Luxury Family Development Faces Collectivization Challenges

Louis Weedon and LVMH, the luxury goods company, and the Herm family s of the luxury family business, have suffered from a wave of shares since the autumn of 2010 when Louis Weedon group announced that they had won the brand equity of Hermes.

Recently, Hermes issued a press communiqu Paris The procuratorate filed a petition to sue the Louis Weedon group for holding Hermes shares through unconventional means such as insider trading and internal and external collusion. Louis Weedon group also issued a statement on the same day, saying that the group's operation on the operation of Hermes is in conformity with the norms and counterclaims, accusing Hermes of "extortion, false accusation and unfair competition".

In fact, as the world's largest luxury group, Louis Weedon has a total of over 60 luxury brands, of which more than half come from the acquisition of family businesses.

Why are these family businesses willing to abandon the family's hardworking brands and join the large luxury group? What is Hermes struggling for?

　　 Capital driven "de familial"

From eighteenth Century to early twentieth Century, the luxury market was dominated by family workshops, and consumer groups were also concentrated in the aristocracy. However, the main line is niche, high-end and limited. Luxury goods For enterprises, the operating cost is very high, and the sales crowd is not enough, so it is difficult to make great progress in product analysis and improvement. This is undoubtedly an obstacle for the future development of enterprises.

As a result, after World War II, with the increase in demand, some enterprises began to "go family" and buy other brands, and intensified competition led to the emergence of such large groups such as Louis Weedon. Especially in recent years, due to the strong impact of global capitalization, many luxury enterprises are burdened with heavy capital pressure and fewer and fewer independent luxury brands. They hope to use strong capital strength to promote the operation of the market.

"Now many luxury brands are starting to enter the Chinese market, but China's market is too big. If you continue to run family businesses, you may gain a good reputation and reputation among the small crowds in the short term, but in the long run, you simply can't meet the needs of the market." Zhou Ting, Dean of the Institute of wealth and quality, said in an interview that "there is not enough capital strength and market publicity is not in place, which makes it difficult for the sales terminals of the brand to descend from the first line to the two or three line cities". In the long run, consumers will forget that this will only fall into a vicious circle for luxury brands.

In addition, Zhou Ting believes that the current situation of the blending of luxury goods and fashion industries also urges enterprises to need capital support and the development of collectivization and scale. Otherwise, it is difficult to cover the wider spread of the brand.

　 The collision between culture and capital

Chen Zhilong, chief operating officer of Mercure China in Paris, France, thinks that luxury collectivization is an industry trend, which can help some poor and even losing brands to achieve market profits as early as possible, and can hire more standard designers to change the artistic standard of the brand.

That being the case, why do those luxury brands who are away from the group remain independent and exist under the pressure of greater competition? What is Hermes struggling?

Perhaps Hermes CEO Patrick Thomas (Patrick Thomas), on behalf of the Hermes family's response to the acquisition of Louis Weedon group, pointed out the crux of the problem: "if this is a field. Financial war We may fail, but this is a cultural struggle. "

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"Capital can change the structure of the company and change the market, but some genes can not be changed, such as artistic conception and understanding of design." Chen Zhilong also admitted in an interview with this newspaper that capital investment first pays attention to the rate of return on investment. Some distinctive luxury brands first consider the art genes of family brands. To maintain their unique brand reputation, they will inevitably collide with the capital side.

In fact, the focus of group management is group brand management. In order to maximize the interests of the group, managers will analyze the brand positioning, optimize the brand structure of the whole group, and incorporate each brand into the brand strategy structure of the group. As a result, some small brands will grow rapidly into international brands, but at the same time, some brands will be repositioned, sometimes even contrary to the idea of brand creation.