International luxury Brands who bet big on China during the boom years become digitally creative as the economic slowdown and repression of conspicuous consumption hit hard profits.
International brands in China
International brands integrated into popular platforms such as online chat app WeChat, pushing marketing campaigns on social media platforms like Weibo, as well as opening their own windows on Tmall and JD.com of Alibaba.com. As a lack of knowledge about the technology and fears about safety meant that these movements were slow in coming.
— Marketing China (@marketing2china) 22 juin 2016
Although revenues from online sales are still small-only 5% of China market they were up $ 22.5 billion of fast luxury interior. According to a L2 intelligence firm report, sales of luxury online increased 20% in 2015, almost three times faster than the luxury market in general. Mobile is particularly important. Searches for luxury brands performed on smartphones are almost twice those performed on a desktop computer, and increased 44% in 2015 year on year. There are 700 million users on Weibo and WeChat has more than 200 million.
— Global Blue (@GlobalBlueGroup) 21 juin 2016
How Chinese consume is closely watched by a crowd of analysts and companies because the Chinese buyer representing over 30% of global luxury spending and is the engine of growth, according to Bain & Co. consulting
— Sam Hurley ➤➤➤➤➤➤➤➤➤ (@Sam___Hurley) 21 juin 2016
Burberry Group PLC in partnership with the Chinese model Wu Yifan for her clothing line for men / winter 2016 fall, allowing him to share exclusive content via Weibo, a move that “broke the Chinese Internet” by encouraging tips in social engagement, said L2. Burberry expects e-commerce to make up a third of sales over the next three years.
Coach Inc. offers coupons on WeChat and launched media campaigns on Weibo and WeChat. Cartier has targeted the Chinese buyer abroad by launching a store locator and offer a product of translation tool on WeChat. Cartier Parent Co. Financière Richemont SA has launched e-commerce sites for Shanghai Tang in 2015 in China and has said it will launch a for its Lancel leather goods brand in Asia.
e-Commerce in China and luxury brands
According L2, Chow Tai Fook has a strong presence on Tmall and JD.com and control 100% of the first pages of the brand’s search results on the two platforms. A spokesman for the company said it has a team of over 250 employees that handle e-commerce and that “closely following” the keyword search rankings on platforms like Tmall and JD.com.
The counterfeit problem on platforms such as Alibaba is a big problem for brands that are trying to take control of their online sales. The Wall Street Journal reported that while Burberry has opened a window on Tmall Alibaba, he did it in part to better take control of the sale of so-called gray market goods on the platform. Only 35% of luxury brands offer e-commerce brand owned through their websites or storefronts on Tmall and JD, as L2.
“Luxury brands are all about control. Whether the quality of the product, the price, the sales environment, control is everywhere,” said Erwan Rambourg, head of consumer and retail research at HSBC. Thus brands prefer to sell on their site rather than partnerships with third parties, with whom they must negotiate on issues such as counterfeit products.
“Generally speaking, luxury companies have been three attitudes to e-commerce platforms: sue, ignore or participate,” he added.
The online stores transition happens that many openings after rapid shuttering retailers during the boom years, when many rushed to China to meet a middle class growing. The huge but empty luxury store is a common sight in many second and third tier Chinese cities.
Yet he does not know how e-commerce can fill the gap for profits collapse marks. The decline in luxury demand is due in part to changing consumer habits and tastes. Chinese are buying high-end handbags more abroad than they are at home as the weakening of the euro and the yen are cheaper to travel.