Samsonite turns to the Chinese middle-class
Samsonite has begun promoting its less expensive products in China to attract middle-class Chinese customers. In addition to placing mid-priced items in store windows, Samsonite will train its employees to promote its mid-market products, reports The Financial Times.
“Earlier you wanted to display the highest-priced goods at the front of the store so the consumer feels good about your brand and comes in to shop,” said Samsonite CEO Ramesh Tainwala.
“Now you want to display the mid-price of your offering so the customer is not getting scared.” Spencer Leung, a consumer goods analyst at UBS Hong Kong, said, “From a profit and loss perspective, you have to tap up the middle market but it will be quite difficult in the medium term.” He added, “In the past, roughly 50-60 per cent of luxury goods sales went directly or indirectly to the government. Once consumption from the government is not there, you can image that private-sector demand has to double just to absorb the loss.”
Further affecting Samsonite in the Chinese market is the company’s decreasing reliance on department stores for sales, as the luxury crackdown has made customers more hesitant to make high-end purchases in such an environment.