival to unleash consumption power TAIWAN HONG KONG MA

16、CAU Shanghai: 67.2% Guangzhou: 53.1% Shenzhen: 51.9% Wuhan: 39.9% Hangzhou: 66.9% Xian: 52.9% Chengdu: 58.4% Changsha: 68.7% Xiamen: 58.1% Shenyang: 62.8% Beijing: 46.7% Nanjing: 70.1% Local government enforced a combination of measure to encourage consumption during Labour Holidays with joint parti

17、cipation of eCommerce giants, O2O platforms, shopping malls and brands Higher traffic and consumption during Labour Holiday speed up the recovery of both online and offline retail market Average recovery rate in China during Labour Holiday hit 59.3% with 18.6k average daily traffic per shopping mall

18、 ( 4.2 times of daily traffic in Feb) Shopping malls in Yangtze River Delta experienced the highest traffic rebound Sales of key retail companies increased by 32.1% compared with Qingming Holidays Average Shopping Malls Traffic Recovery Rate in Key Cities Online sales also increase by 36.3% compared

19、 with last year Travel retail channel in both airport and city centre launched promotion to improve sales of duty free products Sales recovery of department stores in Beijing increased from 34.4% during epidemic to 64.7% during labour holiday under shopping incentives Holiday effect Shopping voucher

20、s Online promotion More in-coming domestic travellers Social needs for shopping, dinning and entertainment Vouchers worth 19 billion RMB were issued in 28 provinces City-exclusive live stream for Wuhan, Shanghai, etc. Source: Ministry of Commerce of the Peoples Republic of China, WINNER Tech, Public

21、 Data How to get ready for the next wave of China luxury goods market growth by seizing the right moments as of now Short term: Optimise existing value chain Capitalise inventory and Spring/Summer new collection Optimise Ops & tax & legal efficiency across value chain and partners 2020 Q2 Rationalis

22、e Capital Expenditure (CAPEX) and Operating Expense (OPEX) to be highly strategic focused Digitalise customer engagement and rationalise product / service offerings 2021-2022 Long term: Realise new value proposition Redesign and implement future Omni- channel model for China2020 Second Half Mid term

23、: Boost China market recovery Explore target-group consumer shopping behaviour changes Optimise eCommerce channels and capability on digital marketing Revitalise tax-efficient supply chain and in-country distribution Reimagine value chain transformation to be customer-centric and growth driven 11 Te

24、am Contacts 12 Michael Cheng PwC Asia, Mainland China & Hong Kong Consumer Markets Leader Rebecca Silli Hong Kong Consumer Markets Partner, Legal Services Jennifer Ye PwC China Consumer Markets Leader, Risk Assurance Steven Zhong Operations & Supply Chain Partner, Consulting Jaelyn Kwan Digital & Cu

25、stomer Partner, Consulting Jane Wang PwC China Consumer Markets Partner, Tax Jenny Tsao PwC Hong Kong Consumer Markets Partner, Tax Thank you! This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. 2020 PricewaterhouseCoopers Limited. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see for further details.