“John Galliano sacked from John Galliano” – Chinese Investors’ Takeover For John Galliano’s fashion label?

John Galliano has been fired by his own namesake label following his alleged racist and anti-Semitic tirades. The borad at John Galliano, 91 percent of which is owned by Christian Dior, has agreed to hand over design duties to the in-house team and let go of Galliano. Galliano was arrested in February after he was accused of making anti-Semitic remarks to a couple during an altercation at a café in Paris. He was fired from the Dior label in March just view days before the Dior-presentation at Paris Fashion Week. Recently, Dior publicated that the maison would sell John Galliano after Galliano’s court-rehearsel. May 12th, 2011. Dior pretends that Chinese and Italian Investors are interested to takeover the fashion label John Galliano.

John Galliano RTW FW 2011/12

“Understanding China’s Growing Live For Luxury” by McKinsey Insights China – Chinese luxury consumption is projected to grow 18% annually from 2010 to 2015, accounting over 20% of the global luxury market. Today, luxury goods in are the rigueur symbols of wealth and social status in China. The world’s priciest and most prestigious luxury brands are scrambling to erect massive retail shrines in urban China’s toniest shopping districts. Louis Vuitton now has 36 stores in 29 cities across mainland China, compared to stores in just 10 cities 2005. Gucci has expanded even faster, starting with just six stores in the beginning of 2006, ramping up to 39 stores today. Hermes quadrupled its stores from five in 2005 to 20 today.

There’s a reason for the rush: while many other markets are flat or shrinking, luxury goods are booming in China. Even in the teeth of the global recession in 2009, luxury goods saw 16% sales growth, a moderate slide from the 20% level of the precious few years, but still far better than many major luxury markets. Sales in that year hit RMB 64 billion (about US$ 10 billion). Robust economic growth rekindled the market 2010, and, according McKinsey’s research, the market is on track to reach 180 billion in 2015 (US$ 27 billion at fixed exchange rate). By then, China will account for over 20% of the global luxury market, overtaking Japan as the world’s largest luxury market.

John Galliano RTW FW 2011/12

China’s Four Categories of Luxury Consumers

In the course of McKinsey’s Insight China-research, they identified four distinct segments of luxury consumers in China by looking at the percentage of household income spent on luxury goods. Such spending serves as a proxy for the importance that consumers attach to luxury. More than hals of luxury consumers are what McKinsey consider “core luxury buyers” – affluent households that spend between 12% and 20% of their income on luxury goods – a total of RMB 20,000-60,000 (US$ 3,000-9,000) on luxury goods a year. Three other consumer groups are increasingly important. Two of these – “luxury role models” and “Fashion fanatics” – shape fashion trends. Combine, thea will make up one-third of the luxury market by 2015. The fourth group, whom McKinsey call “middle class aspirants” is smaller but growing rapidly.

  • “Luxury role models” are rich, young, and fashionable, living the quintessential luxury lifestyle. They make up only 1% of luxury consumers, but by 2015 they will account for 24% of spending. Most rare self-employed or corporate executives, many of them living in Beijing or Shanghai. Many have studied or worked overseas, and their social circles include friends with second-generation wealth – so they have had long-term exposure to luxury brands. Luxry role models spend more than RMB 150,000 annually on luxury goods, or about 10% of their disponsable income. They consider these items to be an essential part of their everyday life. Most (71%) have been buying luxury goods for at least five years, compared to only 34% for other luxury consumers. They often buy to indulge themselves and to feel unique rather than simply display their wealth.
  • “Fashion fanatics” are not rich (they typically make RMB 100,000 to 200,000, or US$ 15,000-30,000), and they make up only 3% luxury consumers, their share of income spent on luxury is double that of other segments. These consumers spend up to 40% of their income on luxury products. They spend much of their free time learning about the latest fashion trends and they closely review seasonal offerings. They exert a strong influence on other consumers, sharing their purchases and opinions in social circles and online. And they spend more when they make more, which is happening fast: a third of them earn at least 20% more income than did a year ago. Fashion fanatics want to be on the cutting edge of the latest trends, and they’ll borrow if that’s what it takes: 59% said they would buy on credit, compared to just 32% of middle class asprants.
  • “Middle class aspirants” comprise 51% of luxury consumers, a number that will rise to 61% by 2015. By them, they will account for 16% of spending, up from 10% today. Most earn between RMB 60,000 and 200,000 a year (US$ 9,000-30,000), and hold a mid-level position in a local or multinational company. Many live in Tier 2 or Tier 3 cities with lower living expenses, which allows them to occasionally splurge on luxury goods. Their realtives conservative attitudes towards money mirror those of the average urban consumer: after spending money on luxury item, thea are likely to reduce spending on other things to keep their budgte in check. This group spends RMB 5,000 to 15,000 per year (US$ 750-2,250) or 19% of theirs household income on luxury goods.

John Galliano RTW FW 2011/12

Editorial by Andrea Janke based on McKinsey’s Insights China

Follow Andrea by Twitter @andreajanke


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