Category Archives: Fashion

Luxury Brands Refocus On China

Studies Indicate Sluggish Demand In Established Markets Will Continue As Buyers Remain Motivated In China

According to new studies, Chinese luxury enthusiasts may help buoy the global luxury market for the next few years, if not drive long-term growth

According to new studies, Chinese luxury enthusiasts may help buoy the global luxury market for the next few years, if not drive long-term growth

Luxury brands have had what can conservatively be called a tough year, with the global economic crisis putting a gaping wound in their profits in traditionally high-demand countries like the US and Japan, and recovery lagging behind expectations. These figures have been tempered somewhat by the potential of the Chinese market to soften the blow of falling demand elsewhere, if not counteract it completely. While it is still a bit quixotic to expect China to be the savior of luxury brands everywhere — since it is still very much a developing market — it does benefit luxury brands to plan ahead for the time when China is the world’s biggest luxury market, and start brainstorming on their long-term strategy for sustained growth as well as strong brand loyalty.

This week, Harvard Business looked into the Chinese luxury market, digging through statistics to discern whether this market truly is all it’s cracked up to be. While their findings suggest that hyperbolic enthusiasm about the Chinese consumer is unwarranted — as we’ve written before — they do remain bullish about the potential of this populous and fast-moving market:

New research from McKinsey & Co. indicates that, by 2015, China will be home to the world’s fourth-largest population of wealthy households, an estimated 4.4 million. McKinsey also reports that presently, about 80% of China’s wealthy are between the ages of 18 and 45 (versus 30% in the US). Jing Ulrich, the chairman of China equities at Morgan Stanley, was recently quoted in Forbes as saying of China, “With the global recovery unlikely to be smooth, domestic demand is likely to remain the primary engine of growth in the remainder of 2009.” In a Wall Street Journal op-ed last year, Zachary Karabell argued that “the rise of the Chinese consumer is the only thing standing between them [global companies] and a decline in their business.”

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Chinese Jewelry Brands: Three To Watch

Strong Demand And Growth In Chinese, East Asian Markets Helps Luxury Jewelry Brands Find New Global Markets

Gold has been a traditional "hedge" in China for centuries

Gold has been a traditional "hedge" in China for centuries

We have written before about the popularity of gold, jewelry and watches in China, and as the figures released today show that the Chinese economy seems to have positive momentum, it is likely that domestic demand will continue to grow for these luxury items. Government efforts to spur increased consumption and lower savings rates look to be at least partially successful, and as a result many global jewelry companies are now putting extra effort into their China outreach and expansion programs.

Today, Diamond Worldlooks into the growing influence of Asian jewelry brands as they become an increasing part of the global market, profiling three up-and-coming Asian jewelers who you might see at a mall near you in a few years: Luk Fook Jewelry, Kin Hung Lee Jewelry and Qeelin Jewelry.

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Ralph Lauren Planning To Open 15 New Stores Annually In China

Fashion Brand Sees Potential To Broaden Foothold In Lucrative, Yet Challenging Fashion Market

 

Ralph Lauren's sole free-standing location in China is located in Shanghai's luxury Jin Jiang Dickson Center. The company plans to branch out very rapidly in coming years

Ralph Lauren's sole free-standing location in China is located in Shanghai's luxury Jin Jiang Dickson Center. The company plans to branch out very rapidly in coming years

Wing-Gar Cheng writes for Bloomberg today that American retailer Ralph Lauren hopes to open 15 new stores in China annually in coming years. While the signature Ralph Lauren style has been adapted — or “copied”, depending who you ask — by brands with a long-time presence in China, like South Korea’s E-Land (not to mention counterfeiters throughout the country), the number of free-standing Ralph Lauren locations has remained limited. With the global demand for higher-end items remaining relatively anemic in the North American, Japanese, and European markets — despite improvements — China, with the high potential of its second- and third-tier cities, remains a sought-after target by mid- to higher-range fashion brands like Ralph Lauren. 

As Cheng writes, rapid expansion in China is not simply driven by idealism. There is a great deal of untapped potential throughout the underserved mainland, well illustrated by a quote by George Hrdina, president of Ralph Lauren’s Asian business, who said, “We do more Ralph Lauren business on the island of Manhattan, New York, than we do in Hong Kong and China.” Clearly, adding 15 stores per year is less unrealistic than it may initially sound.

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China’s ’80s Generation “In Love With Luxury”

Luxury Fans Born In The 1980s Quickly Developing Strong Brand Loyalty, Increasingly Sophisticated Taste

China's "80s Generation" has grown up completely within China's post-reform market environment

China's "80s Generation" has grown up completely within China's post-reform market environment

Much of the news we see coming out of China’s luxury market tends to focus on consumers in the 30s and 40s, if not older, but an interesting article from the Beijing Review (via Alibaba News) today looks at a younger demographic — the luxury crowd in their early- to mid-20s. While the number of young people in China who can afford top luxury goods is formidable, it is admittedly only a segment of a segment of this age group, as it is in most global markets. However, what makes them remarkable in China is the speed at which they have not only found and stuck with the brands they like, but have become immensely influential to marketers and designers around the world.

Ding Wenlei, writing for the Beijing Review, looks into the importance of the Chinese luxury market to global brands, who are looking to “glocalize” their products for emerging markets in China and India:

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“New Fashion Action” In Shanghai

Relaunching Of New Max Mara Boutique In Shanghai And Gala Fashion Show Attract City’s Fashion Elite

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Max Mara's flagship store in Shanghai is one of the brand's most important locations

The Italian fashion house Max Mara recently relaunched its flagship Asia store in Shanghai’s Citic Square to much fanfare, and this week the company put on a large-scale gala fashion show to promote two of its product lines. Held at the Garden Lane Creative Park in the city’s Hongkou District, the event was designed to breathe some new life into the unusually quiet late summer fashion environment, and by promoting the main Max Mara line as well as the company’s Sportmax sports line, Max Mara was able to reach out to a wide consumer segment in China’s most fashionable city.

According to the Shanghai Daily, the company took full advantage of the new venue to make an impact on the luxury and fashion crowds:

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China’s Secret Purchasing Powerhouse: Women

Female Luxury Shoppers Powering Growth Of Luxury Brands Throughout Country, From First To Third-Tier Cities

Shaun Rein sees the female demographic as one of the major drivers of luxury spending in China over the long term

Shaun Rein sees the female demographic as one of the major drivers of luxury spending in China over the long term

Shaun Rein, founder and managing director of the China Market Research Group, writes an interesting feature today for Forbes, focusing on female Chinese shoppers, and the continued growth that this demographic has shown in the face of the global recession. Although female luxury customers have largely cut back in traditional luxury markets like Japan and North America, spending remains strong in emerging markets like China, where luxury brands are still new to some second- or third-tier cities — where much of China’s sustained growth will center in coming years, as we have written before.

As Rein sees it, the urban female demographic shows great sustained potential because of the speed at which they have become choosy — rather than simply profligate — spenders. Chinese shoppers are increasingly purchasing luxury goods because they like them, and have developed stronger brand loyalty based on style or quality, rather than simply spending for spending’s sake. This is a good thing for major brands, many of which take unique advertising or marketing strategies for the Chinese market to carve out loyal niches. Obviously, this strategy is working, as Rein notes, “Women [in China] are becoming less price sensitive and more sophisticated about the brands and products that they finally buy.” Unlike many male shoppers in the Chinese market, who are less apt to shop around or develop strong brand loyalty — mainly choosing based on status (for automobiles, mainly) or price (see success of Ferragamo and other high-end men’s luxury apparel brands) — women are more likely to become brand “connoisseurs.”

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China Becomes World’s Second-Largest Luxury Market

Country Overtakes US In Luxury Spending, Purchasing Nearly A Quarter Of The World’s Luxury Goods Sold In 2008

China is now second only to Japan in annual luxury spending, and is expected to overtake Japan within the next five years

China is now second only to Japan in annual luxury spending, and is expected to overtake Japan within the next five years

The World Luxury Association reports that spending on luxury products of all types in China has surpassed that of the United States, with wealthy Chinese spending $8.6 billion on luxury goods inside the country. Figures do not account for Chinese tourists buying luxury products overseas. These figures will no doubt please luxury retailers in China — both domestic and foreign — but there are signs that these companies need to work even harder to broaden their market and consolidate their brand position. This may sound strange, seeing as how China is second only to Japan, and rising fast, in luxury spending, but in order to maintain and grow these figures, companies are going to have to ensure “luxury fatigue” does not set in among some of their most active customers.

News by the state-run broadcaster CCTV put the figures published by the World Luxury Association into the context of luxury retailers trying to speed up their China efforts, as the country is seen in many ways to be on a similar consumer trajectory to that of Japan in the 1950s and 1960s:

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