The new T Galleria by DFS logo, unveiled in Hawaii on September 7, 2013. (DFS)
At a time when jet-setting Chinese luxury shoppers are becoming increasingly discerning and sophisticated, the world’s largest retailer to Chinese consumers outside China unveiled an updated rebrand last Saturday as part of its ongoing investment in high-end brand positioning.
Hong Kong-based, LVMH-owned duty-free retailer DFS chose its Hawaii location in Waikiki to announce the renaming of its non-airport Galleria locations, which was celebrated with an exclusive red carpet event complete with appearances by Asian celebrities and performances by Cirque du Soleil and British singer Estelle. In a reflection of the retailer’s recent investments over the past few years in store upgrades, its 14 global Galleria locations are being renamed T Galleria by DFS, featuring a sleeker logo to coincide with its upscale shift. “We are really on par with the best luxury department stores in the world,” said CEO Philippe Schaus at the September 7 press briefing.
The DFS Waikiki T Galleria store exterior. (Jing Daily)
With a majority of its locations in Asia and on the Pacific Rim, Chinese customers are a major source of global business for the company, which features Galleria locations in Chinese shopper-heavy locales such as Singapore, Hong Kong, and Macau, as well as airport locations in many additional tourist locations such as Hainan. According to Antonio Belloni, Group Managing Director of LVMH, “DFS curates its product selection for tomorrow’s customers from China, Asia, and other emerging markets.” The company is highly aware of its Chinese clients’ growing sophistication. “These consumers are moving rapidly from their first overseas trips and first luxury purchases to become extremely sophisticated travelers and discerning consumers,” he said at the press conference.
Despite the China market’s luxury slowdown in the wake of the Chinese government’s austerity campaign and slowing GDP growth, the company is “very optimistic about the China market,” said Winnie Park, the brand’s senior vice president of global consumer marketing. “We cater to the traveler, and the WTO predicts that by 2020 we’ll have 170 million outbound Chinese tourists.” Hawaii, a longtime stronghold of Japanese tourists and “a place where truly East meets West,” according to Schaus, has seen “a new wave” of Chinese travelers in recent years. They “are discovering Hawaii, and becoming aficionados of this beautiful island,” he told reporters.
The beauty section of T Galleria Waikiki. (Jing Daily)
Several aspects of the T Galleria rebranding are likely to have particular appeal to outbound Chinese tourists. The retailer’s upscale positioning comes at a time when Chinese luxury consumers are embracing niche brands and eschewing logo-heavy designs. Sibylle Scherer, president of consumer marketing and branding for the company, stated that this growing sophistication is part of a global evolution. “I think it’s an international trend, and not just a Chinese trend,” she said. “We see the Chinese customer as a very sophisticated and fashion-savvy customer.” She also noted that DFS has experienced the shift firsthand. “If you look at us a couple of years ago, we were much more ostentatious.” However, according to Park, “artisanship, provenance,” and “the heritage of products” is now “much more important all the way around.”
The company’s experience as a travel retailer also gives it an edge in providing amenities specifically designed for international consumers, such as worldwide returns and concierge services in several languages. Chinese customers have the opportunity to return any purchases at stations in Beijing and Shanghai, where the company also houses marketing offices. In addition, “if there is a high percentage of Chinese traveling there, you can be sure that our staff speaks Chinese,” said Scherer of the retailer’s worldwide locations.
The Hawaii location, for example, offers VIP concierge services with staff that speak Chinese as well as other languages, and provides wide-ranging services such as airport chauffer service and travel assistance to its clients. For all of its customers, the Galleria offers a beauty concierge service available in Chinese, Japanese, English, and Korean. As a signal of the growing number of Chinese visitors, many brands throughout the Galleria feature Chinese-language signage and promotional features.
A photo of actor Ethan Ruan on the red carpet at the DFS T Galleria rebrand unveiling, which was featured on the DFS Sina Weibo account. (DFS)
The marketing campaign for the rebrand also had many elements likely to draw the attention of Chinese consumers. The Hawaii gala unveiling of the T Galleria moniker featured a red carpet appearance by Taiwanese actor and DFS brand ambassador Ethan Ruan, who is extremely popular on the mainland. In terms of branding, the choice of the letter “T”, which stands for “traveler”, is easily searchable for Chinese customers, who frequently search foreign brands online by short letter abbreviations. According to Schaus, “Any customer from any nationality can read ‘T’.” The rebrand is being accompanied by a Sina Weibo campaign with the hashtag #T广场#, which features photos from the Hawaii party, as well as a contest for users to submit a creative photo of the letter “T” in order to be entered for the chance to win a prize.
As a travel brand, one main task for DFS is reaching a largely mobile and globally dispersed customer base, which is enhanced through a digital strategy focused on building consumer loyalty. “We want to move away from a monologue to a dialogue; we want to engage with our customers,” said Scherer. For Chinese customers in particular, the brand will be launching a new consumer-facing website available in both traditional and simplified characters at the end of this year, and regularly conducts social media marketing campaigns through Sina Weibo. The company is also in the process of developing a WeChat strategy: “We want to be present in the right way,” said Park.
One of the retailer’s most successful recent Weibo campaigns was affiliated with its Master of Timepieces event, featuring a video which interviewed several Chinese key opinion leaders (KOLs) on the “pinnacle moment” in each of their lives, including Olympic fencing champion Lei Sheng, fashion designer Guo Pei, photographer Xiao Quan, and pianist Zhao Yinyin. The post received over three million views, which were “totally organic,” said Park. “We didn’t buy banner ads or anything like that. We literally just leaked the video.”
The travel retailer's brand image and store environment appear to be trumping price point in terms of drawing clients. When it comes to the main reasons Chinese customers shop at DFS locations, Scherer stated that brand loyalty and retail experience rank above the duty-free status of many of the retailer's product offerings. Although imported goods are much more expensive on the mainland, pushing Chinese consumers to make an estimated 60 percent of their luxury purchases abroad, Scherer stated that the company’s upscale positioning, marketing, and services are the main aspects which bring in new and return customers. “We all love a good deal,” she said. “Price is always a deciding factor,” but “it’s not the final decision factor. It’s about the experience.”