The Value of Being Different: Lessons from Hermès and Icicle

International luxury brands seem to have settled into a "cookie cutter" business plan for the China market these days — one that necessarily involves key opinion leader (KOL) celebrity marketing, splashy events, digital gimmicks, a huge China “footprint” with as many new mall stores as possible, predictable executive profiles, and millennials millennials millennials! For a supposedly “creative” industry, this level of uniformity is, frankly, shocking, and that level of sameness is beginning to hurt the industry as a whole. But, believe it or not, a few luxury businesses are doing things differently in China, and with tons of success. The most famous example, Hermès, has ironically done this while barely changing their identity in China at all. The French Maison has stuck to their long-standing company philosophy of eschewing celebrity promotions, avoiding large gauche events, funny digital games, and not specifically marketing to youth culture — all of which flies in the face of the brand’s aristocratic DNA. On top of that, Hermès has decided to open a stand-alone store in Shanghai (as they do in most large cities) instead of following the hot shopping mall trend. So how has Hermès succeeded by going against almost all of the current marketing trends in China? One thing the brand has always excelled at has been in-store customer service, and what Hermès understands better than anyone is how to treat customers authentically on the most basic level. Each Hermès store is given a lot of freedom within the company’s guidelines, which allows local managers to use their knowledge of walk-in customers to create the best shopping experience in that city. That means they don't have the usual executives (who almost always hail from Hong Kong or Taiwan) make store decisions in cities like Shanghai—they are made by local staff that knows the area best. It’s particularly helpful in terms of product selection and merchandising. Therefore, an Hermès window in China might be subtly adapted to a Chinese audience, but it will still look like an Hermès window. Of course, not every fashion house has the enduring brand associations of Hermès. But there’s also a very different luxury company finding success in China by bucking the usual trends: a two-decade-old, Shanghai-based fashion brand called Icicle. Focusing on high-end products, the company now has over 250 stores, almost all of which are profitable. Yet surprisingly, not many people know about this brand, even Chinese luxury world insiders. So how does this “under-the-radar” brand reach their customers? Like Hermès, it’s not through celebrity endorsements. Icicle decided early on to put their focus on the quality and creativity of their products (they have a savvy design studio in Paris), as well as always maintaining a more inclusive price point. They also insist on high-quality store staff trained in customer support — both in stores and digitally on WeChat. So instead of investing lots of time and money on big marketing campaigns, Icicle has leaned heavily on professional salespeople, who are, in essence, ground-level ambassadors for the brand. Also like Hermès, the store staff selects merchandise based on its relevance to local customer habits, and store design caters to the specific needs of each different location. Inside Icicle’s new flagship store, inside the Shimao International Plaza in Shanghai, shoppers can enjoy a pleasant visit with a warm and authentic salesperson. Their staff has extensive product knowledge, which is not often the case in many big international brand stores in China. This matters a lot to Icicle as their target customers are mostly working women looking for original yet tasteful and elegant outfits (rather than cultish name brand-obsessed women who simply want to emulate movie stars): a huge and growing market in China. It’s a customer-centric approach that lets buyers feel authentically connected with the brand. Indeed, it took many years to grow this business to over 250 stores, but that slow and steady approach was well worth it. And because of their success, the brand is now looking to expand outside of the country for the first time — into France. In fact, just three months ago, Icicle unexpectedly bought the famous French high-fashion brand Carven, and their relaunch of the brand should be interesting to watch. At a lower retail level, the success of the Shin Kong Plaza SKP mall, both in Beijing and now in Xi’an, has been nothing short of inspiring. This luxury retail leader in China did not become the most rewarded and profitable mall by chance. SKP’s CEO, Ji Xiao’an, has done things very differently from his competitors, and most of his innovations have worked out well. By using a Parisian consulting firm, SKP managed to create a unique space that blends the size of a mall with the focused organization of a department store. By giving dedicated brands less space, while mixing niche brands into various categories, SKPs malls offer a less monotonous and better-organized experience. In addition, SKP has placed a very strong emphasis on client experience by adding a host of special operations to their yearly schedule, like various pop-up stores. They’ve even launched their own print and digital magazine (SKP 杂志) to better communicate specific retail stories to their customers. It’s no longer enough for brands or retailers to open a nice store in the right location — customers demand a clear concept. Despite the constant emphasis on young markets and online sales platforms, what brands should be focusing on is innovation with a qualitative approach. That means instead of opening stores quickly and everywhere, they should first understand what customers desire in a shopping experience. Trying to dominate the market without these basics can lead to disaster. British retailer TopShop proved this when, after opening more than 200 stores in China just a few years ago, they abruptly decided to shut them down and leave the China market entirely. And very high-end retailers are not immune to these issues either, as can be seen with the prestigious French luxury shoe brand JM Weston, which pulled out of the China market recently after 10 years of struggling to find a good way to attract Chinese customers. What these varied success stories have in common is that, for one, they stay loyal to their brand roots and innovative from there. While Chinese luxury customers are quite diverse, they want to be treated with respect and consideration much like anyone else. They also don’t want to be pandered to. As the famous Chinese KOL Mr. Bags stated: “Chinese luxury shoppers are interested in foreign brands because they are different.” In other words: Don’t come in and try to make “Chinese” products. Just be yourself! Therefore, in order to differentiate themselves, luxury brands in China should also seek out a more balanced multicultural China team, but one that can strongly reinforce brand DNA effectively and consistently. Combining European knowledge and legacy with local expertise is the key to having a good brand story that can best serve the always-changing Chinese market.

The Value of Being Different: Lessons from Hermès and Icicle

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Published March 06, 2019

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The Value of Being Different: Lessons from Hermès and Icicle