brand yoga pants and jackets are out of fashion, food, drink and entertainment are downgraded... how do middle-class consumer companies face the "substitution trend"｜hot finance
2024-09-09
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in the past, the "middle class" was the target customer that all major consumer brands tried their best to compete for. however, if we look at the hot searches in the consumer market in the past two months, we will find that the middle class seems to be getting more and more "stingy". has the innocence of the consumer market changed?
not long ago, "baiguoyuan's profits plummeted as employees with a monthly salary of 20,000 yuan cannot afford it" became a hot topic. according to baiguoyuan's financial report data, in the first half of the year, its revenue and profits both fell by double digits, and its net profit plummeted by more than 60%.
therefore, pagoda also began to emphasize cost-effectiveness. the management said: "we will take measures to cope with the decline in customer flow to the store and create popular categories with cost-effectiveness."
of course, similar hot search topics include "a monthly salary of 20,000 yuan cannot afford to live in hanting", "a monthly salary of over 10,000 yuan cannot afford to eat bread", "milk tea returns to the 10 yuan era", "the 9.9 yuan trend has swept starbucks", "the top sunscreen internet celebrity can't sell a thousand-yuan jacket"...
"high-end consumption" is extinguished
lvmh, which owns brands such as lv, dior, celine, fendi, bulgari and hennessy, saw its revenue drop by 1% year-on-year to 41.677 billion euros in the first half of the year, and its net profit dropped by 14% year-on-year to 7.267 billion euros. among them, the asian market, excluding japan, dropped by 10% year-on-year.
this means that domestic middle-class consumers are less interested in buying luxury goods.
however, the growth rate of lululemon, a sportswear brand targeting the middle class, is declining, but the white-label yoga pants sold directly by manufacturers on 1688 are selling well. even the "mckinsey china consumer report 2024" said that the spending focus of chinese consumers is shifting to services and experiences.
in terms of food and drink, i don’t know when it started, westernized brand names, minimalist design styles, and various internet celebrity yogurt brands that emphasize the origin of their products have been frantically occupying supermarket shelves and opening freshly made stores. on the other hand, there is a pervasive online advertising campaign. in particular, some brands of yogurt, with some fruits, nuts, etc., and a fresh name, can easily sell for hundreds of dollars a cup.
driven by freshly made yogurt, the yogurt on supermarket shelves is frequently refreshed. of course, the price is also refreshed. after the entry of high-priced yogurt, a cup of yogurt costing 10 yuan or even more than 20 yuan has become the norm.
however, these "assassins" are no longer selling well. data shows that since last year, the sales volume of the yogurt market has begun to decline from a high level, and the decline rate has even reached double digits. by 2024, the decline has further intensified.
in the first quarter of this year, the overall sales of offline yogurt categories fell by 11.46% year-on-year, and sales volume fell by 12.69% year-on-year. as a result, they began to quietly cut prices. according to the survey data of the first financial business data center, the average price of low-temperature yogurt industry products has dropped from about 80 yuan per piece in 2022 to between 20 and 40 yuan per piece in 2024.
in the e-commerce industry, these changes happened faster and more obviously. for example, pinduoduo's revenue was rising steadily, while jd.com encountered some problems in growth. the entire consumer brand targeting the middle class was in mourning for a while. everyone knows what happened next. xu lei of jd.com resigned and returned to dong ge. after that, it began to quickly adjust its strategy, requiring not only quality service, but also price competitiveness.
in the face of changes in consumption among the middle class, jd.com adjusted quickly. in the 2023 semi-annual report, jd.com's net profit was 13.122 billion yuan, and in 2024 it reached 19.774 billion yuan, with a net profit growth rate of 53.98%.
the reason for jd.com's success lies in its rapid adjustment of strategy and adaptation to the structural changes in consumption among the middle class.
after liu qiangdong redefined jd.com's low-price strategy, jd.com launched a combination of measures: "10 billion subsidies", "9.9 free shipping channel", and lowering the threshold for free shipping to tap into the low-price mentality of consumers. online, the implementation of the chunxiao plan increased the supply of ultra-low-priced goods on the jd.com platform, and also launched a "0 yuan trial operation" on the merchant side to reduce the cost of opening a store.
not only jd.com, but also bestore has keenly captured the changes in middle-class consumption and adjusted its strategy in a timely manner.
in november 2023, bestore announced a proactive price cut, claiming to be the "largest price cut in 17 years". the discounted products include nuts, meat snacks, dried tofu and spicy strips, and other products with high repurchase rates, covering a range of 300 items, with an average price reduction of 22% and the highest reduction of 45%. among them, the price reduction of nut products is as high as 40%; after the price reduction of a bag of 60 grams of hand-torn meat jerky, the member price is only 5.9 yuan, a price reduction of about 40%; the price of crisp winter dates has dropped from 7.9 yuan to 5.9 yuan, a decrease of about 25%.
the trend of “consumption downgrade” spreads
it is worth noting that american consumers' consumption of necessities has also begun to downgrade.
more than 60% of dollar general customers said they had to make sacrifices on basic necessities because of rising prices, and a majority said they were worse off financially than they were six months ago, according to a survey.
some analysts pointed out that dollar general's financial pressure may stem from its insufficiently broad customer base. although overall consumption is sluggish, the economy remains resilient and the economic pressure on middle- and high-income consumers is not enough to make them turn to dollar stores.
“we continue to believe that the strong employment environment is a barrier to a wholesale shift to dollar stores like dollar general,” truist securities equity analyst scot ciccarelli wrote in a note.
however, the middle- and high-income groups have begun to downgrade from mid- to high-end department stores to large discount retail supermarkets, and the financial reports of major supermarket chains are a good example.
mid- to high-end department stores macy's, kohl's and dillard's all reported year-on-year declines in comparable sales in their latest earnings reports. kohl's, which caters mainly to middle-income consumers, said its customers "felt the burden of a higher cost of living."
high-end department store chain nordstrom also said that its second-quarter comparable sales growth of 0.9% year-on-year was largely due to the 4.1% year-on-year sales growth of its discount chain nordstrom rack, which was mainly supported by high-income consumers.
as a representative of large-scale popular supermarkets, wall street journal previously mentioned that walmart's grocery prices are about 25% lower than traditional supermarkets. its second-quarter performance achieved "counter-cyclical growth", with both revenue and profit exceeding expectations, and it said that its market share among high-income families is increasing.
kohl's said it expects to be "more promotional" than ever before during the holiday quarter, given that more wealthy people are starting to "downgrade their consumption," while dollar general made it clear that it will offer more discounts in the coming quarters.
text｜reporter sun qiman (compiled from blue whale finance, wall street news, phoenix.com, titanium media, public information, etc.)
