The spreading of the financial problems have hit consumer confidence, leaving the luxury industry another victim of the ebbing tide.
A five-diamond seller surnamed Lin on Taobao closed her online auction store recently. Living in the United States, she used to provide procurement services to domestic buyers for luxury goods of leading brands.
Talking about the "good old days", she said, "I could sell tens of leading brand handbags in a week, and get more than 20 orders when a limited edition LV came on the market."
Unfortunately, due to the financial crisis in the US, her husband's salary has shrunk, making it hard for her to pay for luxury goods in advance, and brand enthusiasts in China are less passionate than before.
Seeing fewer buyers and falling profits, Lin has had to end her business. She said that she planned to save money and to find a stable job until the recovery of the economy.
Like Lin, luxury stores are also feeling the pinch of recession. "Business this year is really hard, especially after golden week," the Shanghai-based Youth Daily quoted several store managers.
A shopkeeper of a world leading brand boutique said that their sales volume had slid downwards since June, nearly 20 percent under the same period last year. "Most visitors now are the old customers, but they appreciate more than buy."
A luxury enthusiast surnamed Li who used to buy luxury goods at intervals has to curb her impulse now, as the rising living cost has taken much of her decreasing salary, she said.
At the same time, second-hand luxury goods stores have witnessed the white collar workers' shift in spending patterns.
A Shanghai store owner said that buyers are 20 percent less than before, and the label runners had become more rational. Some sell their luxuries to the store for cash, with 10 percent commission for the store, and some sell used handbags and then pay the extra for the latest "in" bags.
Surveys have it that office workers constitute the main purchasers of luxury goods in China. With the stock market shrinking more than two thirds and the real economy affected by the global slowdown, the new rich are tightening their purse strings.
In the wake of the damaged market, brands are finding ways out. I.T., a mecca for fashion followers, promised to refund 6,000 yuan (US$877.18) worth of goods to customers who spend 10,000 yuan or more at its Shanghai store during the National Holiday.
Just about two weeks after the promotion, the Shanghai outlet offered another substantial discount on October 19, by refunding 10,000 yuan worth of goods to those spend 15,000 yuan or above. It is the first time the Hong Kong based master boutique has launched such large scale promotion campaigns consecutively.
World leading brands are also trying to hook consumers through discounts. Chanel, Gucci, Fendi and Prada have offered 70 percent discount for some of their products.
There may be good news for Lin. These promotions have aroused interest among white collar workers in Shanghai, and many put up posts for procurement services on fashion websites. Statistics from an online shopping website show that such posts have more than doubled every week since October.
(Shanghai Daily October 24, 2008)
