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Mix and Match Luxury Fashion

Is Mixing & Matching the New Code of Luxury?

Key Takeaways: 

  • The Gucci x The North Face collection, which is receiving widespread social media attention in China, resonated by portraying an ‘urban hiker’ style.

  • Chinese consumers now want to mix and match Western luxury brands with Chinese labels to create a unique local culture that defines their personalities.

  • The resale market in China may be lagging behind other international markets. But the rapid success of Chinese online platforms selling used luxury goods might point to a growing trend of mixing vintage with new luxury.

If executives were to probe Chinese consumers on why they buy luxury brands, their responses would most likely confirm what they already know (or think they know). But are they missing a bigger picture?

Let’s consider Songxin, a 24-year-old marketing executive. She is the proud owner of a Gucci bag, which she combines with items purchased from fast-fashion e-tailer Shein. Songxin is logo conscious and driven by the need to “stand out” — but she also wants to “fit in.”

Similarly, Rui, a 28-year-old marketing manager who owns the same Gucci bag, combined it with items bought at fashion retailers like Zara & H&M. Rui is primarily motivated by identity: In other words, the need to create “the right look” to reflect her personality.

As we can see, despite their varying motivations for buying luxury brands, consumers like Songxin and Rui share the common practice of mixing and matching. It’s a phenomenon that has, in turn, created a new market space. The blurring and overlapping boundaries between luxury and fashion brands redefine the competitive context. As such, luxury brands now compete indirectly and co-exist with non-luxury brands.

Those luxury brands rightly seek exposure with new consumers. In China, they are trying to appeal to a younger fashion-conscious target via more affordable diffusion brands. Meanwhile, collaborations with sports and streetwear labels have enabled luxury brands to mix and match exclusivity with desirability.

However, the practice of mixing and matching goes beyond the traditional realms of fast and casual fashion. Consumers continue to search for new sources of self-expression, and social media has become practically a laboratory for experimentation. The following three examples show that new luxury codes reflect the consumer desire to mix and match aspiration with inspiration.

First, the Chinese consumer demand for mix and match high-end fashion with functional gear meant for exploring the outdoors is a new trend that was unimaginable several years ago. The Gucci x The North Face collection, which is receiving widespread social media attention in China, resonated by portraying an ‘urban hiker’ style.

Second, Chinese consumers now want to mix and match Western luxury brands with Chinese labels to create a unique local culture that defines their personalities. Because of this trend, numerous luxury brands have flocked to launch limited editions with one of China’s most prolific KOLs and an expert in Western luxury, Mr. Bags.

Tod’s released its fourth collaboration with Chinese fashion KOL Mr. Bags in September 2020. Photo: Courtesy of Tod’s

And finally, we are seeing an increased interest in mixing and matching second-hand/vintage luxury items with new luxury brands. The resale market in China may be lagging behind other international markets, but the rapid success of Chinese online platforms selling used luxury goods, such as Plum, might point to a growing trend. Meanwhile, Alexander McQueen’s collaboration with the Vestiaire Collective and Burberry’s partnership with The RealReal are examples of how vintage mixing and matching is evolving in China.

A mixing and matching strategy can allow luxury brands to control the narrative in an increasingly disruptive market. However, brands should be cautious before jumping on the mix-and-match bandwagon. Executives need to ask themselves if it is a fit with the brand’s existing or desired image. Brand erosion is a risk here, as luxury brands do not want the wrong kind of consumer wearing their brand. Nevertheless, mixing and matching is no longer a fad but a code for both status and identity. As such, luxury brands will need to navigate a mix-and-match strategy or risk getting left behind.

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).

Shanghai Fashion Week

Shanghai Fashion Week Stays Ahead Of Rivals

What Happened: Shanghai Fashion Week will again run as a physical showcase during the pandemic. Today, its official Weibo account announced over 100 runway shows that will start on April 6 under the government’s COVID-19 guidelines. The list includes brands like Reineren and Rico Lee at the Xintiandi tent, debuts from Dawei and Comme Moi, and emerging designers Fabric Porn, Shushu/Tong, and Dumpty at the Labelhood showcase. From an international perspective, Jason Wu and others will take part in the Shanghai International Fashion Showcase, Versace will host an exhibition, and Dior’s Pre-Fall show will be connected to the schedule. 

Recommended ReadingShanghai Fashion Week Outpaces The Big FourBy Jing Daily
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The Jing Take: It has been over a year since the first lockdowns crippled society and global economics. And although it has been a good opportunity for many fashion weeks to reassess their business model viability, Shanghai’s organizing committee managed to buck the trend. In fact, it has outdone other fashion events globally and this season is no exception.

The appointment of 晓雪 Xiaoxue, who boasts four million followers and contracts with Guerlain and the cashmere giant Erdos, as its ambassador, will further emphasize local brands, sustainable development, and women’s empowerment. Meanwhile, the introduction of more B2C strands, such as a carnival-style event, and mega livestreamers Viya and Li Jiaqi, will amplify local brand recognition domestically, which is the point. Clearly, Shanghai Fashion Week means business — on all fronts.

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.

Alibaba-ecomm

Alibaba’s Battle for E-Commerce Dominance Takes a Conciliatory Turn

Having successfully enticed more than 200 premium international brands to launch official storefronts on its Tmall Luxury Pavilion platform — with the pace accelerating rapidly over the past year — Alibaba has emerged as the leader in luxury e-commerce in China, besting rival JD.com, which has also aggressively courted global brands and also claims more than 200 luxury brand partnerships.

Yet the past few months have taken a toll on the e-commerce giant. In December, Alibaba found itself at the center of a broader tech antitrust campaign and is facing an investigation into “alleged monopolistic practices,” coming on the heels of Beijing’s halt of the affiliated Ant Group’s planning mega-IPO, and followed a flurry of speculation regarding founder Jack Ma’s whereabouts.

Now, Alibaba appears to be taking a more conciliatory approach to appease Beijing, whether by choice or force. Last week, the company announced plans to offer a “lite” version of its discount-oriented Taobao Deals app as a mini-program on competitor Tencent’s WeChat platform. The importance of this move is hard to overstate, given how Chinese tech giants have spent years (and billions) to build and defend their “walled gardens,” banning links to competitors as part of a broader effort to vertically integrate content and commerce.

The Taobao Deals mini-program on WeChat will give merchants the ability to accept payments through WeChat Pay, which Alibaba previously excluded from its ecosystem since it is the main rival to Alipay. For now, questions remain about whether the appearance of Taobao Deals on WeChat represents a sign of things to come. Will Tencent reciprocate and allow greater integration with Tmall Luxury Pavilion via WeChat (another favorite of luxury brands) and other Tencent-owned platforms such as Tencent Video? 

Along with the news of Alibaba first tentative step in collaborating with a major competitor, last week the company announced the launch of IPmart, a new intellectual property trading program aimed at helping international fashion and luxury brands that want to take advantage of trends in IP licensing and collaborations but may lack the market knowledge to find the best sources to do so. 

According to Tmall data, IP collaborations grew some 60 percent last year, with the Chinese IP licensing market expected to have surpassed the RMB 100 billion ($15.4 billion) mark in 2020. Tmall also released a list of the most popular sources of domestic IP for fashion collaborations last year, which included toy brands B. Duck and Pop Mart, iQiyi reality shows “Fourtry” and “Youth With You,” and leading cultural institutions such as the Palace Museum and Dunhuang Research Academy. 

According to Alibaba marketing technology affiliate Alimama, IPmart is made up of four divisions: the IP Copyright Center, IP Contract Center, IP Eco Alliance, and IP Operation Center. Merchants active on the platform will be able to access tools to assist with IP selection, licensing transactions, product development, and marketing. And perhaps more importantly for smaller, independent fashion and luxury brands that are concerned about counterfeiting in China, IPmart will use blockchain technology from Ant Group to help authenticate transactions. 

In the near term, it will be interesting to see which international brands, large or small, use IPmart and which Chinese partners ultimately launch collaborations with them. Will it ultimately be used by smaller but still image-conscious luxury brands or be more widely used by mass-market consumer brands or content studios?

Tang Shuang China Fashion Media

Insider Tang Shuang on China’s Fashion Media

Fashion critic Tang Shuang is the next creative to be highlighted as part of the Jing Daily community of individuals who have helped build China’s booming fashion industry. This section profiles industry leaders who contribute to the national and global fashion communities, from consumers and behind-the-scenes employees to business executives and influencers.

Writer Tang Shuang’s razor-sharp wit has been inspiring China’s fashion enthusiasts for over a decade and has earned her a social following of 455,000 on Weibo. Since the start of her media career, Tang has not missed a step by delivering her unique take from fashion’s ringside, making her China’s answer to fashion critic Suzy Menkes in the process.

Tang, who cut her teeth at the media company Modern Weekly in 2008, started her career as an assistant fashion editor despite a lack of fashion experience. But she caught on quickly and, over the next five years, was promoted to associate — and then feature — editor after moving from The Outlook Magazine to Numero Magazine China.

During that time, she also founded a now-defunct multi-brand concept store called The Backroom and contributed to Chinese versions of the New York Times and the Business of Fashion. After short tenures as editor-in-chief at Instyle China and deputy publisher at Vogue China, Tang launched “The Future Of Chinese Fashion”: an ongoing video series that sheds light on China’s homegrown fashion industry.

The three installments investigate the boom in Chinese designer brands while demystifying extensive supply chains to audiences. Altogether, they have garnered nearly 1 million combined views since its October premiere.

Given this media veteran’s extensive engagement in China’s evolving fashion industry, Jing Daily spoke to Tang about the fashion publishing business in China, its future, and what’s coming up on her horizon.

What motivated you to pursue a career in fashion media?

When I was an undergraduate student, I was drawn to French culture, especially literature and film — but not much to fashion. Then I started my position in the “Living” category at Modern Weekly, which is a mix of [covering] lifestyle and fashion. Those years were a golden age for media in China, and I worked with a number of talents I benefited from.

Back then, I did everything from styling to writing, as there was a lack of feature editors. On the other hand, I appreciated the opportunities I got to interview various creatives and leaned towards pitching and writing feature stories.

How would you define your role in the fashion industry?

Since I started in the industry, I have seen myself as an independent fashion critic. I became known more as a media professional, despite my other roles like store owner or brand consultant. But I have been writing continuously, whether for magazines or my channels on WeChat and Weibo.

Continuous leadership shake-ups are disrupting China’s fashion magazine industry. What do these shifts indicate about the future of the sector?

This shift did not happen overnight; instead, the symptoms of leadership turbulence emerged a while ago. The overall digitalization of the media industry in China is irreversible as printed publications there lack loyal readers. In the new media era, business development roles are necessary for bringing in advertising opportunities. Meanwhile, the power dynamic between local teams and their publishing headquarters abroad is constantly changing.

The most noticeable move in China’s digitalization is that audiences show stronger reading preferences on mobile platforms than in the West. However, I don’t think the current digital content in Chinese fashion magazines can replace the traditional ones, other than higher-resolution photos, which hints at a substantial dilemma of local fashion magazines. They are not pushing any boundaries or curating consistent content between printed and digital publications. To be honest, I haven’t seen many changes in the way editors pitch features since I entered the sector. Yet, this shift has been connected to the survival of independent fashion magazines in China.

Photo: Tang Shuang’s Weibo

The capabilities of fashion media extend beyond publishing. How are collaborations like think tanks or creative agencies shaping the industry?

They are not novel things. When I was at Modern Weekly in the late 2000s, there was a client-service chain. The main shift I see is a need for a magazine’s higher capability of creativity and production in collaborations since content today is launched not only in magazines but also on brand channels [previously, print production was only published in magazines.] So the quality of production should be aligned with digital campaigns, meaning they must be good at video-making, shooting, and copywriting.

As the pioneers of fashion publishing leave their positions, do you think the young generations can take over, or is this creating a gap? 

I wouldn’t say it is a gap. As privileges from media titles continue to dissolve, the era of spotlighting an editor-in-chief in fashion media may become past tense. It is unfair to say that today’s younger talents are inadequate. Because the job is changing, the focus is now on the functionality of editorial navigation. So the public may not know who has taken the helm.

Why was “The Future Of Chinese Fashion” made as a video and not, say, a series of written articles? 

I think video can tell stories better and engage audiences more fully. Plus, it is also an overwhelming trend in today’s social media. But also, fashion-related video content in China lacks variety and diversity, so that motivated me to re-navigate words into images. I actually wanted to kick off the project when I was working for Vogue China. It is a scene I have been following and exploring for a few years.

In terms of scope and distribution, how would you compare articles to videos? And how has the reception of your documentary videos been thus far?

Articles can be distributed and reposted in a relatively short timeframe, while videos, especially medium-to-long ones, require more time to reach audiences. Articles usually convey sharper arguments, which can garner immediate attention and spark conversations online, whereas videos are more neutral and showcase facts or incorporate various perspectives.

Comments from insiders and netizens have generally been positive thus far. I have built up a bunch of loyal viewers who are familiar with my writing style. Their only concern is my update frequency, as it takes a lot of effort to put interview and research materials together.

Bottega Veneta Brand Reinvention

What Brands Can Learn From Bottega Veneta’s Reinvention

Key Takeaways:

  • Bottega Veneta has become known for its strict adherence to long-term brand equity building, permanent reinvention of timeless design icons, extraordinary craftsmanship and materials, and contemporary functionality.

  • With his first Bottega Veneta collection, new creative director Daniel Lee won four British Fashion Awards — the first time one designer won that many in one night.

  • The world’s most influential people, from K-Pop stars to Hollywood celebrities, have been spotted with Bottega Veneta products. But the brand’s lack of online marketing could put Bottega Veneta at a strategic disadvantage over time.

At one point, I was one of Bottega Veneta’s best American customers. I loved the creations of Tomas Meier, the creative director of Bottega Veneta from 2001 to 2018. I must’ve bought every men’s bag or luggage item the brand developed over those years. My car keys are even on a Bottega Veneta keyholder.

When I travel, I stuff my Bottega Veneta weekender on my Bottega Veneta trolley. I would never leave home without my two favorite pieces. And everywhere I go, I get complimented on my bags. What I love most is that people don’t even know the brand. They, like me, just admire the products for their understated beauty and exceptional craftsmanship.

Bottega Veneta is one of very few brands that convinces luxury shoppers through its quality and appearance. It doesn’t need a fancy logo. In fact, the moment Bottega Veneta puts a logo on its bags is when it will instantly lose me as a customer. If I’m shopping for a logo, I will buy another brand. Bottega Veneta is appealing through its juxtaposition of outward beauty and stealth branding. It’s for those who know — and those who know, know.

I know someone who bought every version and each limited edition of the brand’s Knot bag and keeps them on a shelf in her house like they are art objects. In my first book, “Luxury Marketing & Management,” I labeled Bottega Veneta as perhaps the best luxury brand in the world due to its strict adherence to long-term brand equity building, permanent reinvention of timeless design icons, extraordinary craftsmanship & materials, and contemporary functionality. Thomas Meier famously stated that you buy Bottega Veneta, “When your own initials are enough.”

Noticing the growing influence of young Millennials and Gen Zers and their new brand expectations, Bottega Veneta reinvented itself in 2018 when it made 32-year-old Daniel Lee its creative director. Lee immediately pushed the boundaries and took significant risks in infusing his vision into the brand while staying true to its core values of extraordinary craftsmanship. His collections were bolder, more colorful, and more flamboyant. He added a new focus on ready-to-wear items, which had been available before but were not central to the brand until Lee arrived.

His first Bottega Veneta collection won him four British Fashion Awards — the first time one designer won that many in one night. For a brand that operated quietly for two decades, this was quite a disruptive emergence. Since then, Lee reimagined the “It bag” category with the brand’s now-iconic Pouch, which has been spotted in the hands of Kylie Jenner, Rihanna, and others. He also reinvented many other iconic Bottega styles — via a playful interpretation of the brand’s famous woven “intrecciato” leather pattern — and his oversized tote bag became an instant hit.

Across digital, Bottega Veneta dared to completely leave social media by shutting down its first Instagram account, followed by its Chinese social media accounts. In a market that has become increasingly dependent on building preferences digitally, that was a bold move, and its validity is still being measured. What it did do, however, was signal that Bottega Veneta is different and has a distinct view of the world. In a reality where most luxury brands drown a “sea of sameness” by copying each other and doing more of the same, this bold move is a statement that could enhance the perceived exclusivity and desirability of the brand.

When the world’s most influential people, from K-Pop stars to Hollywood celebrities, are spotted with Bottega Veneta, the brand has opportunities to stealthily promote on digital. However, since more than 95 percent of purchase decisions are made on the digital journey today, a lack of online marketing will put Bottega Veneta at a strategic disadvantage over time. That will increase its dependence on third-party endorsements, which could weaken its brand equity if the brand story becomes less coherent.

The risk of incongruent brand storytelling became obvious when consumer advocacy group Diet Prada called out Bottega Veneta recently for selling necklaces at seemingly exorbitant prices. Diet Prada pointed out that the brand’s jewelry — priced between $1,500 and 2,500 — did not seem to differ significantly from accessories sold on retailer sites like Etsy or Amazon for approximately $20. As a brand known for distinctiveness and extreme value, Bottega Veneta should never be confused with cheaper alternatives, even in its secondary categories. Many luxury brands fall into that trap.

 

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Here Bottega Veneta is stepping on a fine line, as the perceived value of a luxury brand depends on the Added Luxury Value (ALV) it creates. ALV is elusive and depends on intangibles like the perceived brand story. Therefore, consistency in brand storytelling across all categories is critical. If customers feel that a brand is not delivering its core values in certain areas, consumer trust can quickly evaporate. Similarly, Bottega Veneta’s recent advertising campaigns resembled Tom Ford’s Gucci ads with models in provocative poses. During its reinvention process, Bottega Veneta must be extremely clear about which brand elements to maintain so it won’t lose its long-term brand equity when executing short-term stunts.

Overall, Bottega Veneta’s new direction is extremely promising despite a few red flags regarding its brand equity clarity. While brands must always be true to their core values and have 100-percent clarity on their extreme value creation model (few do!) to be successful over time, adapting to the rapidly-shifting preferences of Gen Zers and young Millennials is critical. In other words, the core positioning of a brand should never change, but expressions need to change with consumer preferences.

Research at Équité has shown that the ability to innovate, influence, and inspire are important predictors of a brand’s ability to create extreme value for customers. Lack of innovation and inspiration equals no value creation. It’s that simple. When we look at brands over time, one of the most critical success factors is their ability to be seen as a change agent or highly influential from a customer’s perspective. Bottega Veneta managed to remain a highly influential and innovative brand under Tomas Meier and — even more so — through Daniel Lee by making the brand relevant for its next generation of customers.

Bottega Veneta’s transformation should be a lesson for all luxury brands. Standing still, hibernating, or doing what you have always done will lead to your brand disappearing and lose relevance. Instead, reinventing yourself to inspire your customers while staying close to your core value creation model is the only way to have a future.

The luxury market has never been as complex or quickly-changing as it is now. And the speed of change will only increase further. Up to 50 percent of today’s luxury brands will disappear by 2030 because they couldn’t connect with Gen Z. In this context, Bottega Veneta’s moves should inspire all luxury brands to reevaluate their strategies. Are you prepared for the future?

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

Masculine jewelry China

China Puts A Ring On Him

Key Takeaways:

  • China’s young male consumers are increasingly interested in sophisticated, diverse jewelry offerings, but big-name jewelry houses have been slow to catch up to their demand.

  • The male jewelry market is still in the early stages of its development, leaving a great opportunity for brands to gain a market share.

  • Brands need to destigmatize the male jewelry genre, go beyond “rapper chains,” and diversify male adornment as much as women’s.

When thinking about today’s luxury male accessories market, a prefixed set of traditional jewelry items that embody “masculine” qualities are implied. Those items include gothic rings, rapper-inspired Cuban link chains, or male wardrobe additions such as tie clips, cufflinks, or belt buckles. But for China’s growing cohort of young, fashion-fluent men, those style conventions are hardly enough.

So, how can luxury brands cash in on this burgeoning male jewelry market? The first step is recognizing the industry’s long-standing male accessory stereotypes. Then, they can destigmatize them.

Take the diamond, for example. The gemstone’s cultural association with “forever love” resonates much less with China’s millennials and Gen Zers than with their Western counterparts. Having grown up in a culture that’s relatively new to the Western concept of equating diamonds and marriage proposals, China’s young men are more likely to see the diamond as a fashion symbol than a commitment piece.

According to a report by the investment firm Guosen Securities, post-80s consumers contributed to 80 percent of China’s diamond sales in 2017, while their US counterparts contributed only 50 percent. Shopping for a diamond is almost exclusively tied to romantic gifts in the US, but China’s cultural detachment allows more young men to buy diamonds for fashion statements.

On social media, a growing number of young Chinese men are sharing their experimental and gender-fluid approaches to jewelry. The hashtag #MenJewelry (男士珠宝) now has more than 30,000 posts on the lifestyle platform Xiaohongshu, where male fashion KOLs explain their tricks and tips on navigating luxury’s limited offers of men’s adornments.

Restricted by choices, many Chinese men are now buying women’s luxury jewelry with gender-neutral designs. Chanel’s Coco Crush classic rings, Piaget’s Possession rings, and Bulgari’s B.Zero diamond rings have become their go-to pieces. Also popular are Fred’s Force 10 bracelet, Tiffany & Co.’s True bracelets, Cartier’s Ecrou De Cartier bracelets, and the Panthere de Cartier pendant.

“Timeless design [in men’s and women’s collections] from Bulgari, Cartier, and Van Cleef & Arpels are the safe choices for the luxury-loving crowd,” says Shark, a KOL who runs the men’s style Bilibili account @潮流整活人. “I would say that most men do not have a clear idea of what they want before shopping. They are more likely to get inspired on the spot and follow the impulse.”

Aside from being stylistically safe, classic pieces from big brands are also endlessly versatile. Compared to the stereotypical “male jewelry,” consisting of rough metals or hip-hop-style gold details, big-name classics have become ideal for layering, mixing, and matching to achieve an urban, professional look. But, says Shark, a love for classic investment jewelry doesn’t apply to the masses. “For the majority of guys who have just started to get interested in fashion, stereotypical male accessories fall into two categories: the Chrome hearts rings or ethnic-looking accessories with feathers or colored stones,” he explains.

While the desire to wear unisex jewels signals a search for male style upgrades, the gender-fluid trend might also come from male Chinese pop stars increasingly wearing dressy jewelry on-screen, helping audiences to accept adventurous male styles. In the popular talent show “Street Dance of China,” popstar mentors Zhang Yixing and Jackson Wang appear in every episode with a hybrid look that features “masculine” streetwear and “feminine” accessories like a pearl necklace. Meanwhile, Chinese fashion magazines are increasingly featuring stylish male icons wearing delicate, fine jewels. Last year, the December issue of Harper’s Bazaar China starred pop star Jackson Wang in a full-body leather look and Cartier’s Juste un Clou jewels, a collection known for its minimal chic forms.

Left: Jackson Wang in Cartier jewelry; right: Zhang Jiaxing’s jewelry+streetwear hybrid look in the talent show “Street Dance of China.” Photo: Harper’s Bazaar China, @StreetDanceofChina Weibo

China’s rising interest in male jewelry did not go unnoticed by the jewelry world’s biggest names. In recent years, luxury houses have been testing the waters by featuring Chinese male popstars in their jewelry campaigns to promote the unisex use of their most iconic designs. Bvlgari has Kris Wu as its brand ambassador, and he routinely shows up wearing the Roman Maison’s branded diamond watches, earrings, and brooches at VIP events. Meanwhile, Louis Vuitton selected Fan Chengcheng to star in its LV Volt jewelry campaign. For its dedicated jewelry line, Tiffany Men’s for the modern man, Tiffany tapped superstar Jackson Yee as its spokesperson as a way to consolidate China’s young, male consumers.

Louis Vuitton starred Fan Chengcheng in its LV Volt jewelry campaigns, 2020. Photo: @ Louis Vuitton Weibo

“In China, the male customer is much more engaged, much more enthusiastic about men’s fashion, and much more comfortable with wearing jewelry, cosmetics, and fashion — all these different categories,” said Tiffany’s chief artistic director Reed Krakoff during an interview last year.

However, despite the luxury world’s growing media representation of men with jewelry, the category’s limited innovation and personalization hasn’t caught up with Gen-Z China’s quickly-evolving demands. Today, most Chinese men are still shopping for jewelry from the big brands’ female-oriented catalogs, where few products or services fit their needs.

Yet, emerging domestic brands may offer the luxury world inspiration for making younger and more fashion-forward jewelry offerings for men. Founded in 2019, KVK has quickly grown big on Taobao, thanks to its genderless and futuristic-looking jewels. The self-proclaimed “post-gender accessory brand” targets Gen Zers that embrace a Cyberpunk-inspired, techy aesthetic. WBJ, a Taiwan-based brand specializing in custom-made male jewelry, has also grown a loyal following among the Mainland’s male fashionistas with its playful, diamond-studded accessories. Unlike stereotypical male jewelry, these emerging brands create inventive jewelry that blends well with the modern man’s daily styles.

Emerging brand WBJ specializes in bold, custom-made jewels for men. Photo: WBJ’s Tmall store

With Gen-Z China’s desire for diversified men’s accessories still growing, brands should help destigmatize the male jewelry genre and adapt their positioning to woo men shoppers. Hungry for novelty and quick to learn, male Gen Zers now want the same range and variations in jewelry that women have. Now, it’s a matter of who will serve them.

Shenzhen Duty Free Shopping

Will Luxury Cash in On Shenzhen’s New Duty Free?

What Happened: The Luohu District of Shenzhen has announced plans to build a high-end duty-free shopping hub and a Guangdong-Hong Kong-Macau Greater Bay Area duty-free shopping area. This follows Yantian and Qianhai, two other districts in the southern first-tier city, signing agreements with Shenzhen Duty Free Group. Although planning is still in its early stages and awaits government approval, local media is optimistic about its prospects given how China’s 14th Five-Year Plan already proposes extending duty-free areas to Shenzhen, among other cities.  

The Jing Take: It’s no surprise that duty-free consumption is on Beijing’s agenda. Since the pandemic, the country has seen the market boom in Hainan, which in early January averaged $27 million (180 million yuan) a day in duty-free sales, more than three times the level a year earlier. With global lockdowns still in place, the province has become a prime travel retail destination for domestic luxury shoppers.

Now, the potential expansion of duty free into Shenzhen spells good news for luxury, especially if it can mirror the success of its island counterpart. In fact, the city should already be on the industry’s radar: not only is it a tech powerhouse — the birthplace of Huawei and Tencent, the latter helping to inject innovation into China’s fashion sector — but it recently ranked among the top ten most competitive financial centers in the world. Shenzhen also hosts its own fashion week, houses 2,500 fashion brands, and boasts the highest local market share of high-end shopping malls. Additionally, it is where Burberry chose to launch its social retail store last year, reaffirming its luxury fashion appeal.  

However, one party that might be put off by this proposal is Hong Kong. With Shenzhen located just a few minutes away by bullet train, Hong Kong could lose its competitive edge with both mainland consumers and global businesses, particularly as political tensions with Beijing paint a uncertain future for the city.

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.

Nike

Is Nike Well-Positioned Post-Pandemic?

Third-quarter results from the world’s biggest sportswear brand are underlining the power of China’s market when it comes to athletic apparel, accessories, and footwear, where its sales overtook those in Europe, the Middle East, and Africa.

Greater China delivered impressive growth of 51 percent for Nike in the three months ending February 28, single-handedly offsetting contractions in other regional markets: North America (-10 percent) hit by supply chain bottlenecks; EMEA (-4 percent); and the Asia Pacific & Latin America (-25 percent).

China’s powerful performance enabled Nike to generate overall growth of 3 percent to reach $10.4 billion in total revenue (-1 percent on a currency-neutral basis). Greater China’s ravenous appetite for sneakers meant that footwear sales of $1.6 billion narrowly edged ahead of EMEA, and the current quarter may well see that lead increase as several European markets go back into lockdowns due to rising COVID-19 cases.

Meanwhile, EBIT of $973 million grew by an astonishing 75 percent in Greater China, just nudging past North America. Nike evaluates the performance of individual operating segments by EBIT, which will encourage an even bigger investment push for the Mainland.

In an investor call on March 18, John Donahoe, president and CEO of Nike Inc, said, “We are seeing particularly strong connections in Greater China where our portfolio brands, including Jordan and Converse, are helping to extend our leadership.” He then added that “my first week at Nike was on the streets of Beijing and Shanghai. Frankly, the physical retail there in monobrand stores — direct or with partners — is an example of outstanding merchandising, linked to a seamless digital experience that’s powerful, and we are furthest along that road in China. Our Chinese team is showing the way for other parts of the company.”

The Nike Rise store in Guangzhou, opened in July 2020, promotes touchless experiences and facilitates the consumer’s online-to-offline shopping journey. Photo: Courtesy of Nike

As such, new brick-and-mortar stores in China are getting 70-90 percent of customers to either identify themselves as members or sign up to become members, helping to personalize Nike’s services through data.

Digital — from which Nike eventually expects to derive 50 percent of all its sales — drives the O2O (online-to-offline) services that consumers want wherever they are. Online grew by 54 percent in the quarter, led by North America, which, for the first time, generated more than $1 billion over three months while China’s digital sales rose 44 percent.

Nike, which is substantially larger than its nearest rival, Adidas, is doubling down on new consumer experiences to keep its pole position. The company’s first product drop via livestreaming took place in the last quarter when it also doubled markets and viewing times (roughly 15 minutes) where it offers the service.

The company’s SNKRS app, which provides insider access to launches, events, and exclusive releases for members, has seen engagement explode, with four times more users than in 2020 and buying members increasing by 80 percent.

Recommended ReadingNike China Cuts 400 Jobs to Make Way for DigitalBy Gemma A. Williams
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Led by this relentless focus on the O2O experience, Nike continues to rationalize retail partners, mainly in North America, that don’t make the grade. The company said, “Our members expect us to know who they are, whether they are in our stores or our partner stores. We will work with those strategic partners who see the same future we do.”

Additionally, Nike’s Express Lane initiative to quickly create, update, and fulfill products in response to consumer demand was further scaled up in China. The brand’s executive vice president and CFO, Matt Friend, said, “We did this with specific products for Chinese New Year, and it is having a significant impact, not just on localizing products but also fulfillment agility in the marketplace.”

Friend also noted that China’s performance rests, to a degree, on a more general post-COVID trend that could inform other regions when they emerge from the pandemic. “As the world opens up, sport is returning. Our performance business is growing significantly as well as our kids business in that market, and that gives us a lot of optimism for North America and other places.”

Should Luxury Follow Bottega Veneta’s Anti-Social Strategy?

Key Takeaways:

  • Earlier this year Bottega Veneta moved to quit all social media platforms (except for WeChat in China), yet it still commands attention thanks to the work of influencers and fan accounts.

  • As luxury brands steer away from exclusivity and strive for inclusivity and accessibility, social media has become the norm for high-end labels to connect with consumers.

  • By 2025, Gen Z is set to make up 45 percent of global luxury spending, while 31 of Gen Z and 25 percent of millennials say they rely on brand-owned social media accounts to find out about sales and product launches.

Over the past week, the Italian luxury brand Bottega Veneta has been all over Instagram, TikTok, and Twitter, even though it no longer has accounts on any of the popular social media platforms. The Kering-owned label’s floral-beaded necklace and coiled jewelry collection have drawn attention for their playful and simple looks, coupled with typical luxury-level pricing — a genius meme fashion move made for maximum virality that coincides with Bottega Veneta’s sabbatical from social. The brand quit all social media in the West in early January and a month later it took its content off of Weibo in China, maintaining a presence only on Tencent’s WeChat.

Recommended ReadingBottega Veneta Says Sayonara To Social MediaBy Julienna Law
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Bottega Veneta was the only Kering brand to report growth in 2020, and the results apparently instilled sufficient confidence to make an official exit from social media. But still, the global influencer obsession with Cassette bags and Lido sandals, combined with thriving fan accounts like Instagram-favorite @newbottega, means that we will continue to see the brand in our feeds.

But now a significant portion of the brand’s narrative is being left in the control of influencers, fans, and others. That can offer a reliable stream of marketing activity for a brand in Bottega Veneta’s enviable position, even if it’s not always entirely favorable, as shown by the recent uproar over the new jewelry.

Katie Yackey, an e-commerce analyst at market research firm Mintel, noted another risk of leaving marketing to your fans: “Brands that only rely on others’ posts will miss out from the potential connection to those posts if they don’t have a presence on social,” she said. “If they have to go to a brand’s website and leave the platform, they risk losing potential customers along the way.”

Even if a luxury brand like Bottega Veneta relies solely on brand ambassadors and influencers, the effect wouldn’t be as powerful as with maintaining brand-owned accounts. “I wouldn’t advise it for brands,” said Arnold Ma, founder of China-focused digital marketing agency Qumin. “It’s like going back to the traditional advertising days where every time you’re doing a campaign, you’re borrowing reach.”

Additionally, the luxury industry has shifted to be more accessible and inclusive. Some might see Bottega Veneta’s departure from social as embodying the concept that privacy is the ultimate luxury in 2021, but it could prove to be a dated move over the long term.

Alexis DeSalva Kahler, a senior research analyst at Mintel, said that the move could even deter today’s luxury consumer: “Turning off a social media presence can make a brand appear more exclusive, which may pose a problem for luxury brands, especially since many consumers view luxury fashion brands as inaccessible.”

The cultural capital sought by luxury brands is no longer about superior elitism, but is instead about being part of the conversation among online communities and maintaining relevance in an overflowing sea of content.

However, back when Chris Donnelly founded luxury digital marketing agency Verb Brands eight years ago, high-end brands weren’t as enthralled with social media as they are today. “Luxury brands are comfortable with the idea of social media now because it has proven success and it’s so ingrained in our lifestyle,” he said.

“The association of luxury and exclusivity is very much in decline, and this trend will only grow,” said Donnelly. “What we’re seeing is that younger consumers are valuing brand experience and brand values, such as sustainability and equal rights, much more.”

And the opinions of young consumers have taken on exponential importance. When Cartier became one of the first luxury names to enter social media when it joined Myspace in 2008, it was inspired by the opportunity to communicate with a younger audience. Today, that remains as a critical motivation behind luxury’s social strategies. After all, by 2025 Gen Z is set to make up 45 percent of global luxury spending.

Recommended ReadingHow Cartier Won China’s Social MediaBy Arnold Ma
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Mintel’s Yackey highlights that 31 percent of Gen Z and 25 percent of millennials rely on a brand’s social accounts to alert them to sales or product launches, and those are vital statistics for premium labels to tap into.

The rising phenomenon of social commerce can’t be ignored either, especially in China, according to Qumin’s Ma. “There are super high conversion rates from followers to buyers,” he said. “We’re talking a range of between five to ten percent. Social commerce and live commerce are massive for increasing revenue.”

As consumers come of age and spend more, luxury may not be able to ignore the role of social media platforms for long. Mintel luxury research analyst Jocelyn Dong summed it up: “The ultimate goal of luxury brands is to achieve business growth. Achieving business growth means higher exposure, penetration, and conversion rates,”

It’s likely that Bottega Veneta’s social vanishing act is a type of publicity stunt designed more to generate hype than a wholesale dismissal of the key marketing tool. And as more people talk about it (like this article), it proves that it’s working for now.

Amazon-Merch

CollaBrands: The Partnerships That Delight Global Gen Z

Amazon-Merch

Amazon Music’s merch partnership represents a new way for musicians to engage with their audiences and enrich the fan experience. (Credit: Amazon)

Key Takeaways:

  • Amazon Music’s plans to work with musical artists to sell merch represents a new way for musicians to engage with their audiences, enrich the fan experience, and earn much needed ancillary revenue.
  • As an early adopter of content commerce, Amazon has benefited greatly from the acceleration of e-commerce as a result of the coronavirus pandemic. 
  • By their very nature, collaborations and co-branding create emotional connections and experiences for consumers.

One of the most significant content-commerce collaborations we saw this week was Amazon Music’s announcement on plans to work with participating musical artists to sell merch via the artist’s pages alongside their songs, albums, livestreams, and music videos, allowing fans to shop for goods directly from the Amazon Music app.  

This represents a new way for musicians to engage with their audiences and enrich the fan experience. It also provides much needed ancillary revenue for artists during a time when they have been unable to tour. An artist’s financial success often comes from revenue streams other than streaming or downloads, and musicians rely on live performances and touring for a significant share of income. 

By partnering with Amazon, artists can seamlessly tie merch and music together, while fans will be able to shop a genre-spanning selection of merchandise, most of which will be available for Prime shipping for Prime members. Among those who have already signed up are Billie Eilish, Lady Gaga, and Gucci Mane, to name just a few.

CollaBrands analysis: Aiming to build audiences through content, Amazon has invested billions of dollars into streaming. According to market and consumer data firm Statista, between 2013 and 2020, the e-commerce giant spent more than $30 billion on acquiring video and music content for Amazon Prime Video and Amazon Music.  Incorporating artist merch for sale as part of its services will grow Amazon Music’s audience while helping participating musicians to capitalize on merch sales while live touring is still off-limits. As the OG of e-commerce, Amazon has been among the first and most successful companies in recognizing how content will drive commerce.  

Content Driving Commerce

Amazon first introduced an internet video service (known as Amazon Unbox) back in 2006, but added the perk of free access to “unlimited, commercial-free instant streaming” to paying Prime members in 2011. Amazon Music was launched in 2014 and gives Amazon Prime subscribers access to thousands of songs free and without interruptions from advertising. As of January 2021, there are 142 million Amazon Prime members in the United States alone.

Coincidentally, this past September, Amazon announced that it was integrating Amazon Music into its video game streaming service, Twitch, which it purchased in 2014 for $1 billion. That same month, Twitch launched its first luxury collaboration, working with the British brand Burberry to stream its Spring/Summer 2021 runway show from London Fashion Week to the Twitch audience of Gen Z gamers.

Conclusion: Clearly, we can learn a great deal from Amazon’s major investment in and integration of content to drive commerce. As an early adopter of content commerce, Amazon has benefited greatly from the acceleration of e-commerce as a result of the coronavirus pandemic. 

elf-chipotle

A food x beauty collab made-to-order for Gen Z. (Credit: Brands)

Chipotle x  e.l.f. Cosmetics

By their very nature, collaborations and co-branding create emotional connections and experiences for consumers. This week, the collaboration that made me smile and take note came from Chipotle and e.l.f. Cosmetics

Yes, we are talking about the fast-casual dining chain collaborating working on a line of limited-edition makeup with a beauty brand, and it’s not the first time. A little over a year ago, Chipotle and e.l.f. launched a collection of primers, blushes and brushes. Coming together once more, the latest effort is centered around a 12-shade eyeshadow palette, with colors inspired by Chipotle’s menu items and ingredients such as guacamole and pinto beans (think earthy greens, neutral tones and a blend of mattes and shimmers). The warmth of each shade aims to replicate the same sense of comfort as enjoying a large burrito, according to the press announcement, and the selection encourages users to customize their own “make-up burrito bowl.”

In addition to the eyeshadow palette, the collaboration also includes several fun “extras”: a “Make It Hot” lip plumping gloss, avocado-shaped make-up sponges, and a cosmetics pouch that looks like the Chipotle paper bag used for tortilla chips. Chipotle also began offering a vegan “Eyes. Chips. Face.” bowl that can be ordered via its app and website. 

Those of you who read this column regularly may have noticed an obsession with food and beauty. Admittedly, I am a fan of both, and have focused a good deal of editorial coverage in these two areas. But this brand mashup, while at first seemingly odd, makes perfect sense. Both brands are hugely popular with Gen Z consumers and the collaboration successfully utilizes a color scheme that is both appetizing and visually appealing. You can be assured of more food and beauty collabs to read about in the months to come. 

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 Steven@globallicensingadvisors.com.

Shushu/Tong

How Chinese Label Shushu/Tong Subverts Feminine Stereotypes

The Social Edition is our weekly series which deep dives into luxury initiatives in China’s social media landscape. Every week, we highlight brand campaigns distributed on Chinese digital platforms — WeChat, Weibo, Tmall, Douyin, and beyond.

Our coverage spotlights global luxury brands, global beauty brands, and local Chinese brands. The latter gives insight into some of China’s most successful campaigns, which often come from local players, and are outside of the beauty and fashion space.

In this week’s roundup, we look at three campaigns, including Ferragamo’s new spin on its monogram, Shanghai-based designer Shushu/tong’s exploration of femininity, and Editions de Parfums Frédéric Malle 20th anniversary celebration.

Did Ferragamo’s Monogram Collabs Hit Their Mark In China? 

BRAND Salvatore Ferragamo
CATEGORY Luxury
PLATFORMS Weibo, WeChat
MEDIUM Image, Short-video, Offline Event

OVERVIEW 
Salvatore Ferragamo has initiated the third installment of the brand’s program reinterpreting its monogram, “Gancini,” with indigenous cultural elements from different areas by collaborating with young artists. In February, the house partnered with lantern craftsman Huang Hongyu to roll out handmade lanterns that draw inspiration from the monogram. The artworks were exhibited in the Shanghai Center Boutique to celebrate the Lantern Festival. In March, the project moved to Hong Kong and featured local artist Afa Lee. This collaboration spotlighted bing sutt — a traditional cold drinking house commonly found in Guangdong and Hong Kong. The brand opened a pop-up bing sutt decorated with Gancini from March 12 to 18 in Hong Kong.

NETIZEN REACTION
The program has flown under Chinese audiences’ radar since it was released in February this year. Despite leveraging traditional cultures from different regions, such as lanterns and cold drinking houses, the brand failed to fully kick off its digital initiatives and optimize the campaign’s social exposure. Aside from posts featuring its brand ambassador Lin Yun and products with the iconic Gancini monograms, the brand’s social content, including videos sharing the artists’ inspiration and their artmaking processes, haven’t received many views on Weibo and WeChat.

VERDICT
Traditional craftsmanship and indigenous culture have become go-to aesthetics for legacy luxury houses looking to facilitate their localization strategies. Still, the way they represent and diversify local talents to engage audiences is crucial for distinguishing the brand from others. Although Salvatore Ferragamo tapped into China’s lanterns (a safe choice), the house did not develop an impressive narrative that intertwined the craft and the house’s heritage or how it related to Hong Kong’s bing sutt culture. Today, young Chinese consumers expect unique and dynamic art and luxury collaborations, so brands must think beyond cliché Chinese cultural motifs to gain traction.

Shushu/Tong Tackles Femininity In Its Spring 2021 Collection

BRAND Shushu/Tong   
CATEGORY Fashion
PLATFORMS Weibo, WeChat, Tmall 
MEDIUM Image, Offline Pop-up
FEATURED TALENTS Ju Xiao Wen (3M Weibo Followers)

OVERVIEW 
Shanghai-based designer brand Shushu/Tong launched its Spring 2021 campaign named “Diamonds Are a Girl’s Best Friend” on March 11. Starring supermodel Ju Xiao Wen and shot by photographer Zeng Wu, the campaign depicts a girl dancing in a glass room. Additionally, the brand collaborated with local retailer LABELHOOD in Shanghai to launch a pop-up store — “In The Wonderland” — which was furnished with floral wallpaper that echoed prints from the new collection.

NETIZEN REACTION
The visual presentation and storytelling of the campaign have been greatly admired by fashionistas. Netizens were also impressed by the collaboration between model Ju Xiao Wen and photographer Zeng Wu, commenting that how the girl in the campaign was shot reflects the ideal imagination of Shushu/Tong. Posts sharing visits to the pop-up store, from fashion KOLs such as @Hu Ban and @Fumin Girl, also garnered organic engagement on Little Red Book.

VERDICT
The theme of the campaign explores the ways in which female identity is constructed in the current socio-cultural context. Despite featuring girlish silhouettes, colors, fabrics, and prints, the brand investigates the dynamic perception of femininity, which extends beyond stereotypes and social constraints. The well-received visual language of the campaign demonstrates Shushu/Tong’s authentic understanding of today’s young consumers who increasingly show preferences for niche, retro, and avant-garde aesthetics.

Perfumer Taps Chinese Artists For Anniversary Campaign

BRAND Editions de Parfums Frédéric Malle  
CATEGORY Perfume
PLATFORMS Weibo, WeChat
MEDIUM Image, Short-video, Offline Exhibition
FEATURED TALENTS Rebuilding The Rights Of Status (228K Weibo Followers) | Jiang Qiong’er (93K) | Philip Tinari 

OVERVIEW 
The French perfume brand Editions de Parfums Frédéric Malle, which is owned by Estée Lauder Group, just rolled out a campaign celebrating its 20th anniversary. The brand collaborated with three China-based artists: the band Rebuilding The Rights Of Status Band, Shang Xia’s creative director Jiang Qiong’er, and the UCCA’s director Philip Tinari. Their goal was to explore the precision, minimalism, and avant-garde chic echoed in the brand’s vision of “perfumes born from total creative freedom.” In addition to the digital initiative, a retrospective exhibition will open to the public at Shanghai IFC Mall on March 19.

NETIZEN REACTION
The three artists’ episodes were centered around three scents created by different perfumers. Their conversations embody the featured scents through complicated and compelling storytelling, reinforcing consumer awareness of the products. Though the brand is considered niche, it has created over 3,500 posts on Little Red Book in China, and the brand’s Weibo followers commented that the selected artists match the scents perfectly.

VERDICT
The rising demand for niche and luxury perfumes in China has attracted international competitors trying to tap into the trend (Euromonitor has predicted that these import brand-dominated segments will grow by 18 percent). However, balancing brand exclusivity with market expansion has been a challenge for disruptors. In Editions de Parfums Frédéric Malle’s case, the label opted to feature artists with strong follower profiles and unique tastes in art, fashion, or lifestyle rather than famous names with large social following numbers. This approach doesn’t just enrich the scents’ narratives; it also helps maintain the brand’s loyal consumer base.

luxury brick-and-mortar rebound

The Return Of Luxury Brick-And-Mortar: 4 Reasons To Go Back

Key Takeaways:

  • Human nature and the reality of a luxury sector driven by first-time purchasers should imply that brick-and-mortar shopping is about to rebound, but consumers will expect stores to give them more now.

  • Shoppers will want to go to stores that are one-of-a-kind and not get the impression of “déjà vu.” And they will enjoy going there to mingle and discuss things, not just buy stuff.

  • Beyond that, as luxury serves no other purpose than changing your outlook on the world or brightening your day, consumers will want to be entertained and educated.

I am not going to pretend I have the solution for all brands on how to think about their future brick-and-mortar footprints — far from it. But the essential idea, for me, is that if you focus on making the consumer feel great — and remember their time in the store rather than just on selling them a product — you will be off to a great start. With that in mind, here are four ways to think about the future of physical luxury spaces. 

Uniqueness 

Luxury brands should ensure their stores are not “copy and pastes” of one another. Every store will have to convey its personality, specific product assortment, decor, art pieces, and animations — all elements that cannot be visible anywhere else. If you are going to a friend’s country house, wouldn’t you be spooked if it were exactly the same as their downtown apartment or seaside shack? You can have consistency in messaging, color coding, and overall look and feel, but make every physical place unique. 

Recommended ReadingRetail Hacks Luxury Stores Must Know For 2021By Gemma A. Williams
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A third place 

Make people stick around. Make the store their “third place”: not work, not home, but somewhere to socialize and chill out. In my recent visit to Burberry’s SoHo store in Manhattan, I was looking around and was offered a coffee and a glass of water. Instantly, that makes you feel more welcome and chattier. It makes you more likely to have positive associations with the brand and ultimately to buy products there. The coffee shop, one of the friendliest places to get together, has actually become a feature inside many retail projects associated with brands. Coffee shops are a good opportunity for consumers to mingle and spend more time. 

But if you want to relax and feel good, maybe a cocktail bar works better to relieve you of a few extra dollars. That is likely what the owners of Watches of Switzerland, a large British watch retailer, were thinking when they started to roll out stores in the US — a country that is well known for its cocktail culture. In its first three American stores, this multi-brand watch brand added a fully loaded bar. So if you want to think about buying that Rolex or Panerai watch, this might just put you in the right spirit for it. And if you don’t buy, you’ll have fond memories of the place and will think of it first for your next purchase. 

Watches of Switzerland’s boutique in Hudson Yard features a full bar from cocktail institution Death & Company. Photo: Courtesy of Watches of Switzerland

Education 

Learning is a great hook. With social media, blogs, and forums, consumers sometimes know as much, if not more, about a brand as the sales associate does. But what about learning something you can’t pick up on the internet? Visit the Atelier Beauté Chanel in New York, put your bag and anything distracting you have in a Chanel locker at the entrance, and you will be ready to go on a tour that you will unlikely forget anytime soon. You can learn a new skincare routine, see how to use foundation, and go on an emotional journey by blind testing scents to discover what fragrances you love and what exceptional raw materials were sourced to manufacture them. 

The Atelier Beauté Chanel is a full-fledged beauty workshop where guests can explore and play with Chanel products. Photo: Courtesy of Chanel

Meanwhile, Apple developed the Genius Bar for consumers to learn about hardware and software and exchange views with other users. Apple also has larger stores, so-called Town Squares, with boardrooms where local businesses can meet and many services you would not find in a regular Apple store. In 2012, Van Cleef & Arpels created L’École, a school of jewelry arts, where consumers can learn about gemology, jewelry-making techniques, and the history of jewelry and precious stones. Will this translate immediately into sales? Unlikely. But it will position the brand as the go-to icon in the art of high-end jewelry for sure.

Entertainment 

The latest Puma flagship in New York is a great example of how to make a store entertaining and a testament to the fact that retail is far from dead. Using some of its brand ambassadors, the brand enables you to experience some fun in the store. For example, you can race down the streets of New York like Puma ambassador Lewis Hamilton in a professional F1 racing simulator that uses a giant screen to replicate the moves from the road. You can dribble, shoot, and play around with a soccer ball in a cube while being coached by French star Antoine Griezmann or Belgian striker Romelu Lukaku. The store has mirrors that enable you to see what a jersey in another color would look like instead of the one you are wearing.

If physical stores don’t surprise and delight consumers, they might as well continue buying goods from their couches. So why not give them a reason (or more) to come back?

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). 

China Skinny Uniqlo

Has China’s “Too Skinny” Trend Gone Too Far?

What Happened: The BBC highlights the latest social media trend in China: women trying on kids’ clothes at Uniqlo. Xiaohongshu and Weibo have been flooded with eye-catching selfies of women wearing petite kids’ clothes to show off how slender they are.

Photo: Xiaohongshu

On Weibo, the hashtag “adults trying on Uniqlo children’s clothes” has received over 680 million views, according to the BBC. Meanwhile, SupChina reports that this is not the first “skinny enough” challenge to take China by storm. Earlier on, there was the collarbone coin challenge and the #A4waist challenge.

The Jing Take: For years, celebrities and role models in China promoted an unattainable beauty standard: white, skinny, and young. But this unrealistic view of femininity is slowly changing thanks to the rise of new consumer trends and the influence of social media.

Nevertheless, online challenges like this most recent one prove that social media still has a distressed relationship with body inclusivity. The penchant for size-zero KOLs and idols sends women an implicit message, so it is hardly surprising when younger women glorify skinny.

Yet, it is worth noting that luxury brands no longer automatically jump on the “skinny is beautiful” wagon.

Since 2017, LVMH and Kering have chosen to ban size-0 models from catwalks and photoshoots. And Donatella Versace reaffirmed the brand’s commitment to body positivity and inclusivity by selecting three plus-size models to walk in her recent Versace fashion show.

Luxury brands that are skeptical about these recent social media fads and can’t understand the local canons of beauty must keep in mind that, even in the West, progress toward inclusivity has been slow.

The body positivity movement is still a niche trend in China, but a change is moving forward.

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.

Rakuten Tencent Content Commerce

Why Rakuten’s Tencent Tie Up Is a Game Changer for Content Commerce

Key Takeaways:

  • Tencent will hold a 3.6 percent stake in Rakuten after the Japanese tech giant raises $2.2 billion via a new share sale.

  • The investment will give Rakuten another swing at the China market, after the company tried and failed to make inroads in the market nine years ago with its “Lekutian” platform.

  • Rakuten can now tap Tencent’s content-commerce prowess and use online video to drive consumers along the path to purchase.

Japanese tech giant Rakuten is best known for its e-commerce platform, but, like its counterparts in China, it also has expansive business interests ranging from video streaming to fintech. This week, the company, which faces challenges on its home turf in e-commerce from the likes of Amazon and Softbank, announced plans to raise $2.2 billion in a new share sale, with Japan Post gaining an 8.3 percent stake, Tencent holding 3.6 percent and Walmart 0.9 percent. 

The sale will make Japan Post the second-largest shareholder of Rakuten, next to the founding Mikitani family, and the partnership between the two giants will have huge implications in terms of logistics and fintech, but it’s Tencent’s stake that is arguably more meaningful.

There are two key areas in which Tencent and Rakuten’s new relationship will be significant on the global level. First, it will give Rakuten another swing at the China market. The Japanese firm tried and failed nearly a decade ago with its “Lekutian” platform, launched in partnership with Baidu, and has since turned to selling products via JD.com, which is also backed by Tencent. Rakuten chairman and CEO Hiroshi Mikitani said in a statement that “the new potential for partnering with Tencent opens up a broad portfolio of opportunities, from digital entertainment, including online games, to e-commerce.”

Second, access to China through a fusion of content and commerce hints at the potential for collaboration and how it ultimately may succeed where Rakuten’s previous partnership with Baidu could not. 

Rakuten has been focused on a very expensive (and moderately successful) global expansion effort through its “cash-back” e-commerce portal and Rakuten TV streaming platform, but has yet to tie the two together in a significant or innovative way. Now that it has an opportunity to leverage Tencent’s content-commerce prowess — taking China as a starting point, Rakuten could apply what it learns from one of the best in the business to its global plans.

Tencent, like competitor Alibaba and archrival Bytedance, has made it a priority to fuse video with e-commerce, and the impetus for this was accelerated during the Covid-19 pandemic. To keep up with the competition, Tencent has been forced to boost video and commerce on WeChat, adding video accounts, expanding e-commerce, and adding livestreaming features. 

Tencent has also shown itself adept at creating or cultivating content trends in areas such as gaming (via its Tencent Games, Riot Games and its stake in Epic Games), and music, through Tencent Music Entertainment (TME), which is expanding globally at lightning speed, and idol competition shows on Tencent Video that mint new stars. 

The content-commerce industry didn’t exist when Rakuten last aimed at China back in 2012. Now, nothing is stopping Rakuten and Tencent —  two deep-pocketed content powerhouses — from teaming up on e-commerce-enabled programs using the “Fourtry” (潮流合伙人) model, perhaps with shows set in Japan (as the first season of “Fourtry” was) that highlight products from the country that can be seamlessly purchased while viewing, with both Rakuten and Tencent cashing in. 

Another possible growth avenue for Rakuten comes by way of Bilibili, the massively popular platform beloved of China’s Gen Z, which also boasts Tencent as its second-biggest shareholder with an 18 percent stake. Were Rakuten to get more access to Bilibili’s 202 million monthly active users (MAUs), this partnership could end up being a true industry bellwether.

China Physical Luxury Retail

Why Luxury Stores Are More Important Than Ever In China

Key Takeaways:

  • The COVID and post-COVID eras in luxury have been defined by the increased importance of online purchases. In fact, some retail experts suggest that the future of sales is moving exclusively online.

  • Digitally-native millennials have been reconsidering the role of physical stores for years since online shopping delivers more interactivity, information sharing, brand awareness, convenience, choices, and suggestions — not to mention safety during a pandemic.

  • The top reason (68 percent of interviewees) Chinese millennials chose to make their purchases in a physical store was that they needed to “see, touch, and try” the product, while another 44 percent mentioned the higher quality of service compared to online.

To a large majority of Chinese millennials, e-commerce shopping is their favorite leisure activity, which is why Gucci recently opened two mono-brand online stores on Alibaba’s Luxury Pavilion. As the first fully-digital Gucci flagship store, they now offer over 750 million users access to Gucci’s collections via an online setting that’s remarkably similar to the brand’s physical flagship store.

It’s the next step in Gucci’s global, “digital-first” approach — one that is particularly aimed at China. Online retailing has undoubtedly contributed significantly to the growth of luxury sales in China, and it has been led by the country’s millennial consumers.

Yet, physical retail locations — a place where consumers can experience a brand through all of their senses — are still a significant shopping motivator. And thanks to smart technologies, the boundaries between digital and physical locations are starting to blur — with omnichannel strategies forever altering the old practices of retail management while reimagining online sites to mimic live retail experiences.

At the forefront of these new digitization efforts is China, which has seen the significant deployment of technologies capable of boosting luxury brand awareness and customer relationships. First introduced to support customer data management, technology-driven innovation is now effectively used to reimagine customer engagement. As such, smart technologies and digitalization have become integral components in various brand strategies, from Burberry and Farfetch’s trailblazing X-Reality strategies to Prada and Versace’s more recent ventures.

Opened in 2012, Burberry‘s London flagship store includes bespoke digital signage on all floors and futuristic radio-frequency ID, which triggers details about merchandise in mirrors that double as visual displays. Photo: Courtesy of Burberry

Necessarily, the COVID and post-COVID eras in luxury have been defined by the increased importance of online purchases. In fact, some retail experts suggest that the future of sales is moving exclusively online, proposing a so-called “phygital” approach in China. And although many global brands have reduced their flagship store numbers since the pandemic began, many online startups have opened new physical popups and concept stores. So what does the future really hold for physical retail?

Dennis Valle, the former chief marketing officer for Versace, says, “We are witnessing the beginning of a significant shift in consumption habits. Chinese millennials expect 360-degree storytelling, and luxury fashion brands need to be ‘curated’ rather than just sold. Luxury is not just a brand matter. The ‘story’ must come with a seamless online-to-offline connection as the core of a ‘retailtainment’ experience.”

Digitally-native millennials have been reconsidering the role of physical stores for years since online shopping delivers more interactivity, information sharing, brand awareness, convenience, choices, and suggestions — not to mention safety during a pandemic.

However, one can only satisfy the need to touch outfits and experience an immersive brand culture inside a physical flagship store. According to a 2020 survey by the BRaND LuxuryLab at Excelia Business School, the top reason (68 percent of interviewees) Chinese millennials chose to make their purchases in a physical store was that they needed to “see, touch and try” the product, while another 44 percent mentioned the higher quality of service compared to online.

Recommended ReadingRetail Hacks Luxury Stores Must Know For 2021By Gemma A. Williams
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Nonetheless, Chinese millennials surely aren’t renouncing the interactivity of online shopping that fits seamlessly into their social spaces like Weibo and WeChat. Having grown up in a highly digitized ecosystem, they now expect flagship stores to experiment digitally (nine of ten Chinese millennials prefer their in-person experiences to be digitally-friendly when making a luxury purchase decision, according to McKinsey’s 2019 report The Chinese Luxury Consumer.)

An authentic brand experience requires a customer to move seamlessly between e-commerce and brick-and-mortar shopping. Today, the customer experience is not defined by individual interactions but by the sum of all brand interactions, regardless of whether the customer is online or offline.

But smart retail has already been serving customers for a few years. Burberry’s flagship store in London was the first to establish a new model that broke the boundaries of traditional retail, and Hermès’ 2018 “Silk Mix” event in Beijing was a great example of a true omnichannel initiative: an innovative pop-up store/WeChat Mini Program combination that increased traffic to the Hermès official account while attracting thousands of guests to its event.

Hermès hosted an eight-day record store pop-up event in the ultra-hip Beijing shopping district of Sanlitun, where visitors could listen to recorded music and live performances. Photo: Tencent

Those examples could be followed by other brands, particularly those interested in consolidating their positions with China’s millennial segment. In recent years, we’ve seen the many advantages associated with smart technologies and digitalization, such as the creation of brand communities, the ability to influence shopping attitudes/decisions, and a way to increase consumer engagement that organically grows brand value. But a deeper brand-customer relationship can only happen if a “real” — yet innovative — store is part of the strategy. In fact, a truly blended digital and physical retail is what may cede luxury brands a future competitive advantage.

Western Brands Localization China

These Western Brands Are Winning China’s Local Markets

Key Takeaways:

  • In 2020, the quintessentially British brand Burberry upgraded its physical retail store experience when its Shenzhen flagship partnered with Tencent to become the perfect modern social retail store.

  • Thanks to a clear art-based strategy that connects it with artsy consumers, Louis Vuitton generated the biggest buzz during the Singles’ Day shopping holiday, taking a 25-percent share of the total buzz volume.

  • While local brands Moutai and Huawei will continue to dominate their respective segments in China, other regional players, like athletic brands Peak Sport Products Co and ANTA, are challenging their foreign counterparts.

China is a complex and diverse market, where brand-conscious consumers dominate luxury purchases. Yet, personal consumption expenditures are wildly different. And still, most international brands employ a homogenous marketing strategy in China.

“The Chinese market is very interesting for many companies that want to go global,” says Marketing to China. “But while this huge market presents huge commercial opportunities, entry into China poses its own unique set of localization challenges.”

Some global brands like Louis Vuitton, Burberry, and Gucci have built outstanding localization strategies by rethinking their marketing offers and tailoring their content to the experiences their regional consumers prefer. But not all global brands have curated their content according to regional needs yet. Let’s look at the Western brands that are already resonating with Chinese consumers.

    1. Gucci

According to Vogue Business, the search volume for Gucci increased ahead of the Lunar New Year, and the brand’s New Year’s collaboration with Japanese manga character Doraemon generated a serious buzz.

Opinions on the campaign were divided. Several netizens left rave reviews. However, the more skeptical ones lamented the move as a “lazy” marketing trick, Jing Daily’s Wenzhuo Wu reports. Despite the mixed reactions, Gucci succeeded at word-of-mouth marketing, confirming that nostalgic branding is still an effective marketing tactic.

During the year, Gucci maintained its relevance through a smart digital strategy and a targeted localization strategy. And its focus on lower-tier cities has allowed the Kering-owned brand to expand its product offering. The Business of Fashion reports that Kering’s strategy for China “is to tap on the network it’s already created in top-tier cities such as Shanghai and Beijing while opening new stores in so-called tier 2 cities.”

Gucci also launched on the Little Red Book and the short video app Douyin, where it engaged a younger and more diversified demographic. Moreover, Gucci got quite a buzz with its “apple of my eye” collection, released for the Qixi Festival. And while the Qixi capsule collection could have spelled disaster for the brand, the promotional video that showcased a friendship blossoming into teen love saved the day.

    2. Burberry

The British fashion house uses the art of storytelling to engage Chinese consumers. Its short film “A New Awakening,” which was released for the Lunar New Year on Weibo and featured award-winning actors Zhou Dongyu and Song Weilong, won rave reviews.

Burberry is also a leader in influencer marketing, having been one of the first luxury brands to select Chinese mega-celebrity Kris Wu as its global brand ambassador. Since 2016, Burberry has continually expanded its network of celebrity ambassadors, including talents like Yvonne Ching.

And in 2020, the quintessentially British brand upgraded its physical retail store experience, as its Shenzhen flagship partnered with Tencent to become the perfect modern social retail store.

Burberry developed a custom WeChat mini program, providing customers with a platform for dedicated client services as well as reservations at Thomas’s Cafe. Photo: Courtesy of Burberry

Burberry also improved its digital capabilities through its Mini Program ecosystem while also betting bigger on livestreams. Its Tmall livestreaming session, in partnership with Yvonne Ching, replicated its in-store shopping experience and garnered over 1.4 million impressions. Even more importantly, most of the featured products sold out within an hour.

    3. Louis Vuitton

In China, Louis Vuitton maintains a strong market position, thanks to KOL partnerships, smart product drops on WeChat Mini Programs, livestreaming sessions, and unique capsule collaborations.

Moreover, Louis Vuitton has a clear art-based strategy that helps the French brand connect with artsy consumers. The flagship stores are art galleries featuring the works of contemporary artists. And Louis Vuitton regularly organizes prestigious exhibits and partners with museums.

According to TD Reply, Louis Vuitton generated the biggest buzz during the Singles’ Day shopping holiday, taking a 25-percent share of the total buzz volume. TD Reply highlights that Louis Vuitton’s collaboration with the Chinese actor Zhu Yilong is the secret behind its success.

Ahead of Singles’ Day, Zhu Yilong promoted Louis Vuitton’s “See LV” exhibition in Wuhan, garnering over 100,000 likes on Weibo. Photo: Louis Vuitton’s Weibo

“In China, influencers have an even greater weight in influencing the perception of a brand than in the West,” says Lars-Alexander Mayer, a partner at TD Reply. “Across all industries, we see impressive examples of how working with Chinese influencers is helping Western brands to gain more attention in China.”

The 2019 China Luxury Forecast report, jointly released by Ruder Finn and Consumer Search Group, also positioned Louis Vuitton as a leader in terms of brand awareness and purchases for the clothing and handbags & leather goods categories.

    4. Domestic brands also gaining traction with locals 

While Moutai and Huawei will continue to dominate their respective segments, other regional players, like athletic brands Peak Sport Products Co and ANTA, are challenging their foreign counterparts.

Both Peak Sport Products Co and ANTA Sports Products Limited have signed partnerships with NBA basketball players and generated engagement through brilliant content creation strategies.

Moreover, new Chinese talents such as menswear designer Xander Zhou and Caroline Hu have gained traction and generated buzz with their collections.

Recommended ReadingAre Chinese Designers The Future Of Luxury Collabs?By Gemma A. Williams
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According to the Business of Fashion, Xander Zhou “has successfully established a cult fan base domestically and internationally and is at the forefront of a new wave of young Chinese designers that are crafting a new menswear aesthetic.”

At the same time, Vogue states that Caroline Hu’s dresses belong at the Oscars,” and fashion aficionados have fallen in love with her theatrical and avant-garde signature style.

Chanel Cultural Endowments China

Does Chanel’s Art Focus Have China In Mind?

What Happened: Chanel has launched a new award series as part of its post-pandemic strategy to support the arts. This two-stranded model consists of the Chanel Next Prize, in which ten artists will receive awards of €100,000 each as well as mentorship, and the Chanel Culture Fund, which will work with art and culture institutions to create new programs. This diffused, global approach will ensure the luxury house access to the next generation of creatives as well as the cultural institutions or platforms that exhibit them. 

The Jing Take: Investing in younger generations is nothing new for brands. LVMH, Gucci, and Amiri all currently offer prizes or other forms of support. And, this coming April, fashion entrepreneur Wendy Yu will unveil the winner of the Yu Prize at Shanghai Fashion Week. But what is novel about Chanel’s project is its choice to support artists and cultural institutions rather than fashion designers. Prada is known for aligning itself with the art world as a way to build valuable brand equity. This approach is particularly significant for the Chinese market, where such cultural synergy is highly prized. 

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.

Douyin Wealth Bragging Banned

On Douyin, Bragging About Wealth Is a Big No-No

Key Takeaways:

  • Douyin has banned almost 4,000 users for deliberately showing off their wealth, known as 炫富 (xuanfu), leaving China’s ultra-rich content creators in need of another gimmick.

  • China has a whole ecosystem dedicated to selling the illusion of wealth, reiterating how young and middle class consumers view luxury as aspirational.

  • The cleared Douyin accounts should serve as a reminder to luxury brands to vet collaborators, as a KOL mismatch can not only have repercussions on a brand’s reputation but hurt its standing in the eyes of the Chinese government.

Chinese blogger Rachel (@张晨Rachel) leads a life straight out of Crazy Rich Asians. Her bed, a vision of cascading white curtains and hand-carved wood, is valued at over $50,000. Her matching pillows and bedding are inlaid with pearls, and together with her other princess-esque furniture, her bedroom alone crosses into six-figure territory. The rest of her house is equally lavish, from the Fendi chandelier and Versace sofa in her living room to the diamond-encrusted tile in her bathroom.

Douyin influencer @张晨Rachel frequently posts about her lavish purchases, including her $60,000 Fendi chandelier. Photo: Screenshots

It’s against this backdrop that the Douyin creator shares her opulent lifestyle with her 1 million followers. But now, her account and many others like it could be in jeopardy. On February 26, China’s TikTok announced it had banned almost 4,000 users for deliberately showing off their wealth, known as 炫富 (xuanfu), since the start of the year. 

The short-video platform plans to clean up content that “pollutes the community” and “endangers the physical and mental wellbeing of youth,” including posts that promote money worship, make fun of the poor, inappropriately flaunt social status, display large wads of cash, or involve minors with luxury goods.

While some netizens applauded the move, many weren’t thrilled with the increasing regulations. One Fashion KOL @琛小星 (172,000 followers) commented that the Bytedance company would be better off blocking accounts with distorted values rather than targeting the rich. “It’s 2021 and everyone’s lives are getting better,” he wrote on Weibo. “It shouldn’t be a problem if people want to get rich and have fun.” Another user said the new rules “blindfold” everyday people: “Not only do you not solve the actual problem of the growing wealth gap, but you also close channels for common people to obtain information.”

As Douyin tightens its grip on its 600 million daily active users — no doubt to stay in Beijing’s good graces — China’s rich content creators may need to find another shtick. Until then, here’s a closer look at the “xuanfu” trend and what its crackdown could mean for luxury.

How Chinese youths flaunt their wealth

There’s no shortage of netizens who have built fanbases — and even profitable careers — out of flexing their luxury lifestyles. Besides @张晨Rachel, Douyin user Cai Luoli (@蔡萝莉) represents another typical example of “xuanfu.” The twenty-something has garnered 16 million followers for both her unique Lolita style and exorbitant purchases, which include Louis Vuitton earbuds and a five-figure RMB trip to Disneyland.

But this isn’t the only type of content running afoul of the new rules, local media pointed out. Rags-to-riches stories, which are sometimes used to market products or scam people, have also been flagged as a no-no. One such account shows a man who went from handing out flyers on the side of the road to becoming a millionaire shortly after, garnering 2 million fans and an average of 10,000 likes. User @氪金研究所 takes a different approach to the trend, interviewing people on the street about the prices of their luxury cars and high-end accessories.

@氪金研究所 interviews a man in Hangzhou about his suit and luxury car, which he says cost $6,000 and $154,000 respectively. Photo: Screenshots

Although these showboating tactics don’t always rub viewers the right way — and certainly don’t mesh well with luxury’s traditional classy image — these KOLs are still worth noting. With their large followings, they not only help drive eyeballs to certain brands and experiences but also reinforce, to an extent, what is considered “cool.”

Social media fuels the fake wealth industry

Of course, not all of these users are actually rich. Whether for internet clout, business opportunities, or better marriage prospects, there’s a whole ecosystem dedicated to selling the illusion of wealth.

In fact, faking rich is cheaper than it looks. On platforms like Taobao and Xianyu, Alibaba’s secondhand market, netizens can purchase luxury footage of ostentatious cars, enviable scenery, and fine dining for as little as six yuan ($0.92). Some services even help to customize these videos, providing a first-person view that users can then add a voice over to before posting on their own social media feeds. 

Others go to greater lengths to fake it ‘till they make it. 2020 saw the rise and fall of the “Shanghai Debutante,” a band of young urban women who bragged about their fabulous lives online. Or at least, that’s what it looked like until one writer went undercover and found that all the luxury items and experiences being posted about — the high teas, the handbags, the hotel stays — were actually purchased as a group. 

For example, 60 people had split a day’s rental of a Ferrari while four people took turns sharing a pair of second-hand branded stockings. Following the viral article, Douyin and Bilibili released style guides to help its users achieve the “debutante” look without looking tacky (or going to such extremes), ultimately reiterating how China’s young and middle class view luxury as aspirational.

Why Douyin’s crackdown should concern luxury

While luxury brands on Douyin, such as Gucci and Prada, are unlikely to be directly affected by the new rules, the cleared user accounts should serve as a reminder to vet brand collaborators. The rules of the game are constantly changing — the recent attack on Little Fresh Meat is just one example — and a KOL mismatch can not only have repercussions on a brand’s reputation but hurt its standing in the eyes of the Chinese government. 

Moreover, brands should note the broader context at play. For one, the platform’s clampdown on wealth flaunting comes as Beijing enacts a larger cleanup campaign against internet companies. Last month, China’s Cyberspace Administration announced that online publishers will need to have a government-approved credential before publishing on a wide range of subjects, dealing a blow to citizen journalists and other content creators. 

Prior to that, the internet watchdog turned its attention to livestreaming, requiring foreigners and celebrities to report to local authorities before big, livestreamed events and limiting spending by any single user — a move that could hinder brands branching into China’s growing e-commerce space. 

Taking another step back, the “xuanfu” phenomenon also reflects a bigger problem in China: the growing wealth gap. To date, China sports one of the world’s most unequal economies. According to the Hurun Wealth Report 2020, more than two million Chinese families had a household wealth accumulation of 10 million yuan ($1.5 million) or more as of the end of 2019, and these families spent more than three trillion yuan last year. 

On the one hand, this rising inequality actually presents an opportunity for brands, particularly as the “haves” feel compelled to differentiate themselves with the “have-nots” by parading their designer goods. On the other hand, Beijing has long cracked down on obscene displays of wealth and may continue to do so as Xi eyes a third-term in office. While this certainly won’t kill China’s appetite for luxury, it could mean the country’s ultra-rich keep their heads low and present their fortunes, including their luxury collections, in less conspicuous ways.

Niche Beauty Brands China Gen Z

Why China Can’t Get Enough Niche Western Beauty

Key Takeaways:

  • Chinese consumers have become fond of using niche skincare products to define their individuality, as they want to associate themselves with new products.

  • Emboldened by this growing demand among Chinese consumers, Western beauty brands are already making waves by unveiling hot-selling products on China’s advanced e-commerce platforms.

  • All in all, the niche beauty market has become a competitive one for various big and small companies to tap into and make huge sales.

The scope for niche beauty brands in China has grown massively in recent years, and international brands like Shiseido, L’Oréal, and Unilever are making the most of this opportunity with their timely new acquisitions: Drunk Elephant, Skinceuticals, and Tatcha. These products are also transparent, eco-friendly, and untainted by suspicious elements that could damage consumers’ skin. Because of these factors, China’s Gen-Z consumers are easily drawn to them. 

But there is more to these brands’ popularity than meets the eye. Chinese consumers have also become extremely fond of using niche skincare products to define their individuality. They want to associate themselves with something new, as the market is inundated with hundreds of skincare items that can fulfill their need for retaining the essence of natural beauty. Therefore, this growing demand has catapulted the Chinese market for niche beauty to ever-greater heights. 

According to Research and Markets, that market is currently valued at $62.5 billion (407.8 billion RMB), and buzz is already circulating that it could be worth $9.2 trillion (60 trillion RMB) by 2025. Feeling emboldened by this great outlook, Western beauty brands have been entering the Chinese market, joining hands with the country’s advanced e-commerce platforms Alibaba’s Tmall, WeChat, Douyin, and others that quickly sell out their products. 

According to a surprising 2019 Reuters Communications survey of 300 consumers spread across Shanghai, Beijing, and Guangzhou, 92 percent of men preferred niche beauty products, while just 31 percent of women considered the niche factor important. And with Gen Z now being the backbone of the Chinese economy, luxury brands must find items they will enthusiastically love. Zhao Anqing, CEO of the Chinese beauty brand Dairui Daily, says that “in China, young consumers are seeking ways to personalize their overall lifestyle and make a point that they’re very different from older generations. For them, it all comes down to embracing the values of a progressive lifestyle where ‘niche’ matters most.”

Today, Chinese consumers are more subtle in terms of their likes and dislikes, and packaging, brand stories, and branding all make up how they value a brand as “niche.”

China’s market is open to all 

Drunk Elephant, Skinceuticals, and Tatcha are all categorized as niche skincare products alongside small players like Milk Makeup and Farmacy. The good news is that even new players like Glossier or famous names like Murad and Topix Pharmaceuticals can be considered part of China’s diverse niche market. All in all, it has become a competitive market for various big and small companies to tap into and win quick sales. To put it simply: The race is on.

Highly efficient e-commerce tools 

While the coronavirus pandemic continues to wreak havoc on the West, their beauty brands have come to rely on Chinese consumers to make up for their losses. And they’re doing quite well thanks to the country’s major e-commerce sites such as Taobao and JD.com, where millions of Chinese consumers spend time shopping. 

Drunk Elephant launched its flagship store on Tmall in September of 2019, and its next move was a smart one. As part of its first promotional strategy, Drunk Elephant participated in the Double 11 shopping festival and was soon ranked in its top-200 beauty & skincare brands and as a top-ten international brand. This performance prompted Drunk Elephant to introduce a wide range of new products globally on Tmall in December of 2019. 

To promote Double 11 sales last year, Drunk Elephant hosted an activity where people who posted pictures of their purchases would be entered into a drawing to have a baby elephant sponsored in their name. Photo: Drunk Elephant’s Weibo

Likewise, Skinceuticals took part in Tmall’s Super Brand Day for the first time in 2020 and surprised everybody with its sales, which were estimated to be far above $15 million (100 million RMB). As a result, it secured the no. 1 position in the beauty category with 100,000 items sold out. It also boasts a global flagship store on Tmall. 

This year is another big chance for overseas beauty brands to consider Tmall, which will be launching 800 foreign beauty brands to introduce to young Chinese consumers. Out of these, more than 50 new brands will be incubated. What’s driving this growth? Gen-Z consumers. “Since these young people live their lives constantly surrounded by social media and international multiculturalism, their choice of using beauty products feels totally worldly,” says Liu Yiman, general manager of the Tmall International Commodity Center. 

While everything is happening online these days, another interesting phenomenon to see in China is that niche Western brands are enjoying physical presence too. Helping them in their journey is a popular Chinese online cosmetics brand Harmay with its brick and mortar stores popping up in major cities like Beijing, Shanghai, and Chengdu, where it is already selling a great collection of niche international cosmetics and skincare brands, such as SG79|STHLM, Graine de pastel, and Iconic London. Famous local brands are successfully navigating this competition from foreign players in their own unique style. According to Daxue Consulting, one such brand is Perfect Diary which is a dominant local brand to reckon with on various levels.         

The reason for niche beauty brands taking off in China is mainly because Chinese consumers are more serious than ever about using products that fully adhere to the concept of going organic. All in all, they want to make sure what beauty products they’re using in their lives should have ethical traits. In short, bruised by the pandemic, they’ve learnt that they can no longer ignore the idea of a safe and healthy lifestyle. At the same time, they want both international and local brands to implement social responsibility under all circumstances. They want to eat healthy and look great without harming nature in a post-Covid era, where the factor of sustainability should rule the roost.    

Alibaba China Market Regulator Fine

No Dice for Alibaba Group’s Monopoly

Update published March 16, 2021

Beijing continues to hold tech conglomerates under close scrutiny, especially the Alibaba Group. At a Communist party leadership meeting chaired by President Xi, companies were warned that the government will continue its offensive against tech companies with vast market power and consumer data. Given this, Alibaba has been in Beijing’s crosshairs since last year; following levies, this latest move now targets its media interests. According to reports, the government has requested the e-commerce giant to divest its publishing arm (it owns the South China Morning Post and has stakes in both Weibo and Bilibili). Additionally, other Chinese companies have now pulled Alibaba’s internet browser from app stores too citing misleading advertising. This would indicate that, after years and years of unbridled freedom, the etailer’s monopolistic expansion might be coming to an end.

Original article published March 13, 2021

What Happened: China’s financial regulators continue to roll out measures to cover the digital sector and the fintech industry, which had previously gone relatively unchecked despite being a large source of consumer credit growth. As part of its ongoing crackdown on monopolistic business practices, the country’s market regulator has levied fines against 12 internet companies, including Tencent, Baidu, SoftBank, and China’s equivalent of Uber, Didi. Each has been slapped with a token fee of $500,000. A much larger fee (around $975 million) has been floated for Alibaba Group, which has had years of unrestrained expansion. This levy, however, has been denied by Beijing. 

The Jing Take: A time-out is definitely being called on Alibaba’s lucrative game of monopoly — or is it? If this fine materializes, it would be the highest in Chinese corporate history. However, since when did fees ever stop a monopoly? Especially not one as dominant as Alibaba. Although it looks like a large number, the fine is a drop in the ocean for the conglomerate that saw steady growth during the pandemic: 880 million mobile MAUs and $22,838 million in revenue in 2020. Plus, Alibaba Group faced much worse in the past; far more damaging was the halting of its Ant Group IPO, after which it faced a restructure and several departures, adding to Alibaba’s woes.

Along with supposedly clamping down on burgeoning growth, these measures have also been aiming to recognize potential infringements of consumer rights. When it comes to luxury, it will be interesting to see how China plans to curb the giant, which, following a deal with Farfetch has exponentially grown its positioning, and in the process, further strengthened its hold on consumers. And brands too.

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.

livestreaming ecommerce repercussions luxury

What China’s Livestreaming Boom Means for International Luxury Retailers

E-commerce livestreaming has been on a global march over the past year, with a steadily growing number of brands and influencers using the format to promote and sell products on Instagram, Facebook, Amazon, and TikTok. But in China, arguably the world’s most sophisticated e-commerce livestreaming market, the global impact is being felt in a different way, with overseas Chinese students, expats and immigrants using livestreaming to sell everything from cosmetics and food products to luxury goods to compatriots back home. 

A quick glance at the data makes it clear that “live selling” is a hot sector. As of December 2020, China’s livestreaming audience had reached 617 million, a rise of 57 million since March of last year. Of those viewers, 388 million made purchases via livestreams, up from around 300 million last summer. These figures are likely to continue their upward trajectory this year as more platforms expand their e-commerce livestreaming capabilities and consumers stick to the “new normals” of shopping domestically for luxury brands and living more of their lives digitally

Livestreaming has already become a regular part of the arsenal of Chinese-speaking staff at luxury boutiques around the world, useful for showing new items to VIP customers or even small groups of potential buyers. Yet it also brings new challenges for international retailers, raising questions about how best to capture the opportunity without alienating local customers or risking brand image.

On a recent weekend visit to Las Rozas Village, a luxury outlet operated by the U.K.-based Bicester Village Shopping Collection on the outskirts of Madrid, the international reach of China’s livestreaming boom was on full display, highlighting its potential to boost sales but also stretch sales staff to their limits. At a number of stores frequented by Chinese shoppers, anywhere from two to six livestreams may occur simultaneously, with tables covered with handbags and accessories and salespersons asked to bring multiple items (while struggling to attend to other customers).

At the Prada boutique, one Mandarin-speaking livestreamer filmed a friend modeling dozens of bags and accessories in rapid succession, while another streamer at the Loewe store shot a row of handbags and filled her audience in on the brand’s history. At some of the more popular shops, customers who were unaware of the livestreaming activity might turn around at the door, thinking another event was taking place. 

At another European brand luxury boutique, a salesperson noted that Chinese livestreamers have helped to boost revenues during a difficult economic time. Spain’s economy shrank 11% last year, and the country’s tourism sector was devastated by the Covid-19 pandemic. However, the salesperson also noted that the livestreamers can pose a challenge due to their demands for attention from staff and the heaps of products they pile up on tables, which can interfere with the other shoppers’ ability to browse. 

On balance, retailers at Las Rozas Village seem to have accepted livestreamers as part of the new landscape, although they would also be likely to welcome regulations to maintain a smooth shopping experience for all customers, as well as to avoid violations of General Data Protection Regulation (GDPR) laws, which forbid posting or streaming images of others without their consent.

These key points are especially important for image-conscious, brand-owned luxury stores. Having invested significant time and money to create retail environments commensurate with the price tags of their products, brand flagships and boutiques are keen to ensure that the sales opportunity represented by Chinese consumers engaging in e-commerce livestreaming does not interfere with the spending habits of other customers. To that end, some stores are considering designating certain areas for livestreamers to conduct their sessions, out of the way of the rest of the shoppers, or setting aside specific time windows or days during which the practice is allowed, and never with other customers in the frame. 

Managers and staff for each brand will have different perspectives on how to regulate e-commerce livestreaming activities in retail outlets, whether to confine it to discreet sections, allow it with specific regulations, or encourage it. But it will be interesting to see which brands take which approaches, and, since Chinese-style livestreaming is the world’s most advanced, we may see influencers and others from other areas trying out similar approaches.

Non-fungible tokens NFTs Art World

Decoded: NFTs, the Art World, and the Influence on Luxury

Although not new, non-fungible tokens (NFTs) have catapulted to global attention over the past month, with examples from the art world drawing headlines for the stratospheric prices being commanded for digital works, such as the Beeple collage that sold for $69 million at a Christie’s auction last week.

But NFTs can encompass virtually anything, from sports cards to music to tweets to fashion. Also last week, the NFT luxury brand RTFKT sold a Lunar New Year edition virtual sneaker on the Chinese digital marketplace Treasureland for $28,000. For both NFTs and luxury goods, value is driven by authenticity and scarcity, so it stands to reason that the combination of the two will offer a new world of possibilities for brands and consumers alike.

This explainer from our sister publication Jing Culture & Commerce looks at what exactly NFTs are, where they came from, and why they matter for the art world and beyond.

What are NFTs?

Non-fungible: a unique asset.
Token: a digital certificate stored on a blockchain.

Fungible assets, such as dollars or gold, are mutually interchangeable and hold exact value when exchanged — for example, swapping a $10 note for two $5 notes.

Non-fungible assets, such as paintings or houses, cannot be exchanged interchangeably — for example, two Van Gogh landscape paintings from 1890, though similar in aesthetics and value, are unique and unexchangeable.

What’s the backstory? 

From the Counterparty platform through the CyptoKitties blockchain game and to this month’s landmark sale of Beeple’s artwork, NFTs have only risen in profile and popularity.

Colored Coins are often considered the conceptual spark for NFTs. Beginning in 2012, these small denominations of bitcoin were used to represent assets from digital collectibles and property to company shares.

Next came Counterparty in 2014, a peer-to-peer financial platform on the Bitcoin blockchain that became a hub for digital asset creation and trading (memes and trading cards thrived).

NFTs hit the mainstream in 2017 with CryptoKitties, a blockchain game in which players adopt, rear, and trade virtual cats (so popular it significantly slowed the Ethereum blockchain).

2021’s manic demand for NFTs can be explained through a confluence of factors:

  • After years of growth, cryptocurrency investors are looking to diversify portfolios.
  • Pandemic lockdowns saw homebound creators and collectors invest more time and money in NFTs ($250 million of NFT volume traded in 2020, up 300 percent year-on-year).
  • Emerging NFT marketplaces (see below) have become more user-friendly, bringing in new collectors.
  • Celebrity interest (Grimes, Mark Cuban, Lindsay Lohan, etc.) has generated huge hype.

How and where are NFTs traded?

Rarible, OpenSea, and Nifty Gateway are among the many user-friendly marketplaces that have made crypto art easy to buy, sell, and search for.

NFTs are created, bought, and traded on the blockchain, predominantly Ethereum’s. To participate, users use a digital wallet and create an account on one of many of marketplaces including:

Rarible — a Moscow-based platform and currently the world’s largest marketplace. It’s centered on supporting artists producing affordable art, with the average transaction per user standing at $129.

OpenSea — one of the first decentralized NFT marketplaces and currently the second largest. Considered by some as the eBay for NFTs, OpenSea platforms millions of assets across hundreds of categories including trading cards, domain names, digital art, and virtual worlds.

Nifty Gateway — focused on fine art and collectibles it terms “Nifties,” its prominence is soaring off the power of platforming celebrity “drops.” Somewhat uniquely, users are not required to own or deal with cryptocurrency and can conduct purchases using a credit card.

Why is the art world excited about NFTs?

On the collecting side, the emergence of easily navigable online platforms invites a younger generation into the art world by opening up an alternate, less intimidating, and transparent market. However, as Christie’s demonstrated through selling Beeple’s NFT work “Everydays: The First 5000 Days,” the traditional gatekeepers are watching closely and don’t be surprised if major auction houses begin gobbling up NFT marketplaces.

For artists, the technology promises to protect the uniqueness and provenance of work, therein preventing forgeries which promises to also benefit galleries and collectors. In addition, artists create smart contracts for NFTs through which they can guarantee royalties from future sales — 10 percent is the industry standard — revenue that creatives are currently cut out from under the existing auction house system.

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Are NFTs here to stay?

Novelty, celebrity promotion, and a sense of scarcity have garnered unprecedented attention upon a previously niche corner of the crypto-universe and in so doing turned digital assets into desirable collectables.

NFTs are a logical throughline of inherently fungible cryptocurrencies and in this respect are here to stay. The extent to which the NFT market can continue its gangbuster growth and unsettle traditional practices of art making and trading are multibillion dollar questions.

Bally Spring 2021

Bally’s Spring 2021 Collection is a Love Letter to Nature

At a time when humanity seems increasingly at odds with the natural world, Bally is here to remind us otherwise with the launch of its Spring 2021 collection, Elemental Balance.

From supplying Swiss expedition teams with custom footwear to scale Mount Everest as early as 1947 to designing eco-friendly capsules in 2020 to fund mountain conservation, the Swiss fashion house continues to draw on its Alpine origins for inspiration. Little wonder too as the artistic direction sensuously highlights Bally’s longstanding ties to the outdoors.

In its latest collection, Bally continues to establish its footing as an “architect of leather” with skillfully crafted ready-to-wear, shoes, and accessories. Spring 2021 dynamically explores the symbiotic relationship between humans and the environment. The new line features micro-woven leathers, raw raffias, twill cotton, and finely interlaced straw — an ode to natural materials and the elements recalling fiery tones, watery hues, and metal accents.

Photo: Giorgio Horn, Jackson Frederick

With versatility and style in mind, heels are accessorized with wraparound leather ankle fringes. Similarly, boots, sandals, and leather totes boast latticed patterns in a show of craftsmanship applying a unique laser-cutting technique. Ready-to-wear items demonstrate the artful execution of leather as a fabric, sartorially sewn into supple tailored looks.

In menswear, silk pajama bottoms pair nicely with double-breasted leather coats (an interesting take on business on the top, quarantine on the bottom), while luxe leather jackets complement light denim and patterned pine motifs. Womenswear also remains elegant and earthly, with highlights including A-line skirts, mariner-style knitwear, and fluid silk dresses adorned with leather trim.

As Bally describes: “Our Spring 2021 collection further demonstrates that tradition does not live in opposition to innovation, but alongside it, autonomous and free.” True to its word, the 170-year-old company is melding tradition and innovation through its digital-first strategy, having presented the collection globally via a dedicated microsite, Bally Studio, in September, ahead of the campaign launch last month.

In its film, “Daydream,” Bally depicts a “dreamlike moment lost in nature,” as a stylish, youthful group weaves through fields and treads on rugged earth. Directed by Antonio Monfreda and featuring Chinese-French model Estelle Chen, the video not only deepens Bally’s emotional connections with consumers but, more tellingly, documents its accelerating shift toward the virtual realm. 

This pivot was already evident in the launch of Bally’s Virtual Showroom in July 2020. This adapted its selling strategy in the face of the global pandemic and followed the redesign of Bally.com last February as well as investment in social media and e-commerce platforms — both growing points of reference for the Chinese customer.

Building on this digital momentum, Bally also expanded its influencer relationships, particularly in the house’s largest market. As CEO Nicolas Girotto told Jing Daily earlier this year, “Bally’s celebrity strategy is rooted in working with advocates who align with our brand values and help us promote an authentic message to their large multi-channel audiences.”

Thanks to the editorial accreditations achieved by the local team, we’ve seen Bally’s style and energy well decoded by a contingent of Chinese idols and Gen Z artists who constantly deliver value to their followers through trend references that are authentic and relevant. Such efforts help build a relationship with the younger generation and enable a constant and consistent social conversation that has contributed to some of the brand’s highest engagements.

By focusing on storytelling around its outdoor heritage and finding platforms and KOLs that align with its brand image, it has authentically enlarged its footprint, too. Essentially, Bally celebrates tradition by all the while, looking to the future.

Dior Women's Collection 2021 Shanghai

Dior Doubles Down on Shanghai

What Happened: It’s been reported that that Dior’s Pre-Fall 2021 Women’s Collection will be staged in Shanghai on April 12. But it won’t be the first time a leading European luxury brand has presented an offline show in the Chinese city. In 2019, Natacha Ramsay-Levi and Miuccia Prada showcased the Chloé and Prada Spring 2020 Collections in Shanghai. And last year, Virgil Abloh presented the Louis Vuitton Men’s Spring-Summer 2021 there as well. 

The Jing Take: The LVMH-backed brand chose an event date that coincides with Shanghai Fashion Week, ensuring that Dior’s show will receive plenty of media attention. Because of the ongoing global pandemic, most Western fashion weeks decided to move online, turning them into “intimate experiences.” By contrast, China’s fashion event was initially postponed but is now expected to run offline and in-person.

Dior’s fashion show should generate significant buzz on Chinese social media, as it will resonate well with local audiences. LVMH has long understood that cosmopolitanism and the desire to break down global boundaries could easily become Dior’s unique selling proposition (USP). And considering how Chinese consumers feel more connected to Western brands that tap into their cultural zeitgeist and thoroughly understand the country’s local cultural sources, this move feels like brilliant marketing.

The report highlights how country-specific fashion shows “have regularly featured additional looks designed specifically with the China market in mind.” These fashion shows create brand experiences and connections by tapping into China’s cultural influences, beliefs, and aesthetics. In upcoming seasons, more luxury brands will likely unlock their full potential in the Chinese market by following a similar path — a well-balanced fashion show featuring Chinese-inspired looks and Asian ambassadors.

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.

Hermes Pricing Bags

What Luxury Brands Can Learn from Hermès About Pricing

Key Takeaways:

  • Too many brands price based on product cost plus an added margin while neglecting to factor in their brand stories.

  • Some brands leave hundreds of millions of dollars of revenue — sometimes billions — untapped by underpricing.

  • The world’s best brands, like Hermès, can achieve 1,000 or even 10,000 times the luxury value creation that base products in its categories create because of their superior brand stories.

A few years ago, a group of entrepreneurs and luxury shoemakers from Los Angeles and London set out to take on the luxury sneaker sector. Their idea? Combine the quality craftsmanship of bespoke shoemaking with Los Angeles’ beach and skateboard culture to create zeitgeist-defining sneakers that excite the ultra-rich.

At the time of the company’s launch, its handmade sneakers retailed at a similar price to handmade dress shoes, which easily exceeded a thousand dollars. Fearful at first about the seemingly high price for its sneakers, the brand learned later through data-driven analysis that they were — by far — too cheap. Believe it or not, when they doubled their prices, sales went up significantly.

Their mistake? The brand initially underestimated its pricing potential. The reasoning behind its error should sound familiar to many brands. The brand’s pricing was based on product cost plus an added margin. What they neglected to factor in was the power of its brand story.

In short, the brand was creating so much value through its story and exceptional experience, the prices seemed too low from the consumer’s perspective. Added Luxury Value (ALV), the story-driven value component necessary for luxury brands, was significantly higher than what the price conveyed. Consumers were confused and did not buy as much as they would in a better alignment of ALV and pricing, leading to lower profitability, volume, and revenue. But after correcting its approach, the brand began to thrive.

This lesson is surprising for many luxury brands. After auditing their brand stories and estimating ALV, I often discover that some of the most expensive brands are priced too cheaply. And if you multiply this error across years — or decades — the missed opportunities add to a significant weakening of luxury brand equity, endangering the long-term survival of brands.

I estimate that some brands leave hundreds of millions of dollars of revenue untapped — billions in some cases. As a result, many of them are struggling. They don’t have the funding to compete and disappear over time. Pricing mistakes — along with weak brand positioning and a deficit in luxury experience creation — are among the top shortcomings I’ve seen in the luxury industry. This issue is due, in part, to a lack of training and knowledge about luxury pricing tools, and luxury brand pricing is often done with tools and strategies similar to the ones that everyday brands use, which always leads to incorrect results.

When it comes to prices, Hermès is one of the best brands to learn from. What Hermès understands better than most is that pricing is not a function of the product; it is a result of the Added Luxury Value a brand creates. Hence, when we price a luxury item, the cost of production is irrelevant. The only question that matters is: How much ALV are we creating? How extreme is the perceived value of our brand? How much desire are we creating with our brand? These are the right questions to answer, not how much the production cost was.

Managing the individual profit margin of a single product is, of course, critical. However, it is a check for negatives and can never be the determining factor for luxury pricing. When I teach luxury managers about pricing, there is always an eye-opening moment when they start to understand that price is created from the brand story value within a competitive set — from the perspective of its customers. Perceived value through the story is the main value driver, not the product. But that value is elusive because intuition tells us that value should be tangible (within the product) and not intangible (a story). By the way, in luxury,  intuition is often dead wrong.

It is the intangible story that drives value. The world’s best brands, like Hermès, can achieve 1,000 or even 10,000 times the luxury value creation that base products in its categories create. I’ll explain why: The combination of value creation elements (based on its compelling brand story) drives Hermès’ value up so much that customers deeply desire its rare and unique products and are willing to pay much more than for other brands. These sky-high prices are not driven by the product — they are driven by the story and its execution. In other words, the products are part of the story but aren’t the story.

Hermès does this better than most other brands, and as a result, was one of the best-performing brands during the pandemic. In fact, it has been steadily growing in revenue and profitability over the past decades. Strict ALV focus is also why LVMH recently became Europe’s most valuable company with the continent’s highest market capitalization. Mastering ALV via total story alignment and proper pricing is the most critical success factor for those brand successes.

Now, let’s take a closer look at what some describe as the world’s most iconic handbag: The Hermès Birkin bag. It is a masterpiece of storytelling. In 1981, the British socialite, model, and actress Jane Birkin, who was considered the fashion icon of her time, boarded an Air France flight to Paris. That flight changed the fashion industry forever.

Birkin famously used a beaten-up basket for years to carry all her items. She was asked many times why she didn’t use a handbag. Her answer? She never found one that was practical enough for her. On that particular flight, she happened to sit next to Jean-Louis Dumas, then the CEO of Hermès, when her basket fell out of the overhead bin. While Dumas helped her fetch all her items from around the first-class cabin, he pledged to design a bag that would be stylish and practical enough for her to consider ditching her basket. Today, the world knows it as the Birkin bag.

The story is so fascinating that Hermès customers wait on a list for years, which is now by appointment only — to acquire one. Birkin bags retail starting at about 9,000 USD but can easily exceed hundreds of thousands of dollars for limited editions and rare materials. The fortunate ones who were able to buy a Birkin two decades ago saw a 14-percent average yearly value increase for their used bags — more than almost any other investment. This value creation is so extreme that some bags exceed the price of a Rolls-Royce or a Ferrari. As such, there will never be a discount or a sale on them. I predict that, in a decade from now, the cheapest Birkin bags probably will start at around $15,000 to $20,000 because, over the past decades, their prices have increased steadily, reflecting gains in ALV.

Recommended ReadingBirkin Bags As Currency During COVID-19By Chenyue Fu
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All of this shows that perceived value comes from the story, not primarily from the product. Unsurprisingly, there are many bags from other brands inspired by the Birkin bag, often retailing around $200-$500. But these brands don’t elicit the same desire through their stories and, therefore, can’t create ALV.

Similar to Louis Vuitton, Dior, and others, Hermès never promotes. I have said many times in my presentations that promotions are the fastest and most effective way to destroy your brand equity when you are in luxury. They punish your most loyal customers and destroy trust in your brand. When a person knows that someone else bought their favorite brand at a lower price, they will no longer buy full-price. Promotions destroy the story, desire, and value.

Hermès has always been a disruptor that continuously reinvents itself, from being one of the first luxury brands to tell their story online to collaborating with Apple to disrupt the watch industry to its latest push in experimenting with sustainable mushroom leather. But ALV is also driven by a desire for innovation, state-of-the-art technology, and brands that push boundaries. In fact, my analysis shows that one of the most accurate predictors of future luxury brand declines is a lack of innovation or inspiration. Hermès, to the surprise of many, does the opposite.

Luxury brands have high hopes for the post-pandemic world, but reevaluating their luxury strategies is critical. Brands that believe they can drive their businesses long-term with unclear brand storytelling, a lack of innovation and inspiration, and cost-based prices will never realize their full potential. Instead, they may be gone by 2030 since I predict that nearly 50 percent of underperforming luxury brands will not make it to the end of the decade. The time to act is now.

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

Luxury Sub-sectors Outperform Covid NEIWAI

7 Luxury Sectors Chinese Consumers Love Post-COVID

Key Takeaways:

  • The adoption of a healthier, minimalist lifestyle pushed consumers to embrace the Dieter Rams mantra: “Less, but better.” Instead of pursuing trends and the latest fashions, Chinese luxury shoppers want investment pieces.

  • The second Wave Of The Trend Lens consumer study conducted by Agility Research & Strategy shows that 54 percent of the Chinese HNWIs interviewed plan to buy more expensive luxury items.

  • Hermès Birkin leather handbags and fine jewelry are stable investments in China.

The last year has been catastrophic for retail and luxury. However, one of the most surprising effects of the pandemic has been the rise of new luxury sub-segments exceeding our expectations.

Even though China has gone back to work, reverberations from the stay-at-home economy still linger. Consumer spending and behavior have been altered (at least for the medium-term), and most shoppers have learned to prioritize wellbeing, comfort, and non-discretionary expenses.

The rise of a post-aspirational mindset and the adoption of healthier, minimalist lifestyles also pushed consumers to embrace the Dieter Rams mantra: “Less, but better.” Instead of pursuing trends or the latest fashions, Chinese luxury shoppers are chasing investment pieces. Meanwhile, the second Wave Of The Trend Lens consumer study conducted by Agility Research & Strategy shows that 54 percent of the Chinese HNWIs interviewed plan to buy more expensive luxury items.

Recommended ReadingWhat China’s Affluent Consumers Want Post-COVID-19By Adina-Laura Achim
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Hermès Birkin leather handbags and fine jewelry are stable investments; hence, they had a swift recovery. Interestingly, this unique consumer buying behavior is similar to what we had seen in more mature markets like the US.

Edahn Golan, the founder of Edahn Golan Diamond Research & Data, explained that fine jewelry sales in the US have picked up again from the early months of the pandemic, gaining strength heading into the summer. Fine jewelry sales went up by almost 10 percent to $5.25 billion during August, year-on-year, according to CNN Business.

Among other things, the world’s largest diamond jewelry retailer, Signet Jewelers Limited, announced that the company’s preliminary August sales for all jewelry are up 10.9 percent compared to 2019, CNN Business reports.

Now, let’s take a look at the segments that are over-performing in China:

  1. Workout gear

According to the South China Morning Post, China’s health & wellness industry is estimated to grow by 19.2 percent to$145.1 billion by 2025. The pandemic has undeniably triggered a global health & wellness boom, and Lululemon Athletica — a company that believes “in a holistic approach to wellbeing” — has benefited immensely from this trend.

“We saw a 45 percent revenue increase in international markets, and despite all that happened in the world, China delivered a really strong performance with total revenue increasing by more than 100 percent in the third quarter,” said Calvin McDonald, Lululemon’s chief executive, in the South China Morning Post.

McDonald believes that the company can maintain dynamic sales even after the arrival of Covid-19 vaccines. “We don’t see any dramatic impact in the reduction of the momentum in the business… there are a lot of drivers of growth within the marketplace,” he said in an interview on “Mad Money.” “I think there are some lasting [pandemic] inflection points across the guests.”

McDonald correctly states that consumers have learned to prioritize health and wellbeing. As such, activewear and workout gear are here to stay.

Overall, the global health & wellness industry increased by about 6 percent to $775.5 billion in 2020, while China’s industry grew by 3.3 percent to $121.7 billion, according to Euromonitor. And by 2021, China is estimated to hit $145.1 billion.

  1. Athletic footwear

Considering China’s rekindled passion for sports and wellbeing, it’s hardly surprising that athletic footwear is also growing in momentum. Take, for example, Nike’s strong sales during Singles’ Day, helping the brand raise its financial outlook for 2021.

“With sales somewhat stagnant on its home turf, Nike has been doubling down on the China market, seeing the region as a key growth opportunity for the brand,” says Lauren Thomas, CNBC’s retail and real estate reporter. “Over the summer, it opened a new kind of store called Nike Rise at a mall in Guangzhou, which holds local meetups for its mobile-app users.”

The Nike Rise store in Guangzhou offers members access to in-store workshops and events as well as a personalization bar, with design elements inspired by the city’s sport culture. Photo: Courtesy of Nike

CNBC reports that Nike’s revenue grew 24 percent in the Greater China region year-on-year, compared to just one-percent growth in North America.

  1. Lingerie

Digital-first intimates and lingerie brands Neiwai and Ubras have won in the China market with their comfy designs and empowering messages.

According to iiMedia Research Group, the Chinese underwear market was valued at $61 billion in 2020. This scale presents a unique opportunity for global brands. But so far, domestic players seem more resilient and better equipped to weather market changes.

The Western lingerie veteran Victoria’s Secret crashed and burned in China. But local lingerie brand Ubras surpassed Uniqlo to become Tmall’s best-selling underwear brand during the Singles’ Day 2020 shopping extravaganza.

“On the first round of the shopping festival, which started from October 24 to November 3, Ubras used 33 minutes to surpass its sales volume on last year’s Double 11,” says China Marketing Insights. “It broke 100 million RMB in sales in 1 hour and 45 minutes.”

  1. Loungewear

Technavio predicts the sleepwear and loungewear market will grow by $19.5 billion between 2020 and 2024, progressing at a CAGR of almost 9 percent during this period.

In China, the loungewear trend is gaining momentum because of digital interactions and smart digital marketing strategies. Hashtags like #StayInFashionGuide and #StayInPajamaContest amassed high participation rates. And KOLs even joined the hype by recommending loungewear brands.

KOLs that hopped on the loungewear trend include Chinese artist Wu Zhehan (left) and food blogger Shuibingsha 水冰沙 (right). Photo: Weibo

  1. Beauty

According to The Moodie Davitt Report, L’Oréal generated massive sales in China, outperforming predictions. The French Group highlighted the “spectacular” performance in China, where e-sales growth beat estimations. L’Oréal was again a leader in category sales during the 2020 Single’s Day event.

But domestic players also had a good year. Chinese makeup brand Yuetong, for example, secured tens of millions of yuan in its pre-Series-A funding round, and Hangzhou-based Proya Cosmetics Co gained by over 88 percent in 2020, according to The Business Times.

  1. Leather goods

Even before the pandemic, clothing was an underperforming segment, and brands had to rely on leather goods to maintain momentum.

“Most runway pieces never get produced,” said Cameron Silver, the founder of Decades, to the Daily Beast. “They’re marketing exercises. The legacy brands aren’t in the fashion business anymore. They’re selling handbags and lipsticks.”

The Altagamma Consensus study estimates that, in 2021, the leather goods segment will dominate and register the most growth (+16%).

In China, various luxury brands have already announced new price hikes for bags, small leather goods, and entry-level items. We foresee that this price strategy could drive up in-store traffic and bring additional sales opportunities.

  1. Jewelry

In China, the jewelry segment is fueled by consumption trends in lower-tier cities. According to Daxue Consulting, “the geographic center of jewelry consumption is shifting downward,” as larger first-tier and second-tier cities are reaching full maturity.

Daxue Consulting highlights how, in recent years, Lukfook and Chow Tai Fook Group have expanded into lower-tier cities. As such, domestic brands now understand that they need to take advantage of the new politics and trends of consumption.

Burberry's Earnings Update Q4 Positive

Burberry’s Sales Rebound Sparks Hope for Luxury Retail

Global luxury demand is finally recovering, and the British fashion giant seems eager to share the good news.

Ahead of the financial year end on March 27, Burberry issued an unscheduled trading update forecasting that full-year profits would be ahead of expectations. The iconic trench-coat maker stated that retail sales in the three months to March are set to be between 28 percent and 32 percent higher than the same period last year, while its full-year group revenue should fall 10 percent, less than the 13 percent decline analysts predicted.

This upbeat report sent Burberry shares up as much as 10 percent on March 12 — its largest daily increase since mid-January 2020. 

Compared to fourth quarter results last year, this is certainly a welcome turnaround. With the pandemic placing Chinese consumers, who account for two-fifths of the brand’s sales, in lockdown, the luxury house saw its same-store sales tumble 27 percent. Even just last quarter, Burberry was still struggling with shuttered stores and travel restrictions, saved from disaster by mainland China’s double-digit growth.

This newfound optimism isn’t without merit, however. Burberry has been making strategic moves to hasten recovery, particularly in China, where life has largely returned to normal. From its successful Chinese New Year campaign, which included a star-studded short film and branded WeChat red envelopes, to the opening of its social retail store in Shenzhen, the London-based group has worked to ramp up engagement in the market and innovate its e-commerce approach. Notably, the brand recently won a rare preliminary injunction against local copycat Baneberry, further securing its market share. 

Of course, Burberry isn’t the only one reaping rewards from China’s resilience. Prada, for one, announced earlier this week that its 2020 retail sales had surged 52 percent in the mainland during H2 and that its e-commerce sales more than tripled in 2020 versus 2019. Meanwhile, Hermès credited its four dozen retail stores in China and DTC business for generating half of the company’s revenue. 

Although not all fashion brands can boast the same upswing (as seen by the number of retail bankruptcies and acquisitions last year), Burberry’s positive update reinstalls some level of confidence in the broader luxury industry. While investors will have to wait until May 13 to learn just how well Burberry performed its fourth quarter, for now it’s enough to ride the expected rebound — and perhaps in these times, hope is the real luxury. 

Zegna Masculinity Virtual Idol

Zegna Tackles Contemporary Masculinity With Virtual Idol Noonoouri 

The Social Edition is our weekly series which deep dives into luxury initiatives in China’s social media landscape. Every week, we highlight brand campaigns distributed on Chinese digital platforms — WeChat, Weibo, Tmall, Douyin, and beyond.

Our coverage spotlights global luxury brands, global beauty brands, and local Chinese brands. The latter gives insight into some of China’s most successful campaigns, which often come from local players, and are outside of the beauty and fashion space.

In this week’s roundup, we look at three campaigns, including COS’ tie-up with T Magazine, Zegna’s partnership with virtual idol Noonoouri, and Shiseido’s celebration of its 40th year in China.

COS Tapped Female Creatives To Celebrate International Women’s Day

BRAND COS 
CATEGORY Fashion
PLATFORMS Weibo, WeChat, Tmall 
MEDIUM Image, Short-video, Livestream
FEATURED TALENTS Ding Wei (329K Weibo Followers) | Liu Min (97K) | Xie Xin (657K) | Zhu Yu Jie (754K)

OVERVIEW 
To celebrate International Women’s Day, COS, which is owned by H&M Group, launched the “COS Her Stage” campaign along with the “COS Women” capsule collection in China. The Swedish brand collaborated with T Magazine to spotlight four female creative talents and explore blurry social boundaries through the lens of contemporary women. The campaign included livestream sessions on Tmall that invited singer and producer Ding Wei, singer Liu Min, dancer, art director Xie Xin, and curator Zhu Yu Jie to share their journey of self-exploration and take on gender issues.

NETIZEN REACTION
The campaign hashtag #COSHerStage has garnered nearly 11 million views on Weibo, mainly driven by short videos posted by the featured talents. The campaign post on the brand’s WeChat account has received 29,500 views, with comments on the diverse representation of contemporary females. The selected influencers, even those without cult social followings, were well-recognized by netizens due to the consistency between the brand image and their personalities.

VERDICT
In China, global brands have not been the typical players to fight for consumers’ attention on International Women’s Day, as developing a localized narrative on gender issues is even more challenging than approaching traditional festivals. In COS’ case, however, the label opted to collaborate with local media outlet T Magazine to identify the female KOLs with independent personalities, which helped its campaign reach its target audience. In addition to posting campaign photos, the label conducted in-depth interviews with featured figures to spark dialogue and create organic content for its social followers, helping the brand maintain a loyal and active consumer base.

Zegna Explores Masculinity With Virtual Idol Noonoouri 

BRAND Zegna  
CATEGORY Luxury
PLATFORMS Weibo, WeChat
MEDIUM Image, Short-video
FEATURED TALENTS Li Xian (22M Weibo Followers) | Noonoouri (17K)

OVERVIEW 
To promote its Spring 2021 collection, Zegna teamed up with brand ambassador Li Xian and the virtual idol Noonoouri to explore the complexity of contemporary masculinity in a 40-second video campaign, “Men In My Imagination.” The brand hoped to start a broader conversation on this theme and encourage audiences to focus on who they are beyond social boundaries and gender bias.

NETIZEN REACTION
The topic of “what makes a man” sparked conversations on masculinity, which has been a somewhat controversial topic on China’s social platforms after male public figures with feminine appearances (Little Fresh Meat) were criticized by mainstream media. Meanwhile, the campaign video has received over 22.7 million views since it was released on March 4. Netizens commented that the brand ambassador Li Xian is a perfect representative of a contemporary male who is not simply defined by stereotypical masculinity.

VERDICT
Chinese luxury consumers, especially Gen Z and younger, continue to show a rising awareness of diversity and inclusivity issues. Zegna’s campaigns tapped into this by showcasing various expectations and representations of masculinity from both a male and female point of view. Moreover, by casting the digital avatar Noonoouri, viewers focused more on Li Xian’s actual face and expressions, which helped drive traffic as the majority of Li’s fan base consists of females. Given this, however, we’re not sure how well this approach worked to attract Zegna’s male target audience.

Shiseido Celebrates 40th Anniversary in China with Celebrity Power

BRAND Shiseido 
CATEGORY Cosmetics
PLATFORMS Weibo, WeChat, Tmall 
MEDIUM Image, Short-video, Offline Event 
FEATURED TALENTS Zhang Ziyi (29M Weibo Followers) | Liu Yifei (68M) | Zhao Liying (88M) | Wan Qian (6M) | Huang Xuan (10M) | Li Qin (25M) | Zhang Tian’ai (17M) | Wu Qian (12M) | Li Kaixin (9M)

OVERVIEW 
On March 9, Shiseido celebrated its 40th year in China by lighting up the Bund in Shanghai. Attending the retrospective were ambassadors from various Shiseido sub-brands, each reviewing the brand’s forty-year efforts in the Chinese market, which have shaped the society, environment, culture of China’s beauty sector. Featured celebrities Zhang Ziyi, Liu Yifei, Zhao Liying, Wan Qian, and Huang Xuan spotlighted the group’s commitment to social welfare, sustainability, innovative technology, and women’s empowerment. The group also collaborated with Taobao Juhuasuan — a marketing and group-buying platform for flash sales — to offer consumers special treats.

NETIZEN REACTION
The campaign hashtag #Shisedo40yearsInChina has received nearly 74 million views on Weibo, with netizens sharing their memories of the Japanese brand, one of the first international beauty conglomerates to enter China’s vast beauty market. Meanwhile, fashion and beauty KOLs like @Yvonne Ching, @MogNotMushroom, and @GirlLisa posted videos and photos from the offline event in Shanghai, which drove substantial social traffic for the campaign.

VERDICT
Shiseido has built a solid reputation in China over the past four decades thanks to its proactive social responsibility, as well as its innovative and resilient market strategies. The anniversary-focused campaign — which was a retrospective of the group’s history, corporate values, and visions rather than a simple product showcase — was leveraged by Shiseido’s extensive celebrity endorsements. And by bringing together the many faces of Shiseido’s sub-brands, it was able to strengthen its brand portfolio and market awareness, ranging from personal care to prestige skincare, among local beauty shoppers.

luxury hyper-segmentation scarcity

Luxury Hyper-Segmentation: Avoiding The Ubiquity Trap

Key Takeaways:

  • Being driven by first-time purchasers can have you run the risk of becoming ubiquitous/boring/“déjà vu,” and the prospects of the world reopening are certainly exciting but beware not to fall into the ubiquity trap.

  • Louis Vuitton, the biggest brand in luxury personal goods, got hit by ubiquity issues 7-8 years ago and addressed the issue very efficiently.

  • Youth is looking to be surprised and delighted while becoming part of the club, which sounds like a real conundrum. There are, however, ways to convey scarcity while selling to millions.

The risks in selling more of what is supposed to be exclusive

In my book Future Luxe, I make the case that the luxury sector has great growth prospects ahead since it is driven by first-time purchasers, mostly living in Mainland China and the US. 

Brands have made it easier to connect with these first-time purchasers. Logos have been harmonized to the point where it is almost ridiculous, with many brands going for the most easily readable all-caps sans serif look. Names got shorter and are thus more easily remembered, Yves Saint Laurent is now Saint Laurent. I used to work at Christian Dior, now just Dior. And while there is no risk of change there, Louis Vuitton clients in the US refer to the brand just as “Louis.” 

While many things have been simplified, the biggest risk, in my view and one that hit the sector 7-8 years ago, is that of ubiquity. I was Hong Kong-based then, and many Chinese consumers and friends would tell me how “I’ve seen this brand too much, this product too much, and my assistant buys it. I’m done.” While your name and logo can be made more eye-catching, the idea that your product is seen too much is incompatible with luxury desirability. Louis Vuitton addressed this head-on, and so have other very successful brands over the past decade like Chanel, Moncler, Bottega Veneta, and others.

Rebirth of the cool

How do you make a brand that is seen as ubiquitous exciting again? Hyper-segmentation. From a product point of view, that means that if Louis Vuitton relied heavily on the monogram ten years ago, it is known for many other products now. Have money to spend, want a higher leather quality and a more discreet logo presence? Look at the Capucines Collection, which retails at Hermès-type price points. Newcomer to the brand? Why don’t you start with a Pochette Métis? Think Louis Vuitton only does bags? Check out the fine jewelry range, the fragrances, the NBA partnership products, or the luggage if you really feel the world is about to re-open. Many have commented on Louis Vuitton over the years, but a comment that has not come up is déjà vu/boring/expected. 

The Capucines Collection from Louis Vuitton ranges from about $4,000 to over $31,000. Photo: Courtesy of Louis Vuitton

Meanwhile, other leaders in the industry have shifted away from product dependence in other ways. Remember the Intrecciato Collection at Bottega Veneta? You could have been under the illusion that was all the brand sold a few years back. Not the case anymore. Want to buy the Chanel 2.55 bag in black? Well, you will have to ask for it because it has been so successful that the brand would rather not display it in-store. Walked past a shopping window display from Moncler in the past two years? You know you might end up buying a more classic design, but its Genius Collection product sure is fresh and funky and just seeing it makes you feel special, right?

Lots to do outside of the product

There is an inherent contradiction in the luxury sector, which is that brands are selling more items every year that are supposed to be exclusive. The good thing is that scarcity is also in the eye of the beholder. If I am buying Louis Vuitton, Gucci, and Prada, so are millions. 

But you can develop capsule collections, variations on existing leading models, seasonal online pop-ups, and surprising collaborations (don’t tell me you saw The North Face/Gucci tie-up coming). More importantly, scarcity can go way beyond the product: Send me messages that are specifically catered to me, give me a reason to come back to a physical store when the world reopens, and show me that it is different from all the other ones I have been to. Give me entertainment, help me learn something, think out of the box, surprise me! Crisis breeds creativity. So hopefully, the industry will not cease to surprise us.

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). 

RTFKT Chinese New Year

Meet The Brand That Made $3 Million In Digital Sneakers

From flying cars to AI robots, sci-fi novels have grappled with what the future might look like for decades. And as outrageous as those predictions seemed, they are all coming true to some degree (yes, even personal airborne vehicles are visible on the horizon).

COVID-19’s ability to upend trends over the last year has helped accelerate more supposed impossibilities. But few could have predicted the recent, dramatic rise of NFTs — otherwise known as non-fungible tokens. Existing solely on a blockchain, NFTs are symbols of digital asset ownership. For instance, instead of buying a physical painting, one can purchase an NFT as a virtual representation of the artwork. 

Before 2020, these digital collectibles were more or less unknown. Yet global companies like Microsoft, Apple, and Google have been mining the fields of augmented reality and virtual reality for years, so virtual transactions were surely the next step.

Mentions of NFTs have also been growing on Weibo, which is hardly surprising, given that China’s big-tech conglomerates (Alibaba Group, Baidu, Tencent, Xiaomi, and Huawei) have likewise been exploring the possibilities of AR and VR. But is China ready to embrace NFTs?

RTFKT, the first luxury brand operating in the space, founded by a trio of creatives, certainly thinks so. For Chinese New Year, the brand designed a unique, pure gold virtual sneaker, which was auctioned off on the Chinese digital marketplace Treasureland. It eventually sold for $28,000 — not too shabby for a brand with zero market recognition and an object that doesn’t physically exist.

However, it failed to generate the staggering $3 million that the brand previously earned via its collaboration with the artist FEWOCiOUS. Considering these prices though, the brand has rightly earned itself the nickname “a Supreme for a digital audience.”

For now, it’s impossible to avoid NFTs and the tantalizing possibilities they unlock (already, you can store your NFTs in a virtual museum in the Metaverse). Jing Daily spoke with a founding member of RTFKT Benoît Pagotto to discuss the brand’s pure gold sneaker, whether NFTs will fly in China, and more.

Jing Daily: Firstly, how did this all start? What was your mission statement? 

Benoît Pagotto: Well, when we started the brand and company, the vision was to create the brand of the future, and we wanted most of our items to be virtual. So our principle was digital-first, with physical as a nice add-on for the tangible touch at home. We also use open-source and work with the community. It is like remixing, and we take cues from the gaming community. We did not think we would reach this state this quickly, but COVID has accelerated that and put less of an emphasis on physical. Now, everyone has realized the power of culture in gaming.

Given that you made such a digital splash with your FEWOCiOUS collab — which netted $3 million and now has a massive reach — what do you want to achieve as a brand? 

With all the content we make, it’s about making it in the best possible way and purposefully. Also, we want to empower the crypto community, exchange ideas, and work with them. Part of our profits will be reinvested into supporting the community, buying some art, and giving back to it. The community is a mix of very young members, which we often mentor. FEWOCiOUS is only 18 — he draws on the iPad and paints. It also includes these OG comic book artists that never had a big moment. 

How are you approaching the China market as a virtual luxury brand? 

As a brand, we have luxury positioning even though the aesthetic is gaming. But it is very crafted; the techniques we use are very high-end. We wanted to do something specific this Chinese New Year because that is what luxury brands do for that time. But how do you make something special for China? 

We released a [unique] luxury sneaker for the Chinese New Year. We did it in red and gold, and I love the aesthetic and the way they think about style. They go all out. We launched it through a WeChat group and on Treasureland, where it was available to bid on for a certain number of days. 

RTFKT’s festive ox-themed sneakers are “forged out of pure gold and are enchanted with positive blessings.” Photo: Courtesy

Do you think there is a particular appetite from the Chinese consumer? And have you seen any interesting developments in China in terms of NFTs, companies, or products? 

Chinese people have a deep connection with art. We didn’t know what to expect from our China auction in terms of prices, but people over there are getting into the crypto art market, and there’s a lot of interest. They are already used to this type of digital trading. They understand the value and how it is resold as an asset. But the movement is just starting there, and we wanted to do something very early on. I am also very interested in finding artists in that sector and communities. 

Any advice for people or brands trying to move into the sphere? 

It depends. It is still risky. There is a boom now, and prices will go lower at some point. But at the same time, more people will join, and it will be healthier. But it is an investment. We are the first brand in the space, and we can be creative. But if you want to invest, you need to follow the space and take an interest in the movement. For example, if you just do a virtual experience or an exhibition with no takeaway, it will be lackluster. These days, the new generations are used to demanding interactivity, and we think that one of the utilities is status and rarity, so you will want to display it. 

I hear you have new collaborations to announce. Can you share any details yet? 

We have been contacted by everyone, but we are being cautious. [Our collaborations] need to be genuine and not for the money. One thing I can say is that we are doing a virtual shop for Atari in Cryptospace. We have created one in the shape of a giant shoe for a big activation on March 11. Also, we are announcing a partnership with Snapchat where we have access to their tech and will give a unique and exclusive experience to the owner. 

Finally, what is the future here, and do you see any end game?

Honestly, this cannot be answered yet. It is impossible to predict — that is what we think. If you look at the big tech companies with augmented reality glasses, Apple is the most advanced, building the infrastructure for five years. And that idea of an overlay on the physical world will soon become more mainstream. 

The main purpose of blockchain is about safety, security, and provenance, and that is why it will last. Blockchain is the authenticator. What you do with it, whether it’s trading or, for us, making fashion items, is up to you.