CollaBrands: Sony and Discord Create a New Future for Social Media
This week‘s column focuses on how two complementary technology brands are collaborating to develop more robust digital experiences for consumers.
One major consequence of the global pandemic has been the rapid digitalization of our everyday lives, covering activities from shopping to personal interactions. Social networks have seen their total user base quadruple over the past decade, from 1 billion in 2011 to 4.20 billion users in 2021. Stay-at-home orders during the COVID-19 outbreak reinforced the importance of technology to maintain social connections and offer interactive experiences, and we are continually discovering new digital tools that encourage improved communication.
Social Media to Meet the Needs of Users
Social media is transitioning from the static model of Facebook and Instagram to more interactive formats. TikTok, for example, has seen spectacular growth over the past year, amassing nearly 700 million users who embrace the entertainment if offers via non-stop short video. However, even in the case of that hugely popular app, it lacks real-time interaction for the most part. As technology evolves, the future of social media will require the option of live, two-way communications.
Clubhouse and Discord are two apps that have taken off over the past year, and both boast real-time interaction. Similar in their underlying technology, the major difference is accessibility: Discord is open to all mobile phone users, while Clubhouse requires an invitation to join and was only available to Apple iOS users until very recently. What makes both attractive is their ability to connect users in live conversations. Thus, what was once one-way social media (via posts from an individual or brand) has given way to engaging online discussions.
Not Just Gaming
While Discord was originally created for gamers, it has quickly transitioned to much wider usage, enabling the development of communities that can support active communications.
Discord is a VoIP (voice over IP) platform that combines video, voice, and text communications. The versatile app has a strong focus on community, and the ability to build them has helped fuel its growing popularity. Groups topics range from gaming to anime to music to politics. You name the interest, and members can start a community for it on Discord.
The Sony Collaboration
With more than 140 million active users, Discord is one of the largest online communities, particularly for gaming enthusiasts. Sony PlayStation’s network has 109 million players. Last week, Sony Interactive Entertainment and Discord announced a partnership to bring their users together. Accompanying that news Sony’s investment in Discord for an undisclosed amount. (Back in March, Discord rejected a $12 billion acquisition offer from Microsoft.)
According to a statement from Jim Ryan, president and CEO of Sony Interactive Entertainment, “Our goal is to bring the Discord and PlayStation experiences closer together on console and mobile starting early next year, allowing friends, groups, and communities to hang out, have fun, and communicate more easily while playing games together.”
The Impact for Brands
Discord is open to brand partnerships and collaborations and offers significant opportunities to promote social commerce, given its Gen Z and teen user base. Brands that create communities on Discord can obtain valuable feedback in real-time on their brand positioning and how consumers perceive their offerings.
As noted in previous CollaBrands columns, digital brand collaborations are still in their infancy and hold great promise for brands seeking to reach digitally native consumers within the comfort of their preferred social communities.
Steven Ekstract is Managing Director of Global Licensing Advisors, a consultancy that provides companies with insight and strategic direction to succeed in the $300 billion a year licensing business. Ekstract is the founder and former Publisher of License Global magazine, the leading information source for the consumer licensing business. He can be reached at firstname.lastname@example.org.
10 Truths Brands Should Know About Livestreaming in China
Offering low prices or high-value gifts is one of the rules for pitching via top streamers. Therefore, even sky-high sales figures do not guarantee a profitable promotion.
If the target audience hasn’t heard of the brand before the livestream, there’s only a low chance that they will buy the goods in three minutes, especially for luxury goods with relatively high prices.
Many celebrities are rushing into the livestreaming game, and there is no doubt that celebrities can leverage their huge fan bases to draw in more viewers. However, it is also not news that celebrity streams record poorer ROI than bottom-tier streamers on e-commerce livestreams.
E-commerce livestreaming is a shopping mode that enables viewers to purchase goods in real-time while livestreamers conduct demonstrations. COVID-19 has led to faster adoptions of e-commerce in Western countries, but it has also grown e-commerce livestreaming into a large part of China’s sector. KPMG and Ali Research even projected that the total scale of China’s e-commerce livestreaming industry would reach $307.12 billion in 2021 (1.995 trillion RMB).
But even though the numbers are promising, disappointment with e-commerce livestreaming is also rising. Some news outlets have revealed fake traffic behind the “views” and abnormally high return rates on e-commerce livestreaming orders.
In such a situation, some brands are wondering:
How should I position e-commerce livestreaming within my plan now?
Should I continue investing a large proportion of my budget in e-commerce livestreaming in 2021?
This article will help you decide, thanks to these ten livestreaming truths.
1. Making a profit in e-commerce livestreaming is never an easy thing for brands
Generally, brands need to pay the streamers with a basic service fee plus at least a 20-percent sales commission. Moreover, the service fee may be higher than $61,590 (400,000 RMB) across the entire collaboration with a top-tier streamer. Offering low prices or high-value gifts is one of the rules for pitching via top streamers. Therefore, even sky-high sales figures do not guarantee a profitable promotion.
2. An e-commerce livestreaming platform is merely a tool, not a total solution
An e-commerce platform is merely a tool that brands can use for increasing brand awareness, reinforcing the target audience, or boosting revenue. However, brands should not deem livestreaming platforms a total solution for meeting all the above objectives. The key is knowing what you are pursuing with each livestream and defining it to match your goal.
3. Pre-marketing and brand reputation are crucial for brands gaining high ROI via e-commerce livestreaming
E-commerce livestreaming is like the last-shot attempt in football. Across the customer journey of awareness, consideration, and purchase, e-commerce livestreaming could merely help on awareness and purchase but not on streamer consideration since they are likely to spend three minutes or less introducing each product. If the target audience hasn’t heard of the brand before the livestream, there’s only a low chance that they will buy the goods in three minutes, especially for luxury goods with relatively high prices. Therefore, a brand should not go for livestreaming if it hasn’t already recorded sufficient positive mentions on key social media platforms like Xiaohongshu.
4. The viewers of the livestream might not be your target audience
A recent report by Taobao Live and Taobangdan pointed out that netizens from Tier-2, Tier-3, and Tier-6 cities are the groups most fascinated with e-commerce livestream purchases. These groups may not be the target audience for all brands, especially luxury brands. Therefore, we should not only evaluate streamers’ views and follower numbers when selecting streamers; it is also meaningful for us to consider whether the demographic matches the brand.
5. Signing with a popular celebrity doesn’t guarantee purchases
Many celebrities are rushing into the game, and there is no doubt that celebrities can leverage their huge fan bases to draw in more viewers. CBNDATA also shows that top celebrity and streamer crossover streams generated higher revenues than regular streams. However, it is also not news that celebrity streaming shows record poorer ROI than bottom-tier streamers on e-commerce livestreams. For example, Wu Xiaobo, one of China’s most successful finance writers, only sold 15 cans of milk powder when he debuted his livestream in 2020. Therefore, if you are selecting a celebrity for livestreaming, and the objective is generating sales, you should review his or her past selling performances and customer demographics.
6. Not all the top-selling streamers have over 1 million followers
Don’t vote down a streamer solely based on follower numbers. Similarly, with the fact that popular celebrities don’t associate with high ROI automatically, some streamers on the top-selling list don’t necessarily have over a million followers. A CBNDATA report shows that 53, 47, and 37 percent of Taobao live, Douyin, and Kuaishou’s top 100 streamers, respectively, have less than 1 million followers.
7. Livestreaming viewers want a deep discount, and offering value-added gifts or limited-edition items may be a workable solution for luxury brands
CBNDATA’s research reveals that both brands and MCN deem “huge discount” as the most important factor for e-commerce livestreaming. Luxury brands don’t typically want to be associated with steep discounts to maintain their high-end brand image, so offering value-added gifts to emphasize the total value is one of the solutions. Additionally, launching limited-edition items could be another.
8. Taobao Live, Douyin, and Kuaishou are the top battlefields, but you need to select the right one for your products
Recent iimedia’s research projected that Taobao Live, Kuaishou, and Douyin continued to be the leaders in e-commerce livestreaming over 2020. However, not all platforms fit your brand, as the audiences on different platforms prefer different product categories or products with different prices. For example, jewelry, beauty & cosmetics, clothes & bags, and home appliances are the top categories on Taobao Live. But clothes, jewelry, beauty & cosmetics, foods, and shoes & bags are the leaders on Douyin. As Kuaishou’s users tend to be from smaller cities, low-priced household essentials, food, beauty & cosmetics, and clothes & shoes are more favorable on the platform.
9. Most brands overlook the best material to improve their brand image after livestreaming
Many brands are willing to put effort into pursuing a high ROI via e-commerce livestreaming. However, not many brands have worked on their post-streaming actions. Video and photos from the livestream, especially those with top steamers, could make good material for building an audience and improving the brand image.
10. Brands need to plan streams regularly
In KOL livestreaming rooms, many customers purchase goods because they trust the streamer rather than the products. Moreover, the top streamers may require a higher basic fee and commission ratio, which yields a decreasing ROI for KOL livestreams.
Conducting brand-run streams is a wiser idea. It allows the brands to gain “real” firsthand demographic information on the viewers. Meanwhile, brands are also able to retarget those viewers via advertising tools. Furthermore, it allows brands to capitalize on the trust that viewers build with the flagship store.
As such, the answer to our opening question is: Yes! Livestreaming has formulated new consumer behaviors and will continue to be one of the key growth engines of China e-commerce. Your brand needs to get on board, or you will quickly get squeezed out of the market.
Yet, entering this opportunity market is not an endpoint — it is just a beginning. Your brand must define its objectives for doing e-commerce livestreaming, take time to select the right channel, and match your goals to the right streamer.
Prada Continues To Innovate “New Retail” In China
What Happened: Prada unveiled its Outdoor collection, a special ready-to-wear selection inspired by a range of outdoor environments, in Shanghai shortly after its debut at SKP Mall in Beijing and Xi’an. As the collection’s first installment, a series of outdoor-inspired activities called “Garden” will roll out at Rong Zhai — Prada’s social and cultural hub located in the heart of Shanghai — on May 14.
From May 19 to 21, the garden of Prada Rong Zhai will transform into a summer-night outdoor cinema with special screenings featuring cinematic works by Chinese film directors, including Jia Zhang-Ke, Chen Chuanxing, and Pema Tseden. Over the following weeks, various Prada Outdoor workshops will be available for reservation through Prada’s WeChat Mini Program. The workshops will provide a unique opportunity for guests to explore gardening, horticulture, camping, coffee, and mixology.
Meanwhile, a special installation of Prada Outdoor will open to the public on May 20 and stay open through June 6 at Wu Kang Road — a hot location amongst young residents and visitors.
Jing Take: Discerning luxury players have started to break the boundaries of their usual seasonal launches in the post-pandemic era. And Prada has opted to draw inspiration from the natural world by adding diversified experiences that are relevant to their customers, in addition to their normal Spring/Summer and Fall/Winter presentations. The brand’s outdoor selection, including hammocks, blankets, cushions, woven picnic baskets, hats, and bags, only adds to the brand’s product categories and offerings. As importantly, those variations resonate with China’s luxury shoppers, who have shown a distinct appetite for unique products with an iconic brand DNA.
Yet, Prada’s dedication to China’s market is beyond product development. Cultural integrity, which is a big part of the legacy house’s brand values, can also be found in Prada’s collaborations with local creative talents. But the brand’s diverse range of outdoor workshops will also elevate audience engagement and garner organic digital content in the social arena.
Indeed, these initiatives, from brand pop-up stores to workshops, are part of Prada’s larger vision of experimenting with new retail models. Instead of sticking to fixed boutique locations, the house has been eyeing fluid sites that can better engage young generations that attach greater importance to experiences and newness.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.
Rimowa Unpacks More Offline Retail In China
What Happened: The LVMH-owned German luxury suitcase brand Rimowa is growing its retail footprint in China. It has now opened its first double-story boutique in Beijing Sanlitun, covering 260 square meters in total. The store presents a new concept of “mobility,” as the tables are equipped with movable pulleys, allowing them to be moved along a track, while the display walls holding products are also mobile.
In 2016, luxury conglomerate LVMH acquired Rimowa for $716 million and named Alexandre Arnault, who was then only 24 years old, brand co-CEO. Under his youthful leadership, the 120-year-old heritage brand went through a series of transformations by collaborating with popular hype brands like Supreme, Off White, and Fendi and introducing new categories.
The Jing Take: In 2019, Rimowa’s global luggage sales reached $156 billion, and China accounted for 24 percent of that number. Despite COVID-19, the brand has not halted its retail expansion in the country. Instead, it has upgraded its store experience, shifting away from minor shopping centers to focus on flagship stores in premium locations.
This move is a risky one for the luxury suitcase brand since international lockdowns crippled the travel business, and Rimowa’s sales halved during the period (although China now offers a bright spot amid tentative global reopenings). The company’s hyped-up collaborations, limited editions, and seasonal collections have gained the interest of local Gen Zers, but luggage is far from a frequent purchase.
Recently the brand launched sunglasses products, a soft leather goods collection (Never Still), and phone covers; the latter quickly sold out. But to meet its $1 billion sales target, the brand will need to consolidate these new categories rather and not just simply cater to China’s easily distracted young luxury spenders.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.
5 Ways Luxury Brands Can Win Over The FOMO Generation
Luxury is associated with exclusivity, but the democratization of luxury has reframed the meaning of scarcity. For example, Louis Vuitton’s Lunar New Year and Chinese Valentine’s Day collections reinforce the desire to own an item that is not widely available.
Building anticipation and creating social hype can be leveraged into a heightened brand image. In fact, exclusive partnerships, such as The North Face x Gucci collab, are not primarily about generating sales but more about increasing brand equity.
User-generated content offers luxury brands an opportunity to project an enviable lifestyle within their communities. Some brands even provide incentives for consumers to create and share content, like how YSL gives its customers rewards when posting images with YSL items.
Zhang Wei, a marketing executive in Shanghai, has has acquired an impressive collection of designer handbags. Her aspiration to always own the latest designs and brands is rooted in the social psychology called the fear of missing out (FOMO or 错失恐惧症).
The need to follow or catch up on trends is not new, but FOMO stirs highly intense emotions such as regret, disappointment, anger, and anxiety. Wei belongs to a generation raised on FOMO — one that is always connected and engaged. For them, the notion of fear is embedded in the need to belong and has become a signature behavior. Here, Jing Daily has outlined five ways luxury brands can tap into this FOMO to increase brand desirability.
The lucky few
Luxury is associated with exclusivity, but the democratization of luxury has reframed the meaning of scarcity. For example, Louis Vuitton is still known as a “brand for secretaries” in China. Yet, limited-edition launches, such as Louis Vuitton’s Lunar New Year and Chinese Valentine’s Day collections, reinforce the desire to own an item that is not widely available. In other words, these become “must-have” items that elevate the owner’s status above the masses.
Building anticipation and creating social hype can be leveraged into a heightened brand image. Exclusive partnerships like Louis Vuitton x League of Legends or The North Face x Gucci are not primarily about generating sales but more about increasing brand equity. Brand content is communicated and amplified via key opinion leaders (KOLs) who ensure social validation. High exposure with limited penetration equates “coolness” for those in the know.
Beat the clock
A limited time for sales creates a sense of urgency to take advantage of the offer. Singles’ Day is not just about saving money on purchases — there is a sense of competitive rivalry and, ultimately, is about not losing out. The example of the KOL Mr. Bags selling exclusive collections that sell out on WeChat in minutes or his Qeelin x Mr. Bags collection in seconds is a deliberate tactic that puts pressure on consumers to beat the clock. This dynamic “buy now to avoid disappointment” tactic also drives the increasing success of luxury e-commerce livestreaming.
Loyalty programs lock customers into brand relationships because loyalty status offers them preferential rewards. Tiered loyalty programs, particularly those for beauty brands like Sephora’s Pink, White, Black, and Gold levels, provide incentives for customers to access higher value rewards. Experiential benefits are more common for higher-tiered members, such as Clarin’s Platinum level, which includes exclusive invitations to VIP events, beauty workshops, and free facial or body treatment.
Chinese consumers spend hours fixated on social media to provide them with insight and inspiration on their peers’ luxury lifestyles. User-generated content offers luxury brands an opportunity to project an enviable lifestyle within their communities. Images or videos of consumers showcasing a new designer bag, traveling abroad, or driving a sports car can impact peer pressure, and brands can provide incentives for consumers to create and share content. For example, YSL gives its customers rewards when they post images wearing their YSL items.
Social pressures coupled with rising aspirations will mean that FOMO will continue to influence consumer behavior in China. However, marketers should keep an open mind about future developments since some current consumers are now actively choosing to disconnect via the Joy of Missing Out (JOMO), which resonates with less conformist attitudes. It’s a reminder that brand executives should carefully watch the evolving emotions of luxury consumption.
Special thanks to Songxin Xue.
Glyn Atwal is an associate professor at Burgundy School of Business (France). He is co-author of Luxury Brands in China and India (Palgrave Macmillan).
Are China’s “Little Fresh Meat” Idols Losing Their Luster?
Female idols that subvert gender norms and beauty standards are often seen as role models by consumers. By collaborating with these influencers, brands can bolster their storytelling efforts and tap into China’s female empowerment trend.
Little Fresh Meat idols are now over-represented by brands since their fan base, which is mostly comprised of Gen Zers and young Millennials, overlaps with luxury’s audience. Although no longer a “fresh” concept, fans still buy into it.
China-based foreign KOLs can offer global appeal and help drive Chinese culture consumption abroad, but current political tensions make it risky for brands to collaborate with them.
Among a hundred idol hopefuls, five boys stand out.
Well, “boys” may not be the right word to describe them. “Men” is perhaps more appropriate, considering the oldest of the quintet is 31, and even the youngest looks more mature than his doll-faced peers. Sporting facial hair and tracksuits in the opening episode of Youth With You 3, the third season of iQiyi’s hit reality show, the Produce Pandas seem more like misplaced staff members than competitors at first glance.
Dubbed China’s “XXL boyband,” the singing and dancing group certainly doesn’t fit the usual mold of male celebrities. Yet, with the prevalence of China’s “Little Fresh Meat” aesthetic over the years — thin, dainty boys decked out in extravagant outfits — many of the show’s viewers found them to be a breath of fresh air. Others, however, complained that they were lowering the standard for idols with their heavier, scruffier appearances.
Since 2018, survival shows like Youth With You 3 have become incubators for the country’s next KOLs, helping multi-hyphenated talents amass large followings and gain the attention of global brands. At the same time, fashion and luxury names have also been eager to collaborate with these youths, as their dedicated fans are often willing to shell out millions to show them their support.
So, with idols playing a starring role in brand marketing strategies, what does it mean when mainstream programs like Youth With You 3 and Tencent’s Chuang 2021 start showcasing contestants that go against beauty conventions? Here, Jing Daily examines whether China’s idol scene is becoming more diverse and what opportunities a change could offer luxury brands.
Female idols blaze the trail for diverse beauty
While subverting beauty standards has been a growing trend in China, it is mostly reaching women, observed Laurence Lim Dally, the founder of Cherry Blossom Intercultural Branding. From Li Yuchun, a tomboyish pop star who won the singing contest Super Girl in 2005, to the “handsome youths” of Fanxy Red, more female idols are steering clear of the cookie-cutter, “cutesy girl group” image and carving out space for aesthetic diversity.
This trend was amplified last year when two members of Fanxy Red, along with the androgynous singer Liu Yuxin, competed in Youth With You 2. With their shorts, swagger, and perfectly coiffed hair, the popular trio helped bring the show’s theme of “not defining a girl group” (“不定义女团”) to the forefront and sparked conversations about challenging stereotypes. As Liu Yuxin, the season’s contestant to receive the most votes, said in a Harper’s Bazaar video, “They say girls should not be too handsome. I say mistaking a girl’s coolness for being handsome is too shallow.”
According to Dally, androgynous women express their individuality in a context of historically standardized beauty codes and censorship. As such, these gender-neutral stars are seen as role models who help brands not only spice up their image but also resonate with luxury’s largest driving force.
“With these idols, brands can make ‘being a trailblazer’ and ‘breaking the standards’ a part of their storytelling,” explained Allison Malmsten, a market analyst at Daxue Consulting. “Many brands aim to target empowered young Chinese women not only for their consumption power but for their market influence.” Brands like Dior, G-SHOCK, and Sofy have already taken note, tapping Liu Yuxin to front their campaigns touting individuality and girl power.
“Little Fresh Meat” still takes the cake
In contrast, when it comes to representing masculinity among idols, China’s effeminate Little Fresh Meat look still dominates. But this is no surprise since the term itself is such a money-maker. “[Little Fresh Meat] is a title people [marketers, media, brands] know will attracts fans and consumers. So it gets used on a wide range of male idols who are young and good-looking,” said Yishu Wang, a director at the marketing agency Half A World, to Jing Daily.
Luxury brands have also jumped on this craze. Last month, Tiffany & Co. promoted the TFBoys’ Jackson Yee from regional ambassador to its global face. Meanwhile, Prada and Givenchy have joined hands with iQiyi darlings Cai Xukun and Fan Chengcheng, respectively. As to why luxury continues to tap these idols, Wang explained, saying, “The majority of the fans of Little Fresh Meat idols are Gen Zers and young Millennials, who are also the target consumers for luxury brands in China.”
But as Little Fresh Meat becomes the norm, ironically, what is common has become the exception. Over the last few months, the Produce Pandas have made global headlines for their humble looks and down-to-earth personalities, hoping to show the world “ordinary people can achieve ordinary dreams on stage.” Although — spoiler — the members were eventually voted off the show, it is interesting to note that their fans are largely based overseas or in the gay community (a reminder that unconventional KOLs can be used to target niche demographics).
Despite their super fans, foreign idols are a gamble
While Little Fresh Meat idols reign supreme, one thing has started to change: their passports. Although few global talents have competed, much less debuted, on Chinese programs, Tencent’s Chuang 2021 chugged ahead with its ambitions to form an “international boyband” — even comically roping in one unwilling Russian translator to fill its quota for foreign participants. These efforts culminated in the launch of the group INTO1, with seven of the 11 members being non-Chinese citizens from the US, Japan, and Thailand.
And so far, this soft power push is paying off. Compared to Chuang 2020, this season saw a significant interest spike abroad, with the term “Chuang 2021” becoming most-searched in Thailand and Singapore, followed by Russia, Western Europe, and North America, Malmsten said. In fact, the final episode alone garnered 4.77 billion views while fan donations for the season exceeded $22 million, emphasizing the cross-cultural appeal of these fresh faces.
Of course, current political tensions can make teaming up with foreign idols tricky. “Not only is there a risk that the idol themselves could do something wrong, but there is also an issue of the agency they are tied to,” Malmsten added. In March, several popular Japanese contestants on Chuang 2021 were embroiled in controversy when the Chinese Communist Youth League revealed on Weibo that their representative agency, RBW, had listed Taiwan as a separate country on its site.
And recently, just days ahead of what was supposed to be Youth With You 3’s finale, Chinese frontrunner Tony Yu was forced to withdraw after a clip of him claiming to be Canadian on another variety show resurfaced, stirring online debate over his nationality. The message to brands here is clear: Tread carefully, as netizens will be the first to call them out if they cross the line.
Sameness prevails for now
It’s hard to say that China’s idol aesthetic has changed drastically. Ultimately, those voted to win these survival shows still tend to fit within China’s narrow definition of beauty. Moreover, due to diverging ideas of inclusion, the racial, LGBTQ+, and body diversity that Western consumers have increasingly come to expect from brands are not necessarily what local counterparts want to see.
Nonetheless, the tide is slowly turning. Older female idols are making waves. Brands like Neiwai are proudly promoting “normal” bodies. Netizens are shutting down skinny fads. And idol hopefuls who are curvy, androgynous, bald, or even non-Chinese have embraced their individuality and entered the ring. So, while Little Fresh Meat isn’t going anywhere, perhaps brands should be — expanding their lineup of idols to stand out and steer meaningful conversations rather than risk going stale.
Does China’s Graying Population Hide A Silver Lining For Brands?
What Happened: After weeks of news outlets teasing China’s first population plummet in five decades, the results are finally in: The country has actually surpassed the 1.4 billion mark, up 72 million people since 2010. The catch, however, is that this is at a growth rate of close to zero (0.53 percent), largely due to falling birth rates, rising costs of raising children, and an increasing focus on careers. Although China’s workforce “remains big” at 880 million, this number has shrunk 40 million over the last 10 years. Meanwhile, the number of people aged 60 and above has grown to a concerning 18.7 percent of the total population, making the average age in China 38.8 years old.
The Jing Take: Unless you’re in the senior care business, China’s graying population isn’t particularly good news. For one, this swelling number of retirees could stunt economic growth, placing pressure not only on the country’s medical and pension systems – the latter forecasted to run out of funds by 2036 – but also on its younger generations, many of whom are only children as a result of China’s one-child policy. While Beijing wants to raise the retirement age, this would create other problems for working adults, making it harder for them to find jobs and rely on their elderly parents for childcare.
Moreover, considering how important Chinese youths are for sustaining global luxury’s growth, their shrinking ranks may hamper consumer spending and efforts to develop new industries. Yet amid this crisis, there may be a golden — or rather, silver — opportunity for brands. iiMedia Research predicts China’s senior economy will reach 5.7 trillion yuan ($886 billion) by 2021. Leading less busy lives, these consumers can spend more time and money on leisure activities, tourism, and artwork, as well as fashion and beauty. And conveniently for brands, more are shopping online; in fact, JD.com stated that seniors spent 2.3 times as much as the average user in 2017, while Taobao saw its number of active elderly mobile users jump 29.7 percentage points higher than the average amid the pandemic.
So, while China rallies for more babies, perhaps brands should start targeting its Baby Boomers. Compared to their indebted millennial counterparts, this vast, yet underserved segment have, in a nutshell, what all brands are looking for — well-to-do consumers ready to spend. Ok boomer, it’s your turn. Again.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.
How To Win The Booming Lingerie Market In China
Smart retailers have capitalized on opportunities presented by the stay-at-home economy when comfort and health were prioritized to the detriment of sexy intimates.
Some retailers and brands are anxious about expanding to China because of the high costs associated with an international expansion strategy and China’s complex regulatory framework.
Global brands are mitigating risks with partnership agreements with distribution and management companies in China.
The Chinese underwear market was valued at $61 billion in 2020, according to iiMedia Research Group. And according to CBNData’s Underwear Industry Trends Research, in 2019, women’s underwear occupied the largest market share (over 60 percent).
The lingerie market in China is thriving despite the COVID-19 pandemic, and analysts are predicting a significant CAGR by 2025. Since then, smart retailers have capitalized on the opportunities presented by the stay-at-home economy, which prioritized comfort and health to the detriment of sexy intimates.
According to a report by TechSci Research, the increasing purchase power of China’s giant middle class and its Westernization are shaping market trends. The report also highlights that manufacturers targeting China have a user-centered design strategy where they only produce lines that respond to the needs and desires of their audience.
Yet, despite the market’s potential, some retailers and brands are anxious about expanding to China, which is understandable if we consider the competitiveness of the market, the high costs associated with an international expansion strategy, and China’s complex regulatory framework. However, other global brands are mitigating risks by entering partnership agreements with distribution and management companies in China.
One of those companies, Privet, focuses on lingerie and is “the leading distribution and management company in China,” according to its Founder, Olivier Pichon.
Privet offers “B2B professional communications services to the operation of mono-brand and multi-brand stores.” And, since its founding in 2014, it has serviced more than 50 global lingerie brands, offering them personalized marketing solutions and assisting their China market entry strategies.
Working in omnichannel accelerations, Privet has partnered exclusively with brands like Aubade, Chantelle, and Eberjey. “We started from wholesale, and now, we run mainly e-commerce operations with multi [Lingerset] and mono-brand stores,” said Pichon.
Physical retailers generally have higher conversion rates than online retailers. But Privet has “the best conversion rate,” according to its founder. Successful branding and the capacity to understand consumer buying behaviors are effective strategies in increasing conversion rates. Yet, those don’t always generate high sales and profits.
That is especially true in a highly polarized world where purpose-driven consumers want brands to share their values. A beautiful advert might grab consumer attention and generate some engagement, but it doesn’t necessarily mean consumers will buy.
The most successful brands use “social listing” to understand market directions, observe trends, and follow consumer preferences. And those who refuse to listen to consumers will fail.
Take, for example, Victoria’s Secret. Despite the uproar and backlash against its sexist marketing campaigns, the brand continued to push the same image of “bombshell sexiness.” As such, not even using celebrities like Zhou Dongyu and Yang Mi as brand ambassadors could save the brand in China.
On the other hand, local brands like Ubras and Aimer have won hearts with their one-size-fits-all bras and comfortable shapewear. Global brand Chantelle is also conquering the market with its Soft Stretch collection because consumers appreciate the craftsmanship, “long history, and innovation” of the French brand, Pichon believes.
Distrust, nihilism, and apathy rule post-pandemic, and consumers are demanding brand authenticity and trust. As such, physical retail is better equipped to build and nurture a sense of community and transparency.
Moreover, physical retail is especially important for lingerie brands because it offers consumers the opportunity to touch and feel products. “Fitting is the key,” says Pichon. He believes that most women “still don’t know their size,” as sizing can be different across brands. “Brick and mortar stores can offer an outstanding experience,” he adds.
Today, lingerie brands that can strengthen their omnichannel efforts, provide seamless experiences, and offer personalized interactions will fortify their brand equity and reinforce their market positions. Physical retail will continue to rule, but digital is reinventing the terms of engagement.
China Global Luxury Index Reaches Its Highest Level Ever
Index Moves is our monthly analysis of the biggest climbs and drops on The Jing Daily KraneShares China Global Luxury Index, which tracks the global market performance of the luxury sector. The Index relies on the Jing Daily Global Luxury Score and Jing Daily Brand Awareness in China Score in addition to fluctuations in market cap and stock closing price. Below, we highlight luxury brand moves for the month ending April 30, 2021.
Not only have luxury companies rebounded from the pandemic, they now have surpassed their pre-pandemic highs, as the Jing Daily KraneShares China Global Luxury Index reaches its highest level ever.
The daily Index, which tracks the world’s largest luxury companies and their relevance to China, clocked an almost uninterrupted rise in April, ending the month at 333.33 points and eclipsing its pre-pandemic high of 249.9.
China’s luxury consumers are back with a vengeance, spending like never before and buoyed by a passion for fashion like the country has never seen.
But the Index says as much about the past as the future. April was a month in which many luxury firms reported their first-quarter results. But what is usually a routine reporting exercise told a much greater story this year. The January-to-April data completes a year in which luxury companies have had to trade under the most extraordinary conditions in living memory.
So how did they perform? Mostly, luxury brands did better than expected, which is why their shares surged in April alongside the Jing Daily KraneShares China Global Luxury Index.
However, it was not good news for all luxury companies.
Kering: Luxury’s Pandemic Winner?
For the second month running, Kering took the Index’s first position. But, only in April did the owner of Gucci and Yves Saint Laurent hold the top spot for every single day, with its share price speeding ahead of rivals. Kering primarily owes this to China: Its sales in the Asia-Pacific were up 83 percent from the same period last year, and China is by far its largest market in the region.
LVMH and Capri Holdings, which vied over second and third place in April, were also praised by analysts for their first-quarter results, which revealed better-than-expected sales in China.
But as consistent as Kering’s first-place scores were in April, so too were Moncler’s tenth-place scores during or the month. The only Italian company on the Index has perhaps been too successful in crafting a reputation for puffer jackets and skiwear, which is a market that always suffers at this time of year.
With Masks On, Makeup Giants Stumble
Makeup also wasn’t much of a seller in a year that offered few occasions to wear it. L’Oréal’s shares fell 1.5 percent the day it announced disappointing sales from its makeup brands, including Maybelline. Shares only stopped falling further on news that L’Oréal’s sales in China were up by 38 percent. The same laws applied to Estée Lauder, which reported both a fall in makeup sales and an increase in Chinese business.
Athleisure Trend May Be On Its Way Out
It seems luxury is at a turning point. While beauty brands have yet to rebound, athleisure may have already peaked. And brands on Jing Daily KraneShares China Global Luxury Index that specialize in sporting goods, such as Nike, Li Ning, adidas, Lululemon, and Under Armour, were clear beneficiaries of stay-at-home orders in 2020. So far this year, however, their performance has been less impressive as investors bet on a change in consumer habits as the world reopens.
Investors Keep Their Eyes On Tech
But there is one industry that is here to stay, according to the same investors: Tech. When it comes to the 40 companies that make up the Jing Daily KraneShares China Global Luxury Index, analysts polled by Bloomberg give the strongest “buy” rating to technology firms. Among them are JD.com, Bilibili, and Tencent. Even Alibaba is due for a rebound.
Six Brand Collaborations Chinese Consumers Loved in April
Every month, we look back at some of the most memorable initiatives in China’s active brand collaboration scene, where creativity and ability to connect with Gen Z and millennial consumers on the latest trends are keys to success.
Top Pick: Sotheby’s x Jay Chou
Asian megastar Jay Chou returns to his roots as the son of an art teacher, partnering with Sotheby’s in Hong Kong for an upcoming collaboration that will be revealed in June. Although few details have been released since Sotheby’s made an announcement of the partnership on April 19, the “King of Mandopop” has publicized the event on Instagram to his 6.4 million followers to much speculation of what’s to come.
While best known as one of the biggest Chinese-language music stars, Chou has expanded beyond entertainment into numerous business pursuits. He has worked with dozens of brands, from global consumer names like Pepsi and Oreo to C-beauty brand Pechoin and menswear labels Metersbonwe and Hailan House. He has also launched his own companies, such as streetwear brand Phantaci and several restaurants. Last year, he made his official debut on mainland Chinese social media with an exclusive deal with Kuaishou, including a livestream that reached a reported 68 million viewers, who spent $2.85 million within the first thirty minutes.
Chou’s partnership with Sotheby’s ties to his longstanding appreciation of fine art and has the potential to expand awareness of the auction house among Chou’s tens of millions of fans, spanning generations from Gen Z to older followers who have been listening to his music since he released his first album in 2000. Chou is an avid collector who has previously worked with the likes of Chinese artist Xu Bing, and his Instagram often features works he admires or owns. The two were connected through Enviseam, a brand founded by Jazz Li Chou’s long-time collaborator, which is also listed as a collaborator in the upcoming Sotheby’s event.
Five more collabs worth noting:
Rolls Royce x Netease Music
Luxury car brand Rolls Royce and streaming service Netease’s electronic music brand Fever teamed up to produce “Journey Through Time and Space”, a work inspired by the signals that celestial objects emit into the universe. Four Chinese sound artists who previously worked with Fever — Luminn, NIng, Angry5JaR, and 3ayer — worked together on the project.
“Journey Through Time and Space” was part of a broader April 17 exhibition hosted by the luxury automaker at Shanghai’s Plaza 66 ahead of the. The show centered around Rolls Royce’s Phantom Campus, a dome-shaped complex that is described as a “timeless icon,” and featured various celestial themes, including pulsars, infinite time, and ambient electronic music, aligning the brand with the enduring nature and grandiosity of the universe.
Mercedes x Liu Cixin
Mercedes Benz added a futuristic spin to its “EQ Night” on April 18, inviting Hugo Award-winning author Liu Cixin to serve as a future creator for the brand. The event saw the Chinese debut of various models in the luxury car maker’s all-electric EQ lineup as well as the global launch of the EQB, a new electric SUV. The accompanying hashtag #EQ# has been viewed 240 million times on Weibo.
Liu’s “The Three Body Problem” became the first Asian novel to win the Hugo Award and is currently being turned into a Netflix series. His novella “The Wandering Earth” also became a blockbuster film in China in 2019. In naming Liu as a future collaborator and in featuring him in discussions about the direction of the universe at EQ night, Mercedes Benz puts a futuristic spin on its EQ series as part of a broader cultural conversation.
Neiwai x Manner Coffee
Another content-focused collaboration comes from Chinese lingerie brand Neiwai, which partnered with China’s latest coffee disruptor for the release of a short film highlighting its Spring/Summer 2021 collection. Focusing on the theme of urban exploration, the video features shots of young women wearing Neiwai apparel relaxing in parks, getting splashed by water, and carrying fruit through city streets. Neiwai shared via Weibo that Manner Coffee would also be releasing limited edition drinks, including a new matcha and espresso as well as iced and hot matcha lattes.
Both brands have risen to prominence as domestic disruptors in industries long dominated by Western brands. Manner Coffee began as a single store in Shanghai before exploding to 108 stores nationwide by the end of 2020. The trendy coffee chain has taken on Starbucks as a competitor by maintaining fast-food prices for specialty coffee. Similarly, Neiwai gained traction for its message of body positivity. Its non-sizing strategy, minimalist aesthetic focused on comfort, and viral “No Body Is Nobody” campaign have all resonated with young Chinese consumers and are echoed in the recent video as young women move around freely and comfortably while wearing Neiwai.
Wuling x Elle makeup collection
Chinese automaker Wuling Motors has recently been trending for its Hongguang Mini EV, and is no stranger to the cute aesthetic. The manufacturer recently collaborated with Chinese Elle magazine to release a macaron-inspired Spring makeup gift box. The travel set features the three colors of avocado green, peachy white, and lemon yellow, and includes a special edition macaron collection eyeshadow brush and a twelve-color eyeshadow palette.
Elle wrote on Weibo that the collaboration showcases the “sweetness” of Spring and is inspired by the limitless potential of traveling in fashion. The HongGuang Mini EV is featured as an ideal partner for these journeys. The electric vehicle, small and boxy with the ultra-low price of around $4,400, outsold Tesla in September 2020 and has made a strong impression on Gen Z consumers.
Pomellato x Harper’s Bazaar
Luxury brands continue to tap into female empowerment as high-end jewelry retailer Pomellato teamed up with Harper’s Bazaar Jewelry for a video exploring the nuanced identities and many sides of being a woman. The video features actress Zeng Li, designer Lan Yu, and writer Hao Jingfang, along with editor-in-chief Jing Jing, each exploring how they represent a combination of seemingly contradictory characteristics, such as being innovative and traditional at the same time. Close up shots in the video feature various Pomellato earrings, rings, and necklaces.
This is not Pomellato’s first effort at message-oriented marketing. The Italian jewelry brand previously produced a short film in March featuring Jane Fonda and Cate Blanchett, among other women, speaking about their activism and strength. Pomellato used the same hashtag (#Pomellato for Women) to promote both video productions.
Why Victoria’s Secret Body Positivity Spin Won’t Work in China
What Happened: Lingerie powerhouse Victoria’s Secret has announced a new trio of “brand friends” in China. There’s idol Zhao Xiaotang, with four million Weibo followers, the fashion photographer Chen Man, who has amassed 10 million fans, and finally the former celebrity agent and body diversity champion, Yang Tianzhen. Following a controversial show in 2016, and years of declining sales in China, Victoria’s Secret undertook a much needed rebrand in 2020. The hiring of A-list actors Zhou Dongyu and Yang Mi as part of this strategy was credited with the start of an uptick on the mainland.
The Jing Take: In recent years, Victoria’s Secret’s global image has looked dramatically out of touch with a changing society. This hasn’t been helped by the uncovering of an internal toxic culture built on bullying and harassment, underpinned by tone deaf interviews. But following a company reshuffle, it has been working to address these issues. Recent financial reports show that it has undergone an unusual surge in demand in recent quarters — despite the announcement of a slew of store closures in 2020.
In China, the hiring of Yang Tianzhen, who runs a plus-size fashion line and is much loved among fans, further plays into this progressive shake up. As well as beautiful, she is clever, articulate, and deserves to be on this side of the lens (rather than working behind it). However, this move is very much in keeping with Western brands selling strategies based on so-called inclusivity which taps consumer sentiment to generate profit. And, while this could be read as a positive move, some will see it as an attempt to crib local names. Intimates’ competitor Neiwai, for one, but this has built its body positive messaging from the ground up.
So far, this ploy has not played out as well as they might have hoped. Unlike Neiwai, Victoria’s Secret’s has a long history of glamorous supermodel perfection, therefore this choice is seen as inauthentic for the Chinese consumer and has left many citizens bewildered. Global brands need a localized approach in China, but one that resonates convincingly with the company. “Stay true to yourself, you are unique,” said the official Weibo post on Yang’s announcement. Advice it needs to heed itself.
Bytedance’s E-Commerce Ambitions Look Beyond China
- A more highly regulated tech environment in China is speeding up Bytedance’s plans for global e-commerce expansion.
- Douyin saw e-commerce sales reach $26 billion last year and hopes to see sevenfold e-commerce growth by 2022.
- Internationally, TikTok tested the waters with e-commerce last year via collaborations with Walmart and Shopify.
The explosive growth of Bytedance’s Douyin in China and TikTok globally have given it enormous influence, leading companies to hire “Chief TikTok Officers” while raising concerns in countries like the United States and India over the past year. And in the run-up to an impending IPO, Bytedance is moving quickly to nab market share from Chinese tech incumbents like Alibaba via its pivot to e-commerce.
China’s tech environment is currently rife with tensions. Over the past year, a major government crackdown in China has led to the scuppering of Ant Group’s planned mega-IPO, high-profile antitrust investigations, and a flurry of fines (including a record $2.8 billion against Alibaba). That’s left companies rushing to play nice with Chinese regulators while looking for potential revenue streams globally.
For Bytedance, fresh off its triumph over the Trump administration’s attempt to force the divestiture of its U.S. holdings last year, this means aggressive moves to take advantage of its huge worldwide user base and much-hyped AI prowess to become a powerful force in e-commerce.
Already, Bytedance’s Douyin has become an important conduit for brands to reach and sell to Gen Z in China, achieving an estimated $26 billion in sales last year, a feat that Taobao took six years to accomplish. By next year, Bytedance hopes this number will increase by nearly seven-fold to more than $185 billion. Meanwhile, the company is raking in ad revenue as companies clamor to get in front of Douyin’s 600 million-plus daily active users, and the video app will account for more than half of Bytedance’s expected $40 billion in domestic ad sales this year.
Douyin’s selling point is that the app is basically tailor-made for the way Chinese consumers learn about brands and make purchases these days, which is to say, entirely on their smartphones. As Jing Daily columnist Tanya Van Gastel pointed out earlier this year, “China’s shoppers will not buy via internet browsers.” Everything from product discovery to research to completing the sale takes place on mobile devices.
Bytedance seems confident that the rise of social commerce among younger consumers makes success in the world of e-commerce a certainty. Last month, the company detailed plans to fuse social commerce with Douyin by applying its algorithms to relentlessly push shoppable recommendations into its content streams, which it terms “interest-based e-commerce.”
Bytedance’s blueprint to compete head-on against the likes of Alibaba and JD.com also entails greater vertical integration. Last year Douyin banned shopping links to third-party sites in its livestreams, launched a “Star Map” platform to match influencers with brands, and established its own payment platform. For e-commerce livestreamers, a benefit of choosing Douyin over the more established Taobao Live could be its recommendation algorithms, which can help newer sellers stand out more quickly compared to Taobao Live, where a handful of big names dominate sales.
The story becomes even more interesting in its potential to go global. Currently, TikTok is far less feature-heavy than its Chinese counterpart, but this is changing quickly. Brands are now investing more in branded content, advertising, and influencer marketing to reach Gen Z on apps like Snapchat and TikTok, incorporating paths to purchase in short streaming programs and influencer broadcasts alike. Bytedance has reportedly set up a team in Singapore to start building out TikTok’s e-commerce infrastructure, and TikTok has already launched major collaborations with Walmart and Shopify.
The key question is whether TikTok can build the same power in global e-commerce as it seems poised to achieve in its home market. As it looks to compete with the major e-commerce players back home, it will have to face off against efforts from Facebook and Snapchat to gain the upper hand in e-commerce. But what Bytedance boasts is the ability of its recommendation engine to help streamers quickly build their audiences, increasing stickiness and enticing sellers to sell and shoppers to shop.
What Luxury Brands Can Learn From Peloton’s Treadmill Crisis
Connected fitness is one of the hottest categories worldwide, attracting millions of consumers and creating entirely new business models and ecosystems. Some market analysts expect connected fitness to become a much bigger market than traditional gyms.
Peloton has become practically synonymous with connected fitness in the US, announcing a Q1 2021 growth of 232 percent. Peloton now expects to increase its annual revenue from sales of bikes, treadmills, and subscription services to $3.9 billion.
Less than a month after it fought the US Consumer Product Safety Commission about its urgent warning about its products, Peloton decided to recall all of its Tread+ and Tread treadmills.
Connected fitness is one of the hottest categories worldwide, attracting millions of consumers and creating entirely new business models and ecosystems. Some market analysts expect connected fitness to become a much bigger market than traditional gyms, a trend that can already be observed in China, the world’s biggest fitness market. Keep, the world’s largest fitness platform, has more than 200 million users who exercise on average 4.6 times per week.
In the US market, Peloton has become practically synonymous with connected fitness and recently announced a Q1 2021 growth of 232 percent versus last year — a result many other companies only dream of. Peloton now expects to increase its annual revenue from sales of bikes, treadmills, and subscription services to $3.9 billion, which is a significant increase over previous estimates.
These results are driven by the passionate support Peloton gets from its owners and members. I am one of them, owning a Bike and the Tread+ and using Peloton almost daily for all different sports activities. Like myself, millions of subscribers enjoy the classes by trainers like Robin Arzon or Jess King, who have become superstars with hundred of thousands of social media followers. Buying a Tread+ can cost more than $5,000 when you include installation, accessories, and taxes. Many of the Tread+ buyers are among Peloton’s most devoted, most enthusiastic, and most active brand advocates.
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When brands create so much hype, they do it because consumers feel they get extreme value. And that means brands must be aware of the responsibility they carry. I have used the comparison of luxury with a love relationship because all the same rules apply. The more value and desire a brand creates and the more hype it gets, the more it makes customers trust and fall in love with it. Hence, brands that create extreme value carry extreme responsibility to nurture those love relationships.
Over the past months, an increasing number of reports came up indicating potential safety issues with Peloton’s treadmills. According to The New York Times, the US Consumer Product Safety Commission issued an “urgent warning” in April for Peloton’s Tread+, going as far as to urge owners to immediately stop using them after reports of 72 adults, children, and pets being pulled under the belt of the treadmill, resulting in injuries and the death of one 6-year-old boy, according to the reporting.
As if this was not already bad enough, Peloton’s second, lower-priced treadmill faced issues with its screens falling off the machine while in use. Sports influencers like DC Rainmaker, a leading voice in the running world, called this out in a recent article titled “Peloton Tread Screen Falls Off Mid-Workout, Peloton Says to Fix It Yourself.” That does not sound like love. And in press articles from The Wall Street Journal to The Financial Times, news outlets worldwide were featuring stories about customers who tried to contact Peloton over the past few weeks about issues surrounding the Tread+, gaining no definitive answer until now. When the most devoted customers feel alone, there is a risk of breakups.
Less than a month after it fought the US Consumer Product Safety Commission about its urgent warning, Peloton has now decided to recall all of its Tread+ and Tread treadmills. The brand now warns consumers to operate the devices safely away from children and pets. However, on its website, info about the recall was hidden deep in the chat function (as of May 6, 2021), where it only comes up after answering a series of questions, stating, “In cooperation with the U.S. Consumer Product Safety Commission (CPSC), we are announcing a voluntary recall of all Tread+ units due to a risk of serious injury or death caused by the Tread+ pulling and entrapping users, children, pets or objects beneath the treadmill.” The rest of the website remains unchanged at the time of this publication, and it actively advertises both products without any prominent warnings. In times of real-time consumer interactions with brands, this is a missed opportunity to gain back trust.
The Financial Times estimates the cost of the recall at $165 million. But the true damage to brand equity may be significantly higher. Continuing to actively advertise products on its website seems to contrast with Peloton’s CEO, John Foley’s statement: “I want to be clear, Peloton made a mistake in our initial response to the Consumer Product Safety Commission’s request that we recall the Tread+. We should have engaged more productively with them from the outset. For that, I apologize.” His statement is the right one and a very strong message. But a different approach, showing consumers true love and compassion, must follow now.
While it is laudable that Peloton has now changed its position and recalled the machines and put out warnings, these actions may be too little, too late if they are not followed up with a completely different and more proactive consumer-centric plan. If John Foley and his team take the right approach now, Peloton will emerge from this crisis even stronger. Crises are always opportunities to strengthen a brand’s equity if they are addressed in a timely, proactive way. When things are done reluctantly or not quickly enough, brand equity can erode fast, especially if it’s a brand that generates so much demand and desire.
What can we learn? Confronted with a crisis, luxury brands must remember that they are in a love relationship with their customers and that it is their responsibility to project signs of love consistently. Brands will always be confronted with the unexpected, and things can always go wrong. When I lead luxury masterclasses, I ask participants why they “broke up” with luxury brands in their private life. Their breakups — no less than the total destructions of brand equity in the eyes of a customer — are almost always the result of massive disappointment with how they felt they were treated and never because something went wrong. That is where brands need to be careful. Brand equity relies on how people feel — not the brand’s intentions.
When people felt the brand was proactive, bold, understanding, transparent, communicative, and gave them a fair and understandable way forward, they valued the brand even more. As such, a crisis can increase brand equity significantly when addressed correctly.
In contrast, when people felt they, as clients, were not the top priority, they broke up with the brand. And when they broke up, they were extremely emotional, outspoken, and vocal, as one can expect in a breakup.
Therefore, when a luxury brand is faced with a crisis that can affect consumers, it must be extremely fast in communicating and acknowledging its mistakes by stating facts, showing a way forward, and offering proactive support so that customers don’t feel let down. There can’t be any ambiguity in messaging, and the response needs to be real and authentic and feel that way. As in love, feelings matter in a crisis. Peloton built its reputation and market position because consumers love the brand. Focusing on what made the brand so powerful in the first place is what can bring Peloton out of its crisis.
The stakes for luxury brands are extremely high. They are built on extreme value creation, which is always in the eyes of the beholder (the customer). A significant part of a brand’s value is intangible, which means it can dissolve faster than non-luxury values. If consumers don’t feel love and compassion in a crisis, they will break up and move on. But if they do feel it, they will stay. Sometimes it is as simple as that.
Daniel Langer is CEO of the luxury, lifestyle and consumer brand strategy firm Équité, and the professor of luxury strategy and extreme value creation at Pepperdine University in Malibu, California. He consults some of the leading luxury brands in the world, is the author of several luxury management books, a global keynote speaker, and holds luxury masterclasses in Europe, the USA, and Asia. Follow @drlanger
In This Together: Why Fierce Luxury Competitors Sometimes End Up Working Together
Kering has championed sustainability initiatives broadly for the sector, while LVMH just announced a blockchain approach with Cartier and Prada. But the two big rivals have worked on some initiatives together.
As long as the consumer is the focus, brands collaborating can generate a lot of excitement, enhance brand equity, and boost sales.
The luxury sector is a microcosm, and knowing your competitive landscape offers many possibilities for problem-solving with the right frame of mind.
On 9/11, yes, that same dreadful day of the terrorist attacks on the US (most of us likely remember where we were that day), the Gucci brand became the property of PPR — now known as “Kering” since 2013 — after a prolonged fight with rival LVMH.
While the media loves to focus on bitter struggles, epic rivalries, and intrigue (entire books have been published on the battle of egos in the sector), it is also the case that there is some proximity between rival groups and brands, and the sector has a shared interest in working together on a few topics.
As I have followed the luxury sector for 25 years now, within LVMH and Richemont, and now as an external observer, it’s interesting to see top managers making the rounds as a sort of constant “Mercato Deluxe,” as the sector is not great at bringing in external talent and remains somewhat incestuous in nature. That helps in terms of having a common understanding of what counts. Very few industry-wide bodies exist, and the Comité Colbert, a once antiquated institution that has regrouped many French iconic brands, has been recently revamped by the energetic Bénédicte Epinay who took over a few years back.
Outside of these types of industry clubs, brands and groups are working more directly together as the world becomes more complex. And even LVMH and Kering, always seen as traditional rivals, have worked together on issues, establishing, for example, a charter in 2017 for working relations with fashion models.
Facing three big challenges together
For a long time, I have considered that the luxury sector has been on the back foot. Ten years ago, I heard managers telling me they would never allow their products to be sold online. And this year, I have heard senior managers asked why they should bother with sustainability issues, given how strong growth was.
Both approaches are obviously a bit short-sighted, and as Nike says, at the end of the day, “the consumer decides.” If she wants to buy online, you need to adapt. If she asks you about transparency, traceability, or second-hand sales, be sure you don’t come across like a deer in the headlights. If she wants to buy second-hand and be sure about the authenticity of products, are you ready? For some key questions, we have seen a willingness of sector players to work together, and I have in mind the following three:
- Multi-brand platforms: As explained in my column “Why The Future of Luxury Is Not All Online (Yet),” groups as diverse as Alibaba (the Chinese e-commerce giant), Farfetch (the UK and Portugal based tech luxury platform), and Richemont, the multi-brand portfolio owners of Cartier and Artemis and the holding company of Kering (Gucci, Saint Laurent, Bottega Veneta, and Balenciaga) have set up a joint venture to structure the multi-brand online luxury segment in Mainland China. Teaming up here hopefully will produce results.
- Sustainability: French president Macron mandated Kering to set up a Fashion Pact ahead of the G7 in 2019 in Paris, and the initiatives quickly gathered momentum with 32 groups initially signing on. Today, the pact includes twice as many groups, representing 200 brands in all, from Nike to Hermès and Lacoste to Chanel, working towards common goals on three themes: climate, biodiversity, and oceans. More recently, LVMH, the elephant in the luxury room, launched the Coloured Gemstones Working Group, working with all key competitors from Kering to Chopard and Richemont to Swarovski, to secure responsible sourcing in jewelry.
- Second-hand/authentication: Late in April, LVMH again announced it had teamed up with Prada and Cartier to launch the “Aura Blockchain Consortium,” which provides traceability and transparency to luxury consumers on their purchases. As the second-hand market soars, this again looks like a timely initiative.
Not all luxury brands will participate in all initiatives, as they might have their own or different elements they wish to focus on. But don’t just look at the competitive landscape as “dog-eat-dog.” In an uncertain world, many more projects are bound to emerge for the industry’s greater good. In luxury: Divided We Stand, United We Thrive.
Erwan Rambourg has been a top-ranked analyst covering the luxury and sporting goods sectors. After eight years as a Marketing Manager in the luxury industry, notably for LVMH and Richemont, he is now a Managing Director and Global Head of Consumer & Retail equity research. He is also the author of Future Luxe: What’s Ahead for the Business of Luxury (2020) and The Bling Dynasty: Why the Reign of Chinese Luxury Shoppers Has Only Just Begun (2014).
Is Childrenswear The Growth Engine Of China’s Luxury Market?
Childrenswear outperformed womenswear and menswear during the latter half of 2020. The “BM Style” which has been on the rise in China recently may have impacted figures, as some smaller and petite adults are buying cheaper childrenswear.
Mom-and-children influencers and parenting bloggers have emerged in social platforms like Little Red Book and other online platforms. These include the likes of @superRenee with 700,000 to Diu Ma @和小丢在一起的每一天 who boasts two million devotees.
Subtle networking offline is vital for luxury brands. Birthday parties make connections with the parents in a way that transcends price point, to create privileged and exclusive experiences.
Fashion designer @superRenee has 700,000 fans online and is just one of China’s new mother-daughter influencers. Her fun and carefree account is awash with cute pictures and emojis of her impossibly adorable daughter Yuri. One video of Yuri has earned 57,000 views, which has made her mom, Renee, a leading niche influencer in China’s children sector.
Social media in China is now full of blogs, posts, and videos from Chinese parents and hot mammas like Renee offering style tips, brand choices, and advice. Childrenswear is now a serious part of Chinese parents’ social currency, and some see this sector as 骗你生二胎 or “the persuasion to have a second child.”
According to Euromonitor, the sector outperformed womenswear and menswear in 2019, reaching almost $37 billion, representing a year-on-year increase of 14.4 percent. After the opening of China’s two-child policy in 2016, data from the National Bureau of Statistics show that in 2019, there were around 250 million children under the age of 15 in China. Since then, a further 14.65 million babies were born.
Accounting for children under 16, the category — and much of everything else in China — suffered a rough start in 2020 due to the COVID-19 pandemic. However, the second half of 2020 saw a strong recovery. Luxury childrenswear makes up roughly $5 billion of the sector, mostly from parents in large and medium-sized cities who might even have two children. The “BM Style,” which has been on the rise in China, will have impacted figures, too, as some smaller adults may be bumping up sales figures.
Despite the impact of the pandemic, sales of children’s clothing were expected to grow in 2020 and may climb above $40 billion in 2021. Baby apparel has witnessed the fastest growth with a 17.2-percent increase, and the high-end market has been expanding quickly, too. Tmall International Maternal and Child Industry and CBNData jointly released the “2021 Tmall International Maternal, Child and Child Market Trend Report.” It is estimated that China’s maternal and child market will exceed 4 trillion in 2021.
Though China is currently bracing itself for a population decline beyond 2021, there is still a huge opportunity attributable to the increase in per capita spending on childrenswear from style conscious parents. Here, Jing Daily looks at how online platforms are shaping the sector, dominant local brands, and luxury gifting.
Online and KOL interventions
Much like the rest of the world, there is a new attitude to parenting issues on Chinese social media. For example, a photo of Chinese actor Rayza Alimjan breastfeeding her daughter on set went viral recently. While it divided netizen opinion, the local media was more than supportive and JD.com unveiled Alimjan as its Maternal and Infant ambassador, tapping her five million Weibo followers. JD.com also invited celebrities like Xuan Liu and Liang Tian to join its recent baby carnival to talk about their parenting experiences.
Mother-child influencers and parenting bloggers have emerged on social platforms like Little Red Book, the aforementioned @superRenee are niche but others have bigger followings like KimNico, @那对夫妻 (one million fans) or Diu Ma @和小丢在一起的每一天 (two million devotees), whose posts are devoured.
Many KOLs operate their own brands. Some like @SuperRenee run womenswear links, many of these parent bloggers have moved into childrenswear. Take the local brand Chenchenma, which has risen alongside the founder @CCM辰辰妈 who blogs about her daughter online. The brand featured in Tmall’s top-performing brands on Taobao and Tmall. @Luson妈 is a parenting blogger with an eponymous childrenswear line too who has bagged herself another one million followers.
The desire for particular styles worn by influencers and celebrities are being accelerated on social media too which has also impacted this market. This new generation of parents grew up in the internet age and are keen to follow celebrity “buying lists” for their children, too. Compared to the years 2017-2019, today’s consumption trend for online children’s clothing and internet celebrities in the same style has now increased 16 times — especially the Mini-Me matching trend.
Local dominators lead the way in retail innovation
In China, Balabala is one of the biggest local kidswear brands in the market, topping Tmall. In fact, most leading children’s companies are Chinese.
Recently, Balabala launched an extravagant runway show and exhibition at Shanghai Fashion Week. There it debuted its three-pronged collection in collaboration with different sectors: a co-branded domestic agency with China Mars Mission, a cultural tie-in with the Suzhou Museum, and a nod to luxury via fashion designer Jason Wu. The runway featured the young star Nan Nan (Jackson Yee’s younger brother, who has been gaining attention from the media and netizens alike after appearing in kid magazines such as Milkenfant).
In an attempt to rail against typical children’s brick-and-mortar retail experience, 2020 saw Balabala add a new flagship store concept at the Wanda Plaza in Jiangsu Province’s Huishan. As many younger parents are more accustomed to buying children’s clothes online, offline stores need to work harder to entertain shoppers. In March, 20201, Wuhan Henglong department store opened three new kidswear stores: Alice Pi, Rolling Kids, bonbon et bonbon.
And while the post-lockdown landscape has fed family appetites for communities, amplified IRL entertainment, and tech-laced interactivity, Balabala’s store doesn’t disappoint. Its “Young Zone” features footage from the brand’s fashion shows and campaign content. Meanwhile, its “Kids” area is dominated by the 360-degree installation, “Infinity Wardrobe.”
Luxury dominates gifting and offline experiences
China’s parents are known for spoiling their little princes and princesses, which extends to buying luxury clothing — despite their limited shelf life. Thom Browne recently debuted a children’s line at his men’s calendar at Paris Fashion Week, indicating a strategic shift for the brand. It was well-received on Weibo. Meanwhile, names like Burberry and Dior have long dominated the sector.
According to mother of twins and art agency founder, Lang Xiao, it’s all about creating offline experiences. “I think for these super brands, the subtle networking offline is quite important. I was at a birthday party at Baby Dior recently and made connections with all the other mothers in a very special way. It’s not about a price point; it’s about creating a privileged and exclusive experience,” she noted.
Moreover, when it comes to gifts for children, branded luxury names often top the trend, and here choices can be more obvious. “Gifting is very important in this sector, and that is where superbrands can excel,” Lang explained. And, while she prefers to dress her children in more low-key brands like the popular, chic French line Bonpoint, which is not branded, she will often receive gifts that are “more logo-heavy such as from Fendi.”
Luxury retailers are working with leading influencers in the sphere, too, such as Mytheresa, which has been stepping up its China offensive. It has leveraged fashion blogger Wan Wan@晚晚学姐, a mother of two children who has promoted nine popular kidswear brands on the platform to her three million followers. Apps are also popular for luxury names, and Lang mentioned Children’s Salon as a source for discounted super brands.
Where luxury is also making unexpected gains is with the many parents who have turned to daigou to purchase international brands not available in China, including the popular Japanese brand Miki House.
Meanwhile, the launch of a new luxury gender neutral kids’ section by retailer SSENSE featuring Balenciaga and Rick Owens, among others, will be shipping even more luxury names to mainland parents soon.
Finally, luxury brands who make strong connections among parental networks via kidswear can often reap the rewards of the halo effect for other product lines or offerings making this a vibrant and valuable market to capitalize on.
Hermès Makes Fitness High Fashion On WeChat
What Happened: Fitness, but make it fashion. On the heels of China’s Labor Day holiday, Hermès has launched exercise tutorials on its WeChat Mini Program to promote its latest accessories. The luxury brand recorded four yoga videos, ranging from 13 to 21 minutes long, showing consumers how to incorporate its belts, square scarves, small leather goods, and hats into their routines. For example, belts can be used to stretch and perform breathing exercises, while silk scarves can act as a balancing aid. These clips build upon Hermès’ “Start the movement” marketing campaign, which launched in February, and offer viewers “an invitation to be an everyday athlete with elegance and agility.”
The Jing Take: Luxury flexing its athleisure muscles isn’t new. With the sportswear market predicted to reach $231.7 billion by 2024 and the pandemic accelerating the trend of at-home fitness, brands have increasingly tapped athletic giants to revamp their marketing strategies. Over the past year, Dior released retro-style kicks with the Jordan brand; Louis Vuitton dropped another NBA capsule; and Gucci teamed up with The North Face for a site-crashing collection that saw great success in China.
What’s surprising here, however, is Hermès’ approach. Rather than launching an actual fitness line or collaborating with names like Nike and adidas, the luxury house is simply taking its classic offerings and reimagining them in sports-related settings. This not only helps change consumer perception of the aloof, storied brand, but also cleverly emphasizes the quality and practicality of its products. Moreover, with Hermès’ silk business seeing the largest decline at the end of 2020, down 23 percent, and its accessories sector falling 9 percent, leveraging the wellness trend to highlight these specific products should also help stimulate sales.
Already, Hermès touched on this fitness concept in its AW21 show, featuring contemporary dancers weaving through towers of orange boxes. Perhaps this goes to show that the new way to get consumers spending is to get them up and sweating.
Branded Content Is the Path to Gen Z in 2021
- Brands are allocating more digital marketing resources to branded content that can directly reach and influence young consumers.
- Instagram, TikTok and other platforms are investing in helping creators monetize their online efforts.
- By funding short branded programs and inserting themselves into the narrative, brands can create (and bask in) a more Gen Z-palatable aura.
Whether it comes in the form of documentaries, talk shows, or reality programming, branded content is becoming critical to reach Gen Z consumers on their favorite platforms. According to a recent survey of brand marketers and agencies by the research firm Advertiser Perceptions, 32 percent of respondents said they had increased spending on branded content in the second half of 2020, and are now allocating an average of 20 percent of their digital budgets to its production.
Brands have been turning to platforms like TikTok, Snapchat, and Instagram to reach younger consumers through content partnerships with popular creators, a trend that led Facebook to announce plans for a “branded content marketplace” on Instagram to help match influencers with sponsors. According to Facebook CEO Mark Zuckerberg, the tool would help talent monetize their digital activities and develop a “creator middle class.” Snapchat, too, is set to jump in on the craze with its own “Creator Marketplace,” which the platform is making available to augmented reality creators this year and will expand to all creators in early 2022.
With these moves, Facebook and Snapchat seem to be taking yet another page from the playbook of Chinese platforms like Douyin (the more full-featured Chinese version of TikTok) and Bilibili. Last year, Douyin owner Bytedance launched its Star Map Platform (星图平台), which pairs merchants with top creators (those with 100k+ fans) and gives access to valuable back-end data such as “insights into their follower base, types of content, interaction rates, [and] a deep analysis of the account and their prices.”
Additionally, to incentivize the production of high-quality content, Douyin plans to invest more than $1 billion in traffic resources to help creators double their income to RMB 80 billion (12.3 billion) in 2021. Video streaming platform Bilibili, a favorite of China’s Gen Z, launched its own influencer marketplace last year, and has operated a paid incentive program for popular “uploaders” since 2018 to attract new users and encourage them to produce engaging content.
Digital platforms globally understand that top creators have a legitimate audience and deserve multiple pathways for revenue beyond traditional ads alone. Meanwhile, brands realize that their core customers demand more entertaining content beyond ads or sponsored posts, i.e., longer-form (and often influencer-driven) branded content. This is perhaps the defining confluence of trends for 2021.
We have become more accustomed to seeing more evolved branded efforts from the luxury sector, such as the GucciFest film festival, Balenciaga’s video game fashion show, and Net-a-Porter’s involvement in the Netflix competition show Next in Fashion. But increasingly, branded content is being used by brands to insert themselves into a social context and reflect the way they want to be seen by consumers. Case in point: dating app Tinder’s Love Songs, an Australian scripted series produced exclusively for TikTok by the agency Amplify that stars some of the country’s top young TikTokers, which is about the release its second season on the short video platform.
Looking at the dating world through the lens of Tinder, the series follows the romantic trials and tribulations of Mia (portrayed by Maddi Beazley), who, after a bad breakup, turns to Tinder, where she meets Anthony (Nathan Lust). But instead of hooking up right away, the two agree to serve as each other’s Tinder coaches and navigate the dating world together.
The show’s concept gives a well-established genre a decidedly Gen Z sheen through its short episodes (meant for watching vertically on phones), use of music, and its elevation of TikTok creators to leading lady/leading man status. Love Songs is the perfect encapsulation of where things are headed in the world of Gen Z-facing branded content. And while the acting skills may be amateur and the production values fairly low-budget, Love Songs has found an audience: Its official TikTok account has nearly 140,000 followers, and the first season racked up nearly 13 million total views.
Considering how brands are rethinking their budgets to position themselves for success in a youth-led consumer future, it’s only a matter of time before we see more brands leveraging this relatively inexpensive (and increasingly shoppable) type of content to reach and ultimately sell to Gen Z consumers worldwide. But perhaps more importantly, we’ll see how well video production can lend itself to collaborations, with, for example, music labels desperate to get their newest acts in front of Gen Z audiences.
It’s not difficult, then, to imagine a TikTok series starring both popular TikTok creators and musicians, jointly funded by a brand and a record label, with ample opportunities to insert background music and links to Spotify or band merch pages. Unlike simple advertising, branded content offers more flexible and fluid marketing opportunities that can easily be adapted and localized for key global markets.
Adidas and Nike Sales Plummet Following Boycotts
What Happened: Two sportswear giants at the heart of China’s cotton crisis have seen their sales plummet on Alibaba Group’s Tmall — the country’s largest B2C e-commerce platform. Adidas and Nike both saw massive dips from a year ago, the former was 78 percent down in April, while the latter fell by 59 percent. In March, boycotts were enforced on a number of international brands based on their positions regarding Xinjiang cotton. The issue is likely to further impede adidas’ upcoming auction of Reebok. According to Reuters, the German company is said to be expecting bids from local leaders Anta Sports and Li Ning, which might now be in jeopardy.
The Jing Take: Many brands have fallen out of favor with Chinese consumers and while reputations are often damaged, transactions normally resume after a cooling off period. Hugo Boss has already reported a boom in sales despite also being blacklisted. On the other hand, Puma, which is also barred, is bracing itself for a hit.
One of the complications here is how deeply sportswear brands are embedded in Chinese icon culture and reality TV — the stars of which often opt for athleisure lines and labels. Recently, China has been blurring out the logos and brand names on popular shows like Chuang, Youth With You and even Sisters Who Make Waves. While this has made for some comical viewing (and disruptions in broadcasts), the message is clear. This matter is far from over.
Furthermore, though both Nike and adidas have been reinstated on Tmall, local preferences are evolving. Fila has replaced some boycotted brands on TV shows; however, more troublingly, mainland consumers are now seesawing towards homegrown brands, including Anta Sports and Li Ning. And, given the nuance of current geopolitical tensions, once you’re down, it might be harder to get up again. All eyes will be on earnings reports later this month for a clearer view.
Coach Lifts Parent Co. As China Booms
Mainland China has delivered a hefty revenue increase for Tapestry – the owner of the Coach, Kate Spade, and Stuart Weitzman brands — which has helped the US company make operating income gains for a third consecutive quarter.
In the three months to March, sales in China rose by 175 percent versus the same period last year when the Covid-19 pandemic first hit. Importantly, they were also up by 40 percent compared to the same three months in 2019 pre-pandemic. Global digital sales, meanwhile, grew in triple digits.
Among Tapestry’s trio of brands, affordable luxury house Coach — best known for its handbags — did most of the heavy lifting. While company sales increased by 19 percent to $1.27 billion in the fiscal third quarter, Coach’s revenue jumped 25 percent to $964 million. Kate Spade’s $252 million showed a lackluster one-percent increase, while shoemaker Stuart Weitzman — with 28 percent of its sales in China — generated $57 million, up by 13 percent.
At the operating income level, both Kate Spade and Stuart Weitzman remained loss-making, while Coach climbed to $251 million. That helped swing Tapestry — currently ranked 11th in our China Global Luxury Index — to an overall operating profit of $117 million in fiscal Q3 from a $686-million operating loss over the same period last year. Much of that loss was at Stuart Weitzman, and it has been reduced significantly in the interim.
While Mainland China has become a key market for Tapestry, accounting for 15 percent of its total sales (17 percent in Coach’s case), North America remains the core driver with a 57-percent share. There, sales rose in the mid-teens, returning the company to pre-pandemic levels helped by recruiting approximately 700,000 new customers through e-commerce channels, a “meaningful increase” versus the prior year, according to Tapestry.
CEO Joanne Crevoiserat said in a statement on Thursday: “Our third-quarter results significantly outpaced expectations, and we are increasingly optimistic about our ability to generate long-term top and bottom-line growth.”
A driver of that growth is Tapestry’s Acceleration Program, which aims to achieve a more consumer-centric approach and focus on “high-return” initiatives while also reducing promotional activity.
Among the highlights of the program in Q3 were:
Adding new customers via e-commerce channels in North America and leveraging social media to drive engagement with Millennials and Gen Zers
An increase in purchase frequency through enhanced and consistent brand experiences and reactivating lapsed customers
Growth in China using integrated brand-building strategies and new experiences that appeal to Chinese consumers, though not always
Drastically cut SKU counts by 30-50 percent, resulting in more focused product messaging and lower promotional activity
Data and analytics tools across platforms to quickly respond to changes in consumer preferences and demand
Streamlining stores with 49 closures year-to-date, a net decrease of 94 stores from the prior year.
Looking ahead, Crevoiserat said: “While the environment remains volatile, we see encouraging signs of recovery as vaccination efforts progress, resulting in increased consumer confidence and improving in-store traffic trends.”
Shares in Tapestry opened 4.5-percent down on Thursday morning at $46, but year-to-date, they had increased by 48 percent to $48.40 at last night’s close.
CollaBrands: Best Foot Forward
With all the recent hype about non-fungible tokens (NFTs), it seems apropos to look at the larger trend towards collecting fungible items, and how sneakerheads pioneered what has become the hottest fashion category for collaborations. Sneaker collecting involves the acquisition and trading of sneakers as a hobby, with limited editions of shoes made for certain sports, particularly basketball and skateboarding, among the most prized.
A recent study published in the journal Fashion and Textiles offers insights into the characteristics, motivations, and brand preferences of sneakerheads, from the origins of sneaker collecting dating back to the 1980s. As the custom shoe trend has taken off over the years, many footwear brands have realized that the creativity of shoe collaborations excites consumers, fueling greater demand. Thus, what was once a niche area of focus for collectors has gone mainstream via the growth of jointly branded efforts. The following examples represent some of the latest footwear collaborations, both in sneakers and beyond.
Supreme x Dr. Martens
The iconic New York streetwear brand Supreme has been working with Dr. Martens for many years, and this season’s effort is just the latest collab the two have dropped. The Spring / Summer 2021 launch includes three premium iterations of the 5-Eye Shoe, revamping the style with zebra print, brick orange and classic black colorways.
Dr. Martens x Keith Haring
Earlier this year Dr. Martens also released a footwear collaboration with the estate of artist Keith Haring, in which the footwear can be likened to a blank canvas waiting for an artist’s brush (or spray paint), an apparent nod to the custom sneaker trend. This resulting collection includes the 1460 boot and two different 1461 Oxfords, and follows another artist partnership by Dr. Martens and the estate of Jean-Michel Basquiat from July 2020.
Adidas and Lego Tie Up Another Shoe Deal
In October 2020, Adidas and Lego Group announced a creative partnership, and now we are seeing the results. The newly released ZX 8000 Bricks collection brings Lego’s aesthetics Adidas’ low-top with a collection of six sneakers in the primary Lego colors of red, green, yellow, blue, black, and gray. Adidas also announced the release of a Lego-enabled version of its high-end Ultraboost DNA shoe that allows wearers to customize the brand’s signature three stripes with their choice of Lego pieces.
Kids at Play: Native Shoes x Crayola
The kid-friendly brand Native Shoes has become hugely popular for its lightweight, easy-to-clean footwear made from EVA (ethylene vinyl acetate), a rubbery and water-repellent material. Just in time for summer, it partnered with another beloved children’s brand with Crayola, to cover 11 styles for both kids and adults in either crayon scribbles or colorblock designs.
Adidas Originals x Star Wars
On May 4 (aka “Star Wars Day”) Adidas Originals revealed the latest sustainable take on its Stan Smith shoe as part of the brand’s larger initiative to end plastic waste. The shoe’s design is inspired by Yoda from the Star Wars universe and features embossed quotes and graphic tongue and heel tabs.
Building on its collection of Disney, Pixar, Marvel and Star Wars characters, the new iteration of the sustainable Stan Smith Forever galactic model features an eco-friendly upper composed of a series of recycled material technology. The custom design reimagines the footwear with Jedi master Yoda and tennis player Stan Smith-inspired graphics on the tongue. The sneaker also has a recycled rubber outsole and features Yoda’s words of wisdom, “Do or do not. There is no try,” alongside the figure’s face on the heel tabs.
Hush Puppies x Loud Lacquer
Casual shoe brand Hush Puppies teamed up with nail polish brand Loud Lacquer for a collection that includes both co-branded shoes and nail polish. The partnership pairs two styles from Hush Puppies’ Brite Jells line of sandals with four new colors from Loud Lacquer, called Brite Shades: Lawn Flamingo (red), Soft Swap (yellow), PHC (Caribbean blue) and Go To (black).
“We loved that jellies were making a comeback, but we wanted to put our ultra-colorful and comfortable Hush Puppies spin on the style,” said Kate Pinkham, general manager and vice president of Hush Puppies. “This Loud Lacquer partnership to launch the Brite Jells and Brite Shades collection has been a great collaboration – they are really optimistic, colorful and fun, just like the Hush Puppies brand. We are excited about the opportunity to introduce new consumers to both like-minded brands.”
Steven Ekstract is Managing Director of Global Licensing Advisors, a consultancy that provides companies with insight and strategic direction to succeed in the $300 billion a year licensing business. Ekstract is the founder and former Publisher of License Global magazine, the leading information source for the consumer licensing business. He can be reached at email@example.com.
What Luxury Brands Can Learn from Lanvin’s Blind Boxes
For Chinese Valentine’s Day, Lanvin launched a blind box lottery on its WeChat Mini Program. For $77 (500 yuan), consumers could enter a drawing and redeem prizes at offline vending machines to receive vouchers for silk scarves, sneakers, and even handbags.
The Mob Research Institute’s 2020 Blind Box Economic Insight Report forecasts that the market will double its size by 2024 to reach $4.6 billion. Tmall’s report shows China has nearly 200,000 consumers who would spend over $3,087 (20,000 yuan) a year on blind boxes.
According to POP Mart, the leader in China’s blind box sector, their main consumer group is between 18 and 35 years of age and is urban, white-collar, and a student. Their repurchase rate can be as high as 58 percent.
Jiayi, who lives in Guangzhou, is your average Gen-Z consumer, addicted to the latest buying craze: blind boxes. She confessed that since acquiring her first innocuous blind box, which she bought at a vending machine in the local supermarket, they soon became a habit. Every week, she would return to buy one or two blind boxes as a treat. “It’s so satisfying to open the box,” she said.
As China’s newest obsession, young consumers crave these surprise boxes, which originally contained hand-sized toys. Some are even spending millions of yuan collecting them. While some may be collectors, the attraction goes beyond the product itself: Buyers are paying for the fun of uncertainty and the experience of opening the box.
“It’s a trendy kind of promotion, which satisfies the psychology of curiosity and adventure,” said Gu Huimin, a tourism professor at Beijing International Studies University. KOCs like Wang Doudou, Dan Tong, and Meng Xiaoqi (@王豆豆爱逗逗儿 @可爱的小蛋彤 @孟小琦和爷爷) have gained a massive following on Little Red Book from sharing videos of themselves opening blind boxes.
The Mob Research Institute’s 2020 Blind Box Economic Insight Report forecasts that the market will double in size by 2024, reaching $4.6 billion. Furthermore, Wang Ning, the founder of the blind box market leader in China, POP Mart, has called the sector in China hugely promising.
POP Mart helped make the blind box concept a mainstream sensation in China, but companies from all sectors — ranging from travel agencies, beauty concept stores, and fashion brands — are now applying this marketing strategy to their offerings with the hopes of attracting experience-driven Gen Zers. Below, Jing Daily decodes this new strategy and analyzes how it can be implemented by high-end brands.
Explaining the attraction of blind boxes
Gamified shopping experiences are resonating with today’s young shoppers, who have been spoiled with an overwhelming number of retail choices. Ultimately, blind boxes trade on their uncertainty, stimulating consumers to repurchase in the quest for rare products. According to POP Mart, most buyers tend to purchase these boxes to increase the probability of getting their desired gadgets. As such, the repurchase rate can be as high as 58 percent.
Opening the box to discover which item is in it makes for a sharable experience on social media platforms, attracting organic brand traffic. It’s clearly working: Tmall’s report shows there are nearly 200,000 consumers who spend over $3,087 (20,000 yuan) a year on blind boxes.
“The new generation of Chinese spenders desire a unique consumer culture,” said iiMedia consultant Zhang Yi, meaning brands should capture consumer loyalty through innovative strategies. Luckily, China’s dynamic market offers a great testing ground for brands.
Lanvin as a blind box luxury pioneer
According to POP Mart, their main consumer group is between 18 and 35 years old and are urban, white-collar, and students. Females account for 75 percent of this group. Although the blind box marketing strategy may sound less luxurious for brands due to the price convenience factor, they can offer a gateway for younger consumers, hence Lanvin’s foray into the sector.
So far, it’s the first luxury company to leverage the trend. For Chinese Valentine’s day, it launched a blind box lottery on its WeChat Mini Program, where, for $77 (500 yuan), consumers entered a drawing. Fans could redeem their prizes (Lanvin blind boxes) at offline vending machines and receive vouchers for silk scarves, sneakers, and even handbags.
The house succeeded in gaining the attention of young consumers, but it also converted its online traffic: the initiative attracted 50,000 players within a month, which was five times the daily average reading volume of Lanvin’s WeChat articles.
Additional routes for luxury
Lanvin’s 130-year exclusive collection drove particular attention to its blind box experiment. Therefore, consumers are less concerned about which item they are getting, as any piece of the series is worth collecting, although archive, limited-edition, and collaboration pieces will fuel Gen-Z interest the most.
While it’s unlikely that purchasing a luxury blind box would become a weekly habit, the strategy offers newness to consumers, making the shopping journey memorable for the buyer and resulting in a stronger connection with the spender.
In an era when brand collaboration is no longer new, presentation matters to consumers. Announcing the partnership online through KOLs and placing products in-store may still work, but innovative marketing tools are required to stand out and generate talk online.
Finally, on second-hand platforms like Xianyu, hard-to-find blind boxes are being sold at exorbitant prices. Some rare pieces have increased their prices by 39-fold (from $10 to $390). But the data shows another insight: luxury brand opportunities lay in the rarity of the offers.
What brands need to watch out for
While Blind box scenarios are luring fans, brands should not take this opportunity to move out-of-season inventory because consumers are placing great importance on what’s in the boxes. If the price value is low, social media will be awash with complaints, which can severely damage reputations.
On Little Red Book, many users called out companies like Muji (for selling old-fashioned clothing), Ctrip (for offering midnight departure flight tickets), and, finally, Sephora (for unpopular lipstick colors). Additionally, KOCs are opening blind boxes online to tell consumers what is inside them and whether they are worth buying. @种草大户萌叔Joey showed his fans the local fashion brand Peacebird’s 1000 yuan blind box and advised against it, for instance.
But Lanvin’s blind box experiment paid off: It received great feedback, partially because the value of the items contained in the box was far above the initial price. Some lucky participants even received a Lanvin Bento Box handbag worth $1,864.
The French house’s price positioning was much higher than the market average. Yet over 200 users still shared their experiences on Little Red Book, helping the brand reach a younger (and more valuable) audience. Consumers can hardly purchase anything in a luxury retail store with 500 yuan, so many felt the prize was worth a punt in this case.
Chanel, It’s Not Your Apology to Accept
What Happened: Several weeks ago, fashion industry DJ Michel Gaubert was caught in an online controversy following a social media post which shows him wearing a paper “Asian face” mask and yelling, “Wuhan girls, wahoo!” Following widespread backlash, Gaubert issued two public apologies for his actions.
Now, ahead of Chanel’s Resort 2022 show, Bruno Pavlovsky, the French luxury Maison’s president, stated in an interview with WWD that the house stands by Gaubert and his apology. “Michel is a talented man who’s very respectful of others, and he’s apologized for his actions. He is mortified because he never intended to offend anyone. He’s a long-term partner of the house, and you don’t abandon a partner because of an incident,” said Pavlovsky.
The article was reposted by fashion watchdog @diet_prada and garnered thousands of views and comments. AAPI supporters and fashion activists have come out against Chanel’s stance, while others seemingly shifted their attention to Chanel’s latest show. Comments included condemnations like those from @regardsnorman: “Ok, I guess white people are accepting apologies for us now.”
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The Jing Take: Despite the online uproar against DJ Gaubert and the current rise in hate crimes against Asians globally, Chanel has stood firmly by fashion’s favorite sound maker. The decision, however, is not a surprise and only reflects the Eurocentric structures that allowed DJ Gaubert to think his actions were acceptable in the first place.
Chanel is not just one of the most powerful names in luxury, it is one of the most powerful brands in the world. The brand itself, in addition to its top stakeholders, are protected by their privilege and power. However, this reality is shifting, and executives need to take note. In this case, there is no real threat to Chanel’s bottom line nor seemingly to DJ Gaubert’s career. But what about the next incident and the one after that?
Chanel’s response highlights a bigger issue. The brand, alongside many others, continue to prove that they are lagging to adopt the thinking necessary to reimagine an industry that prioritizes equality. Executives need to begin flexing these muscles themselves, starting with acknowledging their own privilege and understanding how this impacts their business decisions.
Why Sustainability Is Trending With China’s Millennials
Post pandemic global and domestic shifts in China on issues like climate change and green energy are forcing Chinese millennials to reflect on their generations’ values and purpose.
Key influencers and investors are on a mission to promote sustainable fashion in China, such as Yu Holdings founders Wendy Yu and Veronica Chou, the founder & CEO of Everybody & Everyone.
Streetwear trendsetters living zero-waste, minimalist lifestyles have gained traction in online forums and among Chinese netizens.
Last week, Shanghai Fashion Week AW21 presented more than 100 physical shows and spotlighted the importance of green lifestyles via a slew of events. Sustainability was at the heart of this season’s programming and could be found in material interventions, fabric developments, circularity, and upstream trade business promotions.
The pandemic has propelled China’s global stance on climate change, sustainability, and green energy
Recently, leaders from France, Germany, and China held a virtual climate change summit. In March, the National People’s Congress (NPC) of China formalized its latest 14th Five-Year Plan, in which the nation has been vigorously promoting the development of green consumption. Governor Yi Gang of the People’s Bank of China (PBOC) noted that China already owns the largest green finance market worldwide, based on a report by Forbes. Additionally, President Xi Jinping announced in September of 2020 that China aims for carbon neutrality by 2060. The pandemic has facilitated a shift toward inconspicuous consumption, and products perceived as investments have proved to be notably resilient. Moreover, luxury brands investing in “clean tech” and sustainable practices will find an opportunity to connect with “woke” consumers.
Daniel Langer, the CEO of Équité and a professor of luxury strategy at Pepperdine University, wrote in a piece for Jing Daily that, before the pandemic, consumers would occasionally ask about sustainability, but they would never lead to actions. He spoke with the head of the Asia-Pacific region for a top-ten global fashion brand, who shared that many consumers today, particularly young and affluent ones, already see sustainability as a top criterion for purchasing.
Sustainable living is associated with the global millennial elite and China’s middle and upper-class youth
American West Coast DCT brands have cemented their position within a club of global millennial elites and, as a result, have become the new status symbols among China’s middle-class youth. “On social media, these brands are also promoted by Chinese KOLs, who live and work in the Silicon Valley area, or by local influencers who seem to have a successful career in one of China’s Fortune 500 companies,” said Emma Li, founder of the fashion marketing blog and podcast “Annstand,” to Jing Daily. All these associations are powerful attractions for middle-class consumers. Now, young people are experiencing a high level of anxiety and stress and will desire brands that represent a more laid-back message.” Faced with a highly competitive environment and a post-pandemic recession, Chinese millennials have joined in the conversation of millennial burnout (焦虑疲惫的千禧一代) and the search for a more minimalist and purposeful life.
Veronica Chou, the daughter of Hong Kong textile tycoon Silas Chou, who is known for investing in Tommy Hilfiger and Michael Kors, said in an interview with Hong Kong Tatler, “My father was all about making as much money as possible. For me, making some kind of positive impact is also important. I had this epiphany that whatever I do has to have a bit more of a purpose.” The impact of COVID-19 on the industry, including her own business, emphasized a need for companies that are sustainable and nimble rather than the megabrands of her youth, Chou adds.
Wendy Yu, the founder of Yu Holdings, recently launched the inaugural Yu prize at Shanghai Fashion Week to support emerging Chinese designers. “In the space of just a season or two, the momentum has picked up with fashion companies, industry stakeholders, and consumers taking action toward environmental sustainability,” Yu wrote in a piece for Vogue. “More than ever, I noticed a collective consciousness emerging. Even in China — a country known for its consumption and an insatiable appetite for luxury — the mood is changing. And it all starts with education.”
Asian streetwear trendsetters seek sustainability as an authentic lifestyle and not a label slogan
According to Metabolic, a Dutch consulting company that tackles sustainability challenges, Taiwan’s textile industry is leading in the specialization of performance fabric made from waste-based products (PET bottles, coffee grounds) and are pioneering circularity and sustainability efforts in this region.
Fresh off of livestreaming their AW21 collection at Shanghai Fashion Week, Taiwanese functional streetwear label oqLiq spoke to Jing Daily about the ethos of their brand and how they practice a zero-waste lifestyle. Based in Tainan, a southwestern coastal town known for being the R&D base of high-end technology fabrics in the global supply chain, oqLiq’s shoes use leather made from reservoir sludge (“Bi-birth sludge leather”), winning the label the Red Dot Award and the IF design award in 2015. After that, the brand quickly gained traction, participating at Pitti Uomo and debuting at NYFW in 2020. Besides Taiwan, oqLiq designs are currently sold online and with select retailers from Guangzhou and Seoul to Chicago.
Chi ‘Kay’ Hong, one of the designers and the co-founder of oqLiq, shared with Jing Daily that the label focuses on creating a quality piece of clothing that can possess many life spans. Therefore, sustainability is only one aspect that oqLiq offers to its customers and not its entire marketing strategy. For example, by dropping limited capsule collections, they have seen the value of an oqLiq product increase threefold after it was bought by a customer and later resold online. That also encourages Chinese netizens, who are aware of streetwear and new lifestyle trends, to start discussions about oqLiq in online forums, broadening a growing interest in minimalist lifestyle trends. Hong also talks about how both founders and those in their design community have been living a zero-waste lifestyle for many years already.
To oqLiq, there is still much to learn about living sustainably. But it has an advantage because the label is at the hub of the latest innovations in this sector of functional and sustainable textile. OqLiq’s brand ethos is a model example of what Langer discusses in his report on how brands can uphold sustainable values authentically as a way to attract Chinese customers: When a customer believes a sustainability story, it is not a random occurrence. It only comes when a brand competitively benchmarks, strategizes and masters its story delivery.
Why Luxury Brands Overlook These Non-HNWI Spenders
Ultra-High Net Worth Individuals (UHNWI) and High Earners Not Rich Yet (HENRY) are often overlooked by luxury brands.
In 2019, cumulative net worth in Asia grew by 10 percent to $10.4 trillion, proportionate to 29 percent of global UHNW wealth.
HENRYs are widely seen as the luxury consumers of the future.
Luxury brands have been disproportionately focused on High Net Worth Individuals (HNWI) while missing out on building strong customer relationships with other consumer segments.
Ironically enough, Ultra-High Net Worth Individuals (UHNWI) and High Earners Not Rich Yet (HENRY) often get overlooked by luxury brands. The UHNW segment is composed of individuals with investable assets of at least $30 million, while individuals in the HENRY segment are earning between $250,000 and $500,000 a year.
In 2019, Asia overcame Europe as the second-largest UHNW region, with its population increasing by 10.2 percent to 83,310 individuals, according to Wealth-X. Cumulative net worth in Asia grew by 10 percent, to $10.4 trillion, proportionate to 29 percent of global UHNW wealth. Greater China, Japan, and India have all registered double-digit population growth. According to a Wealth Report by property consultancy Knight Frank, China’s UHNW segment increased the most of any country last year (16 percent), followed by Sweden and Singapore.
Beyond any doubt, the UHNWIs are the quintessential luxury consumers, but brands don’t seem to know how to build strong, long-lasting relationships with them. Occasionally, luxury brands don’t even know how to reach these highly private and secretive consumers, who often prefer to remain anonymous. Moreover, UHNWIs are constantly on the move, traveling to different areas. Add to this that gatekeepers and security experts protect them, and you get the image of an impenetrable consumer segment.
Winston Chesterfield, Founder, Barton Consulting, highlights how some luxury brands have embraced more dynamic strategies to better understand this consumer segment. He presents the case of Porsche, where Marek Grzebin is in charge of a UHNW-focused strategy team.
“They are spending a lot, buying very, very expensive models and spending even more on personalization,” Grzebin told Wealth-X. “We need to treat them differently.” Grzebin believes UHNWIs have an indisputable and incontrovertible influence in society. “These people are very, very successful,” says Grzebin. “They are role models, and they are influential in their communities.”
He rightfully points out brands that attract these globally-minded, successful leaders will be seen as reputable companies. The 2019 China Luxury Forecast report, jointly released by Ruder Finn and Consumer Search Group, shows that UHNWIs in Greater China prefer Chanel to other luxury brands. In fact, the French Maison leads across fashion segments like jewelry, clothing, handbags, leather goods, beauty, and cosmetics. In addition, Rolex, Cartier, and Omega are the top-three watch brands that ranked the highest in awareness ratings in both Hong Kong and China.
The second segment that needs to be prioritized by luxury brands includes the High Earners Not Rich Yet consumers. HENRYs are widely seen as the luxury consumers of the future. Celebrated as the “working rich,” these individuals have advanced degrees and good jobs and are set to become successful and wealthy members of society.
In China, luxury brands have an additional reason to target HENRYs: their relative anonymity. This consumer segment is not yet in the limelight, so its spending habits do not risk provoking the government.
Additionally, HENRYs are easier to influence than other more established segments. While the UHNWIs already understand the ins and outs of luxury and have very high expectations of brands, HENRYs are still impressionable and have less radical views. They are prepared to compromise if they receive an interesting value proposition.
Considering that the COVID-19 pandemic “has eroded China’s middle class” and the economic recovery has widened the wealth gap, luxury brands should branch out and target these consumer segments. The middle class that makes up most of the luxury audience in China is shrinking, but UHNWIs and HENRYs still have high disposable incomes.
From a marketing perspective, launching and running a targeted promotion campaign is usually less expensive than creating new products, identifying new collaborators and partners, and launching capsule collections that could satisfy the whims of the Chinese youth. Consequently, marketers should target these consumer segments more aggressively and effectively. Otherwise, they risk losing market share to domestic luxury competitors and even premium global brands, which already have strong market segmentation strategies.
Move Over C-Beauty, C-Pop is Up
What Happened: Following its finale, the Tencent-produced reality show, Chuang or Produce Camp 2021 (创造营 2021), has created what may well be China’s latest boy band sensation, INTO1. The show saw 90 would-be boy band idols battle it out on an artificially created island off Hainan to win over audiences in song and dance challenges and land a spot in the final “group of 11”. The hashtag #Producecamp2021 currently has over 2.9 billion views and 5.71 million comments. The show, now in its fourth series, was streamed on Tencent Video where it achieved record breaking figures (4.77 billion viewers tuned in) and WeTV.
The Jing Take: China’s obsession with Reality TV shows is big business. Chuang is simply the latest in a long line of contests alluring fans and contestants alike in a booming sector. The rewards for those taking part are obvious: expensive social followings and lucrative contracts from brands looking to sign them up. For example, singer Cai Xukun made his name in the 2018 series of Idol Producer 偶像练习生, and later went on to represent Prada and Fila. Perfect Diary has now snapped up winner Liu Yu — who will be the band’s leader — as its latest ambassador. In addition, these fans are known to shower the contestants with lavish gifts and donations: during the show’s final, they pledged over $6.16 million to their favorites.
Interestingly, this season, the show featured international talent alongside Chinese entries and the final line-up features seven non-Chinese members from Japan, Thailand, and the US. This already raised some political tensions during filming; back in March, some Japanese and Korean contestants were called out as their agencies had listed Taiwan and China separately on company websites. However, despite the backlash, this illustrates China’s growing soft power and its push to up cultural consumption abroad. We’ve already had C-beauty, now it’s C-pop’s turn to shine.
How Brands Can Monetize Male Beauty In China
Male beauty is one of China’s fastest-growing consumer product segments, and the growth of male beauty product purchasers has surpassed women. According to CBNData (2020), nearly 80 percent of men born after the 1990s have developed skincare routines during college.
The male skincare business in China is more than three times larger than in the US market and more than twice the size of South Korea’s (2019). And according to Mintel, the market will grow to $2.8 billion (18.5 million RMB) by 2025.
Domestic brands are outpacing international brands’ influence on local young consumers, thanks to their agile business model and understanding of local consumer needs. According to a report from Ocean Engine, seven of the top ten male personal-care brands on the Douyin platform were local brands in 2020.
From masks to eye creams and foundations to bronzers, thousands of male Tik-Tokers are sharing their beauty routines and expertise on video-sharing platforms like Douyin. And in the comment sections, many netizens have asked for product recommendations and tips on skin conditions, such as acne and other imperfections.
This growing interest in Douyin points to a lively Chinese male skincare market, which was valued at $1.9 billion in 2020 and, according to Mintel, should grow by around 50 percent ($2.8 billion) by 2025.
Under Chinese pop idols’ influence, Gen-Z men are now embracing the idea of wearing makeup. The rate of men learning how to apply cosmetics is growing twice as fast as women, and the growth of male skincare purchases has surpassed its counterpart, as well.
Meanwhile, China’s largest online educational platform, Tencent Classroom, released its top-ten learning trends in 2021. According to it, styling hair and putting on aftershave is no longer enough for the basic male grooming routine, it seems.
According to a report jointly released by Tmall and Cainiao, the inventory of imported male cosmetics during 2020’s Singles’ Day Shopping Festival increased by over 3,000 percent, year-on-year. Key products like foundation and eyeliners are becoming especially popular, and the growth rate of boys (born after the 2000s) buying liquid foundation is twice that of girls and four times that for eyeliners.
Despite an evident uptick in the segment, so far, international players have been hesitant to aggressively target male customers, allowing niche and C-beauty brands to take local spending opportunities. According to a report from Ocean Engine, in 2020, seven of the top-ten male personal-care brands on the Douyin platform were local brands.
Many domestic startups have earned a dominant position in the male beauty sector thanks to user-centric business models that allow them to effectively capture consumer demands in a dynamic landscape and rapidly develop product lines and campaigns to match. On the other hand, overseas brands have been slow to diversify their channels and target local male spenders’ needs.
To win in the local market, established brands need to learn to think like domestic brands by quickly spotting opportunities and adapting to consumer dynamics. Here, Jing Daily analyzes the male beauty sector’s key trends and new potential channels for international players.
Younger people continue to be the drivers behind the sector’s rapid growth, and domestic brands are fully leaning on this target through aggressive content seeding strategies. A report from CBNData (2020) revealed that nearly 80 percent of men born after the 1990s have developed skincare routines during college or even before. And in the past year, post-95s surpassed the post-90s to become the top consumers of male beauty products online.
Local startups quickly tapped the opportunity and turned popular Gen-Z platforms — Douyin and Little Red Book, especially — into their battlefield. The two channels’ strong base of KOCs (key opinion consumers) and beauty influencers have been a driving force behind the rise of male cosmetics consumption. Although Little Red Book has a predominantly female user base, data released by the platform shows male beauty-related content has more than tripled year-on-year.
Female consumers are not only concerned about their appearance but their partners’ as well. Shane Xu, the founder of the men’s beauty brand Shakeup, which is stocked at Harvey Nichols, told Jing Daily that they are also collaborating with female influencers. “A campaign that turned out very well for us was a collaboration with a female influencer,” he said. “She presented our lip gel as a great winter present for boyfriends.” In fact, it did so well that he confirmed: “It is now one of our best sellers.”
Given their priorities in the sector, these platforms are the ideal places for male beauty brand content seeding. Recently, a video of Scruffy male boys transforming into handsome guys in a few easy makeup steps went viral on Douyin, and the hashtag #fleekboy has garnered over 390,000,000 views.
“All the KOL campaigns [@乌鸡gege, @厂花老王, @张拾染] we’ve done worked really well,” stated Xu. However, the male skincare startup founder disclosed that their team in China has been very careful about selecting the right influencer. “Looking at the follower data is not enough,” he explained. “You need to do research, watch their content to see if it is the right match with your brand and if the followers are genuine.”
Understanding male consumption habits
Though not new, multifunctional beauty products (one formula offering two or more benefits) are gaining steam among male consumers who are starting to refine their grooming routines, which still lag far behind women’s complex beauty processes.
According to Xu, they prefer “jam-packed properties in one product. That’s the attraction.” Shakeup’s hero BB cream product now sells every 6-8 minutes on Tmall Global. He continues, saying, “The key selling point of our products is their hybrid nature. Our BB cream has cosmetics features but offers skincare benefits like SPF and hyaluronic acid, making the process far easier for our male users.”
The ingredient list in products also makes a difference during the male decision-making process. Cosmetics scandals involving fluorescent powder and other harmful substances from videos of beauty experts and KOCs analyzing the composition of the skincare products are also gaining netizens’ attention. Healthy and transparent formulas are gateways to conquering male consumer loyalty.
And, while skincare products are definitely on the rise, the sector is still underdeveloped in some categories. For example, Xu mentions color cosmetics, saying, “Basic concealers and nude colors are predominant in the sector.” Therefore, male consumers might be wearing makeup to hide imperfections on their faces. However, the bright eyeshadows, mascaras, and blushes seen on pop idols will take a longer time to break into the mainstream.
As the desire for immersive, unique experiences and personalized recommendations grow in China, livestreaming e-commerce has boomed. In 2020 the number of total livestream viewers reached 560 million in China, accounting for 62 percent of the country’s total number of internet users. Male consumers aren’t being left behind by the trend either.
The latest figures show that from 2018 to 2020, male watchers have increased by 205.4 percent, compared to a 111.1-percent rise from their counterparts. In fact, celebrity livestreamer Li Jiaqi is no longer addressing his audience as “all girls,” but rather “all boys and girls.”
Male anchor numbers have grown, too, now accounting for almost 40 percent of the total number. A Taobao ON MAP report reveals that beauty is one of the most popular categories among male consumers in live broadcast rooms, with sales in Shanghai the highest, followed by Tier-1 and new Tier-1 cities Beijing, Canton, Hangzhou, and Chengdu.
As China becomes one of the largest consumer markets of male skincare, domestic brands have led the way through an aggressive product seeding strategy that effectively targets young male beauty consumers. But those international brands are seeing their market shares shrink significantly, thanks to local brands.
This dynamic market requires quick responses to consumer needs. Opportunities for overseas brands may lie in their collaborations with livestream anchors to gain further user insights, open dialogues with consumers, and establish long-term relationships. As such, KOL anchors may be the next brand ambassadors.
Beauty Brands Find Their Funny Bones in China
While most brands rely on the star power of actors and idols whose passionate fans are willing to make purchases in order to support their favorite celebrities, down-to-earth comedians are emerging as the newest faces of global beauty in China.
Brand interest in comedians really took off last year with the third season of Tencent Video’s stand-up competition Rock & Roast (脱口秀大会), which brought numerous new fans to top contestants, particularly female comedians such as Li Xueqin and Yang Li, who are (as elsewhere) underrepresented in the male-dominated field. Domestic brands and e-commerce platforms were among the first to seize on the potential of popular comedians to help boost sales. For example, during the hotly contested run-up to Singles’ Day on November 11, JD.com partnered with the producers of Rock & Roast to livestream a “season 3.5” spinoff of the series that promoted the advantages and benefits of shopping via the platform.
Savvy beauty brands have been among the first international players to tap into comedians, with Rock & Roast champion Wang Mian appearing in e-commerce livestreams to promote L’Oréal and Biotherm during last year’s Singles’ Day sales. L’Oréal has also worked with the big-talking entrepreneur-turned-livestreaming star Luo Yonghao and celebrity interviewer Li Yijing, who appears on the latest season of hit comedy “talk show” Roast (吐槽大会), to star in commercials that promote the brand’s products in a humorous manner.
The LVMH-owned Benefit Cosmetics recently took a creative approach with its stand-up inspired video featuring twin comedians Yan Yi and Yan Yue doing a routine on the subject of “post-makeup freedom.” Like many rising female comedians, the Yan twins have often tackled thorny issues, though that can pose risks for brands as well. Earlier this year, Intel came under fire when it posted a quote from “punchline queen” Yang Li that was deemed offensive to men, and faced the prospect of a boycott as a result (the company ultimately pulled the ad). Domestic lingerie brand Ubras also faced backlash for a comedian-centered campaign in which one of the participants used a sexist double-entendre that demeaned the role of women in the workplace.
Stand-up comedy is still a relatively new format in China, and comedians lack anything akin to the established bar and club scene of the United States and other Western countries. Instead, they make their names through open mic events and through televised competitions such as Rock & Roast and Roast, but their earning power from live events remains limited (even in China’s post-coronavirus era), and they are more reliant on digital channels such as livestreaming for income. This creates numerous opportunities for brands to partner with comedians on various platforms (including Douyin and Kuaishou) and using various creative formats to entertain audiences while introducing products and encouraging purchases, as long as they take care to vet the content with a sensitive ear.
Double Five Festival Features A Stronger Digital Yuan
What Happened: Shanghai has officially kicked off its second annual “Double Five” shopping festival on the first day of Labor Day. The shopping festival, which is similar to the country’s popular Singles’ Day, was launched in May last year by the Shanghai Municipal government to boost local consumption in the wake of the COVID-19 pandemic. In 2020, it generated over $77 billion (500 billion yuan) in online and offline sales.
Yet, this year’s gala will be on an even bigger and better scale. That is because the cities of Shanghai, Suzhou, and Jiaxing jointly organized the “Double Five” shopping festival, launching the third round of its digital renminbi trial by issuing red envelopes and bank discounts totaling over 50 million yuan in value. It’s a project that unveils a cross-province, multi-domain consumer payment system.
The Jing Take: Since last year, many cities like Shenzhen, Beijing, and Shanghai, have carried out pilot trials of Digital Currency Electronic Payment (DCEP), owned by China’s State Bank. The country currently has the world’s most advanced mobile payment structure, dominated by WeChat and Alipay. Yet, the digital renminbi will help the Chinese government strengthen its control over the financial system and reduce the monopolies of digital payment systems. The new form of payment will also track transactions in real-time and curb laundering, illegal gambling, and corruption.
According to The Wall Street Journal, Beijing has added expiration dates to its digital currency, which encourages users to spend it quickly or during times of economic tension. Many believe the new payment method will further smooth transactions and boost domestic consumption. Given that, we should expect China-dependent luxury brands to embrace the digital yuan, which will allow them to cater to consumer shifts with little resistance.
Why Livestreaming May Not Be For Every Luxury Brand
- While e-commerce livestreaming is booming in China, it has yet to take off in other markets.
- Luxury brands have been most successful with livestreams when they are able to control much of the content, look, and feel.
- While e-commerce livestreaming is likely to see explosive growth at the lower end of the market, it may ultimately be less influential in driving luxury sales.
E-commerce livestreaming has attracted an enormous amount of buzz over the past year for its potential to drive sales both in the current (more socially distanced) environment as well as in the post-coronavirus future. According to a recent report by Coresight Research, the livestreaming market is poised to reach $6 billion in 2021 and will nearly quadruple in size within the next two years.
But these projections are dwarfed by China, the world’s most advanced and active e-commerce livestreaming market. According to an October 2020 report by KPMG and Alibaba’s research arm AliResearch, China’s e-commerce livestreaming market surpassed the RMB 1 trillion ($154 billion) mark in 2020, more than doubling year-on-year. While this was due in large part to the COVID-19 pandemic, which saw brands scrambling to leverage the nascent trend, Chinese shoppers have remained engaged with livestreaming even as China’s offline retail largely returned to normal. As of December 2020, China’s audience for all forms of livestreaming reached 617 million, with 388 million engaging in e-commerce livestreaming.
This explosive growth in China has piqued the interest of luxury brands. Over the past year, names such as Loewe, Chanel, and Gucci have increasingly added livestreaming to their overall marketing strategies. However, to date, most brands experimenting with the format are using it as another way to share branded content such as fashion shows, Q&As, or events.
In China, livestreaming is far more sales-oriented (think QVC), and while the format has shown an ability to draw audiences and get them to spend, it has yet to prove its long-term potential for image-obsessed luxury brands. Last year, Louis Vuitton’s much-publicized debut livestream on Xiaohongshu, hosted by influencer Yvonne Ching, drew mixed reviews, with some viewers complaining of the cheap-looking setting. More recently, Dior’s January broadcast, which combined the brand’s Spring 2021 Couture show with a celebrity panel discussion, was savaged by online critics as awkward and boring.
Overseas, the jury is still out on how receptive luxury shoppers will be to Chinese-style livestreams, in no small part because it’s not as new of a concept for audiences whose parents or grandparents may have watched the Home Shopping Network in the 1980s and 1990s, and who are already very familiar with influencer-hosted content on platforms like YouTube or Instagram.
While e-commerce livestreaming will continue to grow globally, led largely by affordable brands and retailers, the most profitable course of action for luxury brands is to be extremely picky about how to fold in e-commerce in a way that suits their brand image, rather than leaving themselves open to the sorts of online criticism that Louis Vuitton and Dior over content they may not have fully controlled. As the Fashion Digital recently noted, brands that “create authentic bonds with audiences through live content will be the ones who are able to continue to forge meaningful relationships with their followers beyond the pandemic.”
The need to connect with consumers via livestreaming while maintaining the right look and feel means luxury brands must exercise caution in adopting this trend. Rather than simply hiring a popular influencer to host a livestream about a new collection and push sales, brands need to very consciously decide why they want to get in on livestreaming. For example, to give audiences a deeper look at the craftsmanship or design inspiration behind products, an event hosted by the brand’s creative director with relevant guests is one option that would maintain an in-house ambience. Or, following the influencer route, a broadcast set in a brand flagship store would be preferable to a QVC-style livestream filmed on a generic set.
While audiences are tuning into livestreams in record numbers, luxury brands simply have to try harder and control as much of the output as possible. While a fast and loose approach may suffice when a popular host is discussing fast fashion or inexpensive beauty brands, a luxury livestream needs to offer audiences as much of a premium experience as possible.
Estée Lauder’s Earnings Reflect Post-COVID Beauty Trends
With masks on and shoppers stuck at home, sluggish demand for makeup products smeared what would have otherwise been exceptional results for the Estée Lauder Company.
On May 3, the parent company of MAC and Bobbi Brown reported that net sales climbed 16 percent to $3.86 billion for its third quarter ended March 31, 2021. Although sales rose across most product categories, the cosmetic maker missed analyst estimates as its makeup segment slumped 11 percent to $1.02 billion, offsetting growth.
While the pandemic took its toll on foundation and lipsticks, the company’s skin care segment, which is more than double the size of makeup, surged 31 percent to $2.26 billion. Likewise, fragrance sales increased 30 percent to $454 million, signaling a shift in consumer preferences toward self-care.
As CEO Fabrizio Freda said, “Our growth engines of skin care and fragrance were incredibly powerful. Sales rose in every region, led by double-digit growth in Asia-Pacific, where many markets contributed and sales growth in mainland China accelerated.”
Specifically, Asia-Pacific jumped 35 percent in sales to $1.3 billion and mainland China enjoyed double-digit growth, led by “strength in skin care, an initial recovery in makeup, and an acceleration in fragrance growth.” This strong performance by the Asia-Pacific region, coupled with domestic travel in China, especially in Hainan, was more than enough to offset drops in the company’s global travel retail business, Estée Lauder stated.
By brand, Estée Lauder and Clinique both saw double-digit growth, fueled by Chinese consumers and continued loyalty for their hero products. For La Mer, Freda noted that increased interest from male consumers plus its “Journey to Renewal” campaign, which featured Chinese KOL Yvonne Ching and offered a travel-retail exclusive five-piece set for the Lunar New Year, helped boost performance. In the fragrance category, Jo Malone London took the crown thanks to holiday activations around Chinese New Year and Valentine’s Day.
Given these multiple engines of growth, the beauty giant is confident in its gradual recovery and expects net sales for the full fiscal year 2021 to increase between 11 to 12 percent versus the prior-year period.
“Impressively, we are investing in many compelling long-term growth drivers, including end-to-end innovation with a new center in Shanghai, state of the art manufacturing in Asia/Pacific, global online, and consumer analytics,” Freda said, adding: “We expect the momentum in our sales growth to build in the fourth quarter of fiscal 2021, not only from easing comparisons but also fundamental strength, as we drive recovery.”