The Sky has Fallen
Why were we ever in a world where an entry-level office worker was so willing to spend a disproportionate amount on luxury?
I think we can argue about cultural reasons including:• The importance of face
• Gift-giving culture
Another way to look at it is that the entire consumption economy was geared toward an elite group of spenders (we can consider this the Top 0.01%).• This group has not been doing very well lately. It has been an economy that has been driven by a very small elite and the trickle down effects of this elite consumption.
• The elite have included government officials and the class that works with them , factory owners who export to foreign markets, real estate developers and entrepreneurs with easy access to capital.
Why Luxury Retailers are Failing
In 2014 SmithStreet conducted a study for a major luxury conglomerate going into 300 luxury consumer wardrobes across 13 cities in China and talking to luxury spenders on store service, discovering that store service was really great if you were recognized by that store manager as a VIP. If not, you generally received unsatisfactory store service, and this was more pronounced when compared to travelers who have experienced store service abroad.
And they are stuck with an expensive and extensive physical store network.
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