{"id":703492,"date":"2024-10-01T05:42:38","date_gmt":"2024-10-01T12:42:38","guid":{"rendered":"https:\/\/www.esri.com\/about\/newsroom\/?post_type=wherenext&#038;p=703492"},"modified":"2024-10-01T06:17:27","modified_gmt":"2024-10-01T13:17:27","slug":"luxury-goods-daigou","status":"publish","type":"wherenext","link":"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/luxury-goods-daigou","title":{"rendered":"A Luxury Shopping Trend with a Geographic Wrinkle"},"author":501,"featured_media":0,"parent":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"sync_status":"","episode_type":"","audio_file":"","podmotor_file_id":"","podmotor_episode_id":"","castos_file_data":"","cover_image":"","cover_image_id":"","duration":"","filesize":"","filesize_raw":"","date_recorded":"","explicit":"","block":"","itunes_episode_number":"","itunes_title":"","itunes_season_number":"","itunes_episode_type":"","_links_to":"","_links_to_target":""},"categories":[],"tags":[479832,281,22772,1161],"department":[488812],"wherenext-category":[],"industry":[],"class_list":["post-703492","wherenext","type-wherenext","status-publish","format-standard","hentry","tag-consumer-trends","tag-location-intelligence","tag-manufacturing","tag-retail","department-emerging-technologies"],"acf":{"short_description":"The latest luxury buying trend in China is challenging manufacturers and retailers to study sales by location. ","pdf":{"host_remotely":false,"file":"","file_url":""},"flexible_content":[{"acf_fc_layout":"content","content":"In a Hemingway-esque decline\u2014the kind that gathers almost imperceptibly before bursting into the open\u2014China is now in the throes of economic malaise."},{"acf_fc_layout":"sidebar","layout":"standard","image_reference":null,"image_reference_figure":"","spotlight_image":null,"section_title":"","spotlight_name":"","position":"Left","content":"<strong>Snapshot<\/strong>: When luxury shoppers start looking for bargains, manufacturers and retailers need location insight to diagnose the trend and react appropriately.","snippet":""},{"acf_fc_layout":"content","content":"In August, China\u2019s producer prices declined for the <a href=\"https:\/\/www.scmp.com\/economy\/economic-indicators\/article\/3277707\/chinas-consumer-inflation-misses-expectations-amid-calls-fight-deflationary-pressure\">23<sup>rd<\/sup> month in a row<\/a>, according to the National Bureau of Statistics. The protracted slide, combined with sluggish consumer prices, has stoked deflation fears as consumers curtail spending.\r\n\r\nThe economic swoon has sparked government intervention, including <a href=\"https:\/\/www.reuters.com\/markets\/asia\/chinas-central-bank-cuts-banks-reserve-requirement-ratio-by-50-bps-2024-09-27\/\">stimulus spending<\/a> aimed at boosting demand. But while the government tries new forms of support, Chinese shoppers are finding innovative ways to cinch their leather belts.\r\n\r\nSome shoppers accustomed to luxury purchases are now looking for bargains through the practice of daigou\u2014a form of price arbitrage that allows the purchase of luxury goods like handbags for significantly less than retail, according to a recent <a href=\"https:\/\/www.wsj.com\/business\/retail\/luxury-brands-new-snag-handbag-arbitrage-575bb1b7?mod=hp_lead_pos6\"><em>Wall Street Journal<\/em> article<\/a> [subscription].\r\n\r\nIt's the kind of trend that can start small and fly under the radar until it becomes a drag on a company\u2019s top line. It\u2019s also a phenomenon companies can track with the right <a href=\"https:\/\/www.esri.com\/en-us\/location-intelligence\/overview\">location intelligence<\/a>.\r\n<h3><strong>Daigou as an Early Indicator of a Problem <\/strong><\/h3>\r\nIn the practice of daigou, independent sellers purchase items\u2014often at wholesale\u2014in a country where prices run relatively low, and resell them at a discount in higher-priced markets. On average, a luxury good sold in China is 24 percent costlier than the same item sold in Europe, according to Bernstein data cited by the <em>Wall Street Journal<\/em>. In the US, the markup is around 16 percent."},{"acf_fc_layout":"sidebar","layout":"standard","image_reference":null,"image_reference_figure":"","spotlight_image":null,"section_title":"","spotlight_name":"","position":"Right","content":"<strong>Related Read:<\/strong>\r\n\r\n\/\/ Analyzing <a href=\"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/nexttech-omnichannel-crm-and-gis\">CRM data<\/a> with maps","snippet":""},{"acf_fc_layout":"content","content":"For a luxury goods manufacturer or retailer, a drop in China sales might be the first indicator of a problem, but diagnosing the origins of a downturn can be challenging. Like any business performance issue, understanding the root cause\u2014the consumer habits behind the headlines\u2014requires data.\r\n\r\nThe data might be publicly available through government agencies or trade groups, or available at a cost. These days, CIOs and CAOs oversee multimillion budgets for data that gives them an edge over competitors. In contrast to IT leaders of previous generations, who cared mainly about the tech stack, <a href=\"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/think-tank-cio-guidance\/\">today\u2019s tech execs<\/a> focus just as intently on the information stack\u2014and location data is a key component of that asset.\r\n<h3><strong>Converting Data into Next Steps <\/strong><\/h3>\r\nWith location data in hand\u2014on where sales are happening, through which sellers, and at what prices\u2014a company can turn information into analysis. Many of the world\u2019s best-known brands use a geographic information system (GIS) for this research, complemented by <a href=\"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/wherenext-confidential-data-scientists\/\">data science<\/a> and a growing library of <a href=\"https:\/\/www.esri.com\/en-us\/artificial-intelligence\/overview\">AI tools<\/a>.\r\n\r\nWith GIS analysis, companies create maps and dashboards that answer a range of business questions, including where counterfeit products enter the supply and which <a href=\"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/dicks-sporting-goods-strengthens-omnichannel-through-brick-and-mortar-planning\/\">omnichannel strategies<\/a> offer the best balance of online sales and store locations. Business leaders use location insight to tailor marketing plans, address underperforming sites, and identify profitable markets for their products.\r\n\r\nIn a <a href=\"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/advice-from-a-retail-leader-seven-steps-to-post-covid-success\/\"><em>WhereNext<\/em> essay<\/a> highlighting retail trends, a global manager at luxury brand Swarovski wrote, \u201cMany brands fell behind because they failed to connect customer data with\u00a0location intelligence.\u201d In a <a href=\"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/gaining-retail-advantage-in-the-post-covid-19-era\">companion essay<\/a>, he detailed the role of GIS. \u201cLocation technology,\u201d he said, \u201ccan highlight microtrends specific to one city avenue where a shop is located, or industry-wide changes that shape an entire national network.\u201d\r\n\r\nLocation intelligence is key to spotting economic conditions and customer habits that can change almost imperceptibly. Today, multinationals may be wrestling with the complexities of daigou. Tomorrow, a new buying trend will emerge in another location, and companies with reliable location data and effective GIS analysis will make sense of it before it threatens the bottom line."}],"references":null},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.9 (Yoast SEO v25.9) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Luxury Goods Makers Wrestle with the Practice of Daigou<\/title>\n<meta name=\"description\" content=\"The practice of daigou, whereby Chinese consumers buy luxury goods at a discount, is ripe for location analysis.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/luxury-goods-daigou\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A Luxury Shopping Trend with a Geographic Wrinkle\" \/>\n<meta property=\"og:description\" content=\"The practice of daigou, whereby Chinese consumers buy luxury goods at a discount, is ripe for location analysis.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/luxury-goods-daigou\" \/>\n<meta property=\"og:site_name\" content=\"Esri\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/esrigis\/\" \/>\n<meta property=\"article:modified_time\" content=\"2024-10-01T13:17:27+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.esri.com\/about\/newsroom\/app\/uploads\/2024\/10\/building-supply-chain-maturity-with-geospatial-tech-wherenext-card-826x465-1.jpg\" \/><meta property=\"og:image\" content=\"https:\/\/www.esri.com\/about\/newsroom\/app\/uploads\/2024\/10\/building-supply-chain-maturity-with-geospatial-tech-wherenext-card-826x465-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" 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